To the Shareholders
Your Directors have pleasure in presenting the 35th Annual Report of yourCompany together with the Audited Financial Statements for the year ended 31stMarch 2018.
Your Company has for the first time adopted Indian Accounting Standards (Ind AS)while preparing its Financial Statements for the financial year 2017-18 and accordinglycorresponding previous year's figures were restated with a transition date as 1stApril 2016. The Financial Statements are prepared in terms of the Companies (IndianAccounting Standards) Rules 2015 as amended and other accounting principles generallyaccepted in India.
The financial results for the year ended 31st March 2018 are summarizedbelow:
| || |
|Particulars ||Current Year 2017-18 ||Previous Year 2016-17 ||Current Year 2017-18 ||Previous Year 2016-17 |
|Net Revenue and Other Income ||1118.25 ||1042.17 ||1245.79 ||1127.19 |
|Profit before Interest Depreciation and Exceptional Items ||128.00 ||113.66 ||150.18 ||127.73 |
|Interest and Financial charges ||17.16 ||16.01 ||18.74 ||16.71 |
|Profit before Depreciation Exceptional Items and Tax ||110.84 ||97.65 ||131.44 ||111.02 |
|Depreciation ||40.92 ||35.56 ||53.90 ||46.29 |
|Profit before Exceptional Items and Tax ||69.92 ||62.09 ||77.54 ||64.73 |
|Exceptional Items ||6.80 ||0.66 ||7.43 ||1.36 |
|Profit before Tax (PBT) ||63.12 ||61.43 ||70.11 ||63.37 |
|Tax Expense ||13.48 ||13.72 ||12.11 ||11.72 |
|Profit after Tax ||49.64 ||47.71 ||58.00 ||51.65 |
|Other Comprehensive Income/(Loss) (net of tax) ||(0.45) ||(0.90) ||0.57 ||(2.58) |
|Total Comprehensive Income ||49.19 ||46.81 ||58. 57 ||49.07 |
OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS
Your Company has recorded a gross turnover of '1118.25 crores in the year under reportas against '1042.17 crores in the previous year. Your Company has earned a Profit afterTax (PAT) of '49.64 crores during the year under report over the previous year's profit of'47.71 crores.
Your Company has entered the two-wheeler aftermarket segment in May 2017 and achieveda turnover of '9.66 crores in the first year. After a successful year in the two-wheeleraftermarket segment your Company in August 2018 has entered into the four-wheeleraftermarket segment with an optimistic target of achieving sales of over '100.00 crores by2020. The Company has established a strong network of 42 dealers and distributors across22 States in India while also marking a footprint in Nepal and Sri Lanka.
Your Company has entered into a Joint Venture Agreement with M/s. Ultra Fairwood PTELimited Singapore on 12th December 2017 to manufacture PODs (AutonomousElectric Vehicles to be run on a dedicated track) for PRT (Personal Rapid Transport) GRT(Group Rapid Transport) or any variant thereof.
Your Company has also been focusing on tapping the vast opportunities in manufacturingcomponents of Electric Vehicles (EVs). To meet this futuristic demand the Company is allset to invest in new technology adoption required for the same. The Company has also beennominated by global clients for critical components for their new electric vehicleprograms.
During the financial year ended 31st March 2018 your Company has paid anInterim Dividend @ 40 per cent i.e. '0.40 per Equity Share of '1/- each amounting to'6.51 crores including dividend tax of '1.10 crores which was declared by the Board ofDirectors on 9th February 2018 and paid on 28th February 2018. Inaddition the Board has recommended a Final Dividend @ 40 per cent i.e. '0.40 per EquityShare of '1/- each for the financial year 2017-18. If approved the total dividend(interim and final) will amount to '13.02 crores including dividend tax of '2.20 crores asagainst a dividend of 75 per cent i.e. '0.75 per Equity Share of '1/- each aggregating to'12.22 crores including dividend tax of '2.07 crores in the previous year on the sameEquity Share Capital.
RESERVES AND SURPLUS
During the financial year 2017-18 no amount was transferred to general reserves. Thereserves and surplus of your Company stood at '530.73 crores as against '500.44 crores inthe previous year.
The paid-up share capital as on 31st March 2018 was '135285000 dividedinto 135285000 equity shares of '1/- each. During the year under review your Companyhas neither issued shares with Differential Voting Rights nor granted Stock Options norSweat Equity.
The export turnover of your Company during the year under review was '268.85 crores asagainst '253.59 crores in the previous year.
The export turnover includes sales to wholly owned subsidiaries amounting to '213.14crores as against '198.48 crores in the previous year. The wholly owned subsidiaries ofyour Company in United Kingdom and United States of America are engaged in providing lastmile sales and customer support in their respective regions.
During the quarter ended 30th June 2018 of the current year exportturnover was '83.72 crores as against '63.93 crores in the corresponding quarter of theprevious year. Further details as regards to the efforts of your Company on this fronthave been dealt with in the Management Discussion and Analysis section of this report.
OUTLOOK FOR CURRENT YEAR
The Unaudited Financial Results for the first quarter ended 30th June 2018already announced show a gross turnover of '311.89 crores for the first quarter of thecurrent year as against a turnover of '270.27 crores in the corresponding quarter of theprevious year.
The Profit after Tax stood at '13.57 crores for the first quarter ended 30thJune 2018 as against '11.33 crores over the corresponding quarter of the previous year.The Earning per Share (EPS) is '1.00 for the quarter ended 30th June 2018 asagainst '0.84 over the corresponding quarter of the previous year. The Company isconfident to maintain the trend to improve the turnover and margin during the remainingpart of the year.
PLANTS AND FACILITIES
The Company continues its efforts towards the expansion of its domestic and overseascustomer base by utilizing the existing available capacities and also implementing newfacilities to enhance capacity by acquiring new technologies and also de-risking itsoperations geographically. The Company is working to augment existing facilities and setup new facilities at the following locations:
A. Bawal Plant
This plant has been set up for High-Tonnage High-Pressure Die Casting production withstate-of-the-art facility having a high level of Automation Quality Control and PrecisionMachining for critical Parts and Assemblies. The Company is now gearing up for highervolumes for its esteemed customers namely BMW GKN Renault PSA Cummins and Eaton. TheCompany has also added new customers like Daimler and Punch Powertrain. The productionlines for these new customers will start in the 4th quarter of this financialyear.
B. Chennai Plant
The Company has set up a manufacturing plant at Chennai for the supply of MachinedAluminum Auto Components to Renault-Nissan.
The Plant was commissioned and started commercial production in 2016. At present theplant has installed capacity of 150000 sets for cylinder block and over 300000 sets ofother components like Oil Pan Timing cases etc. which are in production. The Company hasalso added KIA Motor and PSA-Avtec as new customers and production will start in the 4thquarter of this financial year.
The Company is also targeting other south based customers for domestic and exportprograms to further enhance the business from this Plant.
C. Pathredi (Bhiwadi) Plant
The Company laid the foundation stone for a new manufacturing plant at PathrediBhiwadi (Rajasthan) on 7th July 2016 for manufacturing of Auto Components.
The Company is expected to start commercial production at the new plant in the 4thquarter of this financial year.
D. Sanand Plant
In view of low demand by Tata Motors Limited for the components of the Nano Car supplyis being made from the Company's Gurugram Plant. Efforts are being made to add morecustomers so that the Plant capacity can be utilized. Re-starting of the Sanand Plant isunder discussion with Tata Motors for manufacturing new parts for their new models.Further discussions are in progress with Hero MotoCorp and Maruti Suzuki for supplies totheir plants in Gujarat and other states. The expected production of Hero components willstart from end of the 3rd quarter of this financial year.
Your Company has three Wholly Owned Subsidiaries one Subsidiary Company and threeStep-down Subsidiary Companies.
There was no material change in the nature of the business of any Subsidiary Company.Pursuant to SEBI (LODR) Regulations 2015 Rico Aluminium and Ferrous Auto ComponentsLimited and Rico Investments Limited are material subsidiaries of the Company.
A. Rico Auto Industries Inc. USA
This Company is engaged in the business of trading of Auto Components and providingwarehousing logistics and last mile support to our OEM and Tier-I Customers in NorthAmerica Mexico and Brazil. The Company has recorded a gross turnover of '140.67 croresduring the financial year ended 31st March 2018 as against '151.83 crores inthe previous year.
The Company earned a net profit after tax of '1.79 crores in the financial year ended31st March 2018 as against '1.58 crores in the previous year. The Company hasnot declared any dividend for the financial year ended 31st March 2018.
This Subsidiary has achieved a gross turnover of '37.24 crores for the first quarterended 30th June 2018 as against '38.86 crores in the corresponding quarter ofthe previous year. During the financial year and period under review your Company has notmade any additional investment in this Subsidiary.
The Subsidiary is expecting a moderate growth during the current financial year.
B. Rico Auto Industries (UK) Limited U.K.
This Company is engaged in the business of trading of Auto Components and providingwarehousing logistics and last mile support to our OEM and Tier-I Customers for theEuropean Markets.
The Company has recorded a gross turnover of '84.71 crores during the financial yearended 31st March 2018 as against '52.25 crores in the previous year. TheCompany earned a net profit of '0.50 crore in the financial year ended 31stMarch 2018 as against '0.31 crore in the previous year. The Company has not declared anydividend for the financial year ended 31st March 2018.
This Subsidiary has achieved a gross turnover of '26.36 crores for the first quarterended 30th June 2018 as against '19.24 crores in the corresponding quarter ofthe previous year.
During the financial year and period under review your Company has not made anyadditional investment in this Subsidiary.
C. AAN Engineering Industries Limited
AAN Engineering Industries Limited (AAN) is an AS 9100C Certified Company whichdefines it as a "Manufacturer of Precision Machined Components & Assemblies"for the Aerospace and Defence Industry.
AAN offers an extensive array of services for the manufacture of components/subsystemswithin the Defence & Aerospace Industry. These include Design & Development ofTooling Casting (Aluminum Ferrous & High Manganese Steel) Machining and Assemblysupported by CAD CAM CAE and R&D testing facilities.
AAN currently manufactures and assembles Mechanical Fuses and metal parts forElectronic Fuses with an installed capacity of producing 25000 Fuse body component permonth with scalability up to 75000 per month.
AAN works with a wide range of Raw Materials - namely Aluminum Alloy Alloy Steel &High Manganese Steel & Raw Material/Castings as required by Client. Supplied TrackLinks for one of the prestigious Tracked Fighting vehicle - T72 in High Manganese Steelgrade. The Company's capability has been assessed and passed for supplies of Air ForceAmmunition.
AAN is empanelled and registered with the Special Products division of ElectronicsCorporation of India Limited (ECIL) Hyderabad Bharat Electronics Limited (BEL) PuneEngine Divisions of Hindustan Aeronautical Limited (HAL) (Bangalore Nasik and Koraput)Heavy Vehicles Factory (HVF) Avadi Army Base Workshop and Army Directorate ofIndigenization and various Ordnance Factory Board factories.
AAN Engineering is one of the leading participating companies in the largest ammunitiontender taken out by Ministry of Defence in the year 2018. The company has signed StrategicTransfer of Technology with leading OEMs across the globe. During the year under reviewthe Company has earned a total revenue of '4.08 crores against '4.15 crores in the lastyear. During the year the Company has incurred a loss of '0.25 crore against a profit of'0.01 crore in the previous year.
This Subsidiary has achieved a gross turnover of '1.89 crores for the first quarterended 30th June 2018 as against '1.60 crores in the corresponding quarter ofthe previous year. The Company earned a net profit of '0.03 crore for the first quarterended 30th June 2018 as against '0.06 crore profit in the previous year.During the financial year and period under review your Company has not made anyadditional investment in this Subsidiary.
D. Rico Investments Limited
During the year under review this Company has recorded a gross revenue of '4.92 croresas against '4.86 crores in the previous year. This Company has earned a profit of '3.54crores in the financial year ended 31st March 2018 as against '3.72 crores inthe previous year.
This Company has earned a total revenue of '1.23 crores and a net profit of '0.79 crorefor the quarter ended 30th June 2018. The Board of this Company hasrecommended a maiden dividend of 2 per cent for the financial year ended 31stMarch 2018 and your Company expects to receive an amount of '2.30 crores by way ofdividend on its investment.
This Company has not made any additional investment in its Subsidiary Companies. ThisCompany has the following subsidiaries:
i) Rico Aluminium and Ferrous Auto Components Limited
During the year under review this Company has recorded a gross turnover of '246.40crores as against '272.97 crores in the previous year. This Company has incurred a loss of'0.13 crore as on 31st March 2018 as against the profit of '0.90 crore in theprevious year. Further this Company has achieved a gross turnover of '64.41 crores andearned a profit of '0.79 crore for the quarter ended 30th June 2018.
ii) Rasa Autocom Limited
This Company is engaged in the business of manufacturing of High Pressure Gravity andLow Pressure Die Cast Auto Components. Its plant is equipped with Automation and bettercontrols to produce high quality parts in large volume for export. This Company hasrecorded a gross turnover of '32.74 crores during the financial year ended 31stMarch 2018 as against '27.54 crores in the previous year. The Company has earned a profitof '2.63 crores in the financial year ended 31st March 2018 as against theprofit of '3.21 crores in the previous year.
This Subsidiary has achieved a gross turnover of '14.75 crores for the first quarterended 30th June 2018 as against '6.32 crores in the corresponding quarter ofthe previous year. The Company has earned a profit of '0.35 crore for the quarter ended 30thJune 2018.
iii) Rico Jinfei Wheels Limited
This Company has recorded a gross turnover of '112.83 crores during the financial yearended 31st March 2018 as against '87.54 crores in the previous year. ThisCompany has earned a profit of '0.13 crore in the financial year ended 31stMarch 2018 as against the loss of '2.43 crores in the previous year.
Further this Company has recorded a gross turnover of '36.61 crores for the quarterended 30th June 2018 as against '24.88 crores in the corresponding quarter ofthe previous year. The Company has incurred a loss of '0.95 crore for the quarter ended 30thJune 2018.
E. Uttarakhand Automotives Limited and Scheme of Amalgamation
Uttarakhand Automotives Limited a Wholly Owned Subsidiary has been amalgamated withthe Company w.e.f. the appointed date i.e. 1st April 2015 as per the Scheme ofAmalgamation approved by the Hon'ble National Company Law Tribunal Chandigarh Bench videits order dated 14th December 2017. The certified copy of the order wasreceived by the Company on 9th January 2018 and the same was filed with theRegistrar of Companies NCT of Delhi and Haryana on 11th January 2018.Uttarakhand Automotives Limited has been dissolved w.e.f. 11th January 2018without undergoing the process of winding up and its entire assets liabilities rightspowers and duties stand transferred to Rico Auto Industries Limited with effect from theappointed date. The Scheme did not involve allotment of shares. The Authorised ShareCapital of Rico Auto Industries Limited has increased from '300000000 (Rupees Thirtycrores only) to '540000000 (Rupees Fifty four crores only) consequent to this Scheme ofAmalgamation.
JOINT VENTURE COMPANY
Magna Rico Powertrain Private Limited
Magna Rico has recorded a gross turnover of '92.44 crores in the financial year ended31st March 2018 as against '90.10 crores in the previous year. This Companyhas earned a profit of '5.70 crores in the financial year ended 31st March2018 as against '6.21 crores in the previous year. The Board of this Company hasrecommended a maiden dividend of 7.5 per cent for the financial year ended 31stMarch 2018 and your Company expects to receive '1.58 crores by way of dividend on itsinvestment. During the financial year and period under review your Company has not madeany additional investment in this Joint Venture.
CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to Section 129(3) of the Companies Act 2013 read with rules made thereunderthe appended Audited Consolidated Financial Statements of the Subsidiaries and the JointVenture Company forms part of the Annual Report.
A Statement containing salient features of the financial statements of Subsidiaries andJoint Venture Company has been provided in Form AOC-1 which is annexed and forms part ofthis Report.
Further audited financial statements of the Subsidiaries and Joint Venture Companyhave also been placed on the website of the Company i.e. http://www.ricoauto.in/investor-relation.html.
The Company will make available these documents upon request by any member of theCompany interested in obtaining the same.
MATERIAL CHANGES AND COMMITMENTS
There was no change in the nature of the business of the Company. There were nomaterial changes and commitments affecting the financial position of the Company occurringbetween 31st March 2018 and the date of this Report.
The India Ratings and Research Private Limited - a Credit Rating Agency has maintainedthe credit ratings on 28th March 2018 based on a consolidated view of theCompany and its Subsidiaries business
on the back of their similar business profile Common Treasury and Management Team andthe same are given below:
|Particulars ||Ratings |
|Long Term Issuer Ratings ||IND A-/Stable |
|INR 1891.90m Term Loans/Letter of Credit ||IND A-/Stable |
|INR 2150m Fund and Non-Fund Based Working Capital Limits ||IND A-/Stable |
|Short Term ||IND A1 |
The above credit ratings are being reviewed and revised ratings would be available bythe end of August 2018.
The Company has not accepted deposits from the public during the year under review.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT (MDA)
Pursuant to Regulation 34(2) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 MDA is annexed which forms part of this Report.
Business risk evaluation and management is an ongoing process within the Company. Thesame is further discussed in Management Discussion and Analysis which forms part of thisReport.
The Company is in compliance with the Secretarial Standards issued by the Institute ofCompany Secretaries of India.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The adequacy of Internal Financial Controls is discussed in Management Discussion andAnalysis which forms part of this Report.
A separate report on Corporate Governance along with General Shareholders informationis annexed as a part of this Report along with the Certificate from the PractisingCompany Secretary regarding compliance of conditions of Corporate Governance as stipulatedunder the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
Your Company has an Audit Committee to meet the requirements of the Companies Act 2013and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.
Details of the Audit Committee are given under the Corporate Governance Report. Thereare no recommendations of the Audit Committee which were not accepted by the Board.
NOMINATION AND REMUNERATION COMMITTEE
Your Company has a Nomination and Remuneration Committee to meet the requirements ofthe Companies Act 2013 and Regulation 19 of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. Details of the Nomination and Remuneration Committee aregiven under the Corporate Governance Report.
The Board has framed a Nomination and Remuneration Policy which lays down a frameworkin relation to the remuneration of Directors Key Managerial Personnel and SeniorManagement of the Company. This policy also lays down criteria for selection andappointment of Board Members. This Policy is placed on the website of the Company
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In pursuance of the provisions of Section 135 of the Companies Act 2013 the amount tobe spent during the financial year 2017-18 as per computation worked out to be '17.72lakhs. During the year a wholly owned subsidiary namely Uttarakhand Automotives Limitedwas amalgamated with the Company and its CSR obligation was '13.48 lakhs. The Companytherefore has spent an aggregate amount towards the CSR activities/projects as specifiedin CSR policy of the Company during the financial year 2017-18. The CSR activities of theCompany are being monitored by the CSR Committee.
The details about the policy on Corporate Social Responsibility ("CSR")including initiatives taken on CSR the annual report on CSR activities and thecomposition of CSR Committee are annexed and forms part of this report. The Policy isavailable on the website of the Company i.e. http://www.ricoauto.in/investor-relation.html.
The Company has established Vigil Mechanism/Whistle Blower Policy for DirectorsEmployees Clients Vendors Suppliers and Contractors as an avenue to report concernsincluding unethical behaviour actual or suspected frauds or violation of the Company'scode of conduct. The same meets the requirements of Section 177(9) of the Companies Act2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and is available on the website of the Company i.e http://www.ricoauto.in/investor-relation.html.
RELATED PARTY TRANSACTIONS AND MATERIAL SUBSIDIARIES
The Company has duly approved policies for determining the Material Subsidiaries andMaterial Related Party Transactions.
These Policies are available on the website of the Company i.e. http://www.ricoauto.in/investor-relation.html.All contracts/ arrangements/transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on arm's lengthbasis and prior approval of the Audit Committee was sought for entering into related partytransactions. The details are provided in Form AOC-2 which is annexed and forms part ofthis Report. Please also refer Note 42 to the standalone financial statements for relatedparty disclosures.
LISTING OF EQUITY SHARES
The Equity Shares of your Company are presently listed on the BSE Limited and NationalStock Exchange of India Limited. The Annual Listing Fees have been paid for the financialyear 2018-19.
EXTRACT OF ANNUAL RETURN
In accordance with the provisions of the Companies Act 2013 the extract of AnnualReturn in Form MGT-9 is enclosed and forms part of this report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
The particulars of investments made loans and guarantees given are provided in thestandalone financial statements. (Please refer to note 06 07 & 35 of the standalonefinancial statements).
BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)
In accordance with the provisions of the Companies Act 2013 Smt. Upasna KapurDirector (DIN: 00327461) of the Company will retire by rotation at the forthcoming AGMand who being eligible offers herself for re-appointment. A brief resume of Smt. UpasnaKapur is given in the Notice of the AGM.
There is no change in the KMPs of the Company during the year under report.
All Independent Directors of the Company have given declarations confirming that theymeet the criteria of independence as laid down under Section 149(6) of the Companies Act2013 and the Listing Regulations 2015.
During the year under review four Board Meetings were held and one separate meeting ofIndependent Directors was held the details of which form part of Corporate GovernanceReport.
Pursuant to the provisions of Companies Act 2013 and the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board of Directors have carried out theannual evaluation of its own performance the Individual Directors including the Chairmanas well as the evaluation of the working of its Committees. The manner in which theevaluation has been carried out has been explained in the Corporate Governance Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134 of the Companies Act 2013 your Directors confirm that:
i) in the preparation of the annual accounts for the financial year ended 31stMarch 2018 the applicable accounting standards have been followed and there are nomaterial departures;
ii) appropriate accounting policies have been selected and applied consistently andhave made judgements and estimates that are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company as at 31st March 2018 andof the profit for the year 1st April 2017 to 31st March 2018;
iii) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and preventing and detecting fraud and otherirregularities;
iv) t he annual accounts for the financial year ended 31st March 2018 havebeen prepared on a going concern basis;
v) i nternal financial controls have been laid down to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and
vi) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.
M/s. Walker Chandiok & Co LLP Chartered Accountants (Firm Registration No.001076N/N500013) were re-appointed as Statutory Auditors of your Company at 34thAnnual General Meeting (AGM) held on 22nd September 2017 for a term of fiveconsecutive years till the conclusion of 39th AGM schedule in the year 2022subject to annual ratification by the Members at every AGM.
The Companies (Amendment) Act 2017 notified on 7th May 2018 by theMinistry of Corporate Affairs has dispensed with the requirement of annual ratification ofthe Statutory Auditor's appointment. Accordingly no resolution is proposed forratification of the appointment of Auditors. The Company has received a certificate fromM/s. Walker Chandiok & Co LLP Chartered Accountants confirming their eligibility tocontinue as Auditors of the Company in terms of the provisions of Section 141 of theCompanies Act 2013 and rules framed thereunder.
As required under Regulation 33 of the SEBI (LODR) Regulations 2015 the StatutoryAuditors have confirmed that they hold a valid certificate issued by the Peer Review Boardof the Institute of Chartered Accountants of India.
During the year under report there were no revisions in the financial statements ofthe Company. The observations in the Auditor's Report on Standalone and ConsolidatedFinancial Statements are dealt within the notes to accounts at appropriate places andbeing selfexplanatory need no further comments.
The Board on the recommendation of Audit Committee has reappointed M/s. SCV & Co.LLP (formerly M/s S.C Vasudeva & Co.) Chartered Accountants (Firm RegistrationNo.000235N/N500089) New Delhi as the Internal Auditors of the Company for the financialyear 2018-19.
APPOINTMENT OF COST AUDITOR AND MAINTENANCE OF COST RECORDS
The Board on the recommendation of Audit Committee has appointed M/s. J.K. Kabra& Co. Cost Accountants New Delhi as Cost Auditors to carry out the cost audit of theCompany for the financial year 2018-19. In terms of Section 148 of the Companies Act 2013and the rules made thereunder remuneration of Cost Auditors is to be ratified by membersof the Company. Accordingly a resolution is included in the Notice of ensuing AnnualGeneral Meeting for your approval. The Cost Audit Report for the financial year 2017-18would be filed with the Ministry of Corporate Affairs New Delhi within the stipulatedtime.
The cost records as required under section 148 of the Companies Act 2013 read withCompanies (Cost Records and Audit) Rules 2014 are being prepared and maintained by theCompany in order to ensure proper compliance.
The Board has appointed Shri K. K. Sachdeva of M/s. K.K. Sachdeva & AssociatesCompany Secretaries (C.P. No. 4721 FCS No. 7153) as Secretarial Auditors to carry outthe secretarial audit of the Company for the financial year 2018-19. The Secretarial AuditReport for the financial year ended 31st March 2018 is enclosed and forms partof this report. There is no secretarial audit qualification for the year under review.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS
The Statutory Auditors Internal Auditors Cost Auditors and Secretarial Auditors ofthe Company have not reported any frauds to the Audit Committee or to the Board ofDirectors under Section 143(12) of the Companies Act 2013 including rules madethereunder.
TRANSFER OF UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
Pursuant to the provisions of Section 124(5) and other provisions of the Companies Act2013 (the Act) read with rules made thereunder the declared dividends which remainedunpaid/unclaimed for a period of seven years have been transferred by the Company to theIEPF established by the Central Government pursuant to Section 125 of the said Act.
Pursuant to the provisions of the section 124(6) of the Companies Act 2013 read withInvestor Education and Protection Fund Authority (Accounting Audit Transfer and Refund)Rules 2016 (the Rules) a company is required to transfer to the DEMAT Account of IEPFAuthority all shares in respect of which dividends have not been paid or claimed for 7(seven) consecutive years or more. In accordance with the aforesaid provisions of the Actread with the rules your Company during the financial year 2017-18 had transferred38492 shares pertaining to the financial year 2009-10 to the Demat Account of IEPFAuthority within the stipulated time period.
CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO
The relevant information as required by the provisions of Section 134(3)(m) of theCompanies Act 2013 read with the Companies (Accounts) Rules 2014 is given in theAnnexure forming part of this report.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There were no significant and material orders passed against the Company by theregulators or courts or tribunals during the financial year 2017-18 impacting the goingconcern status and Company's operations in future.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace and hasin place an Internal Complaint Committee to redress the complaints and circumstancesregarding the behaviour of sexual harassment at workplace. The Policy for the same isplaced on the intranet for the benefit of its employees. There were no complaints receivedfrom any employee during the year under review.
The information required under Section 197(12) of the Companies Act 2013 read withRule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is given in the Annexure forming part of this Report. The information required underSection 197(12) of the Companies Act 2013 read with Rule 5(2) and Rule 5(3) of theCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amendedand forming part of this Report for the year ended 31st March 2018 are set outin the Annexure of this Report.
However the Annual Report excluding the Annexure is being sent to the Members of theCompany in terms of the provisions of Section 136 of the Companies Act 2013. A Member whois interested in obtaining these particulars may write to the Company Secretary at theRegistered Office of the Company. The said information is also available for inspection byMembers at the Registered Office of the Company during working hours upto the date of theensuing Annual General Meeting.
Your Company has initiated the process of partial closure of its nonoperationalloss-making undertaking (Machine Shop-I) situated at Dharuhera (Haryana). Consequent uponthe permission of Principal Secretary to Government Haryana Labour Department vide itsOrder dated 25th May 2018 and Review Order dated 21st June 2018and after completion of necessary formalities in accordance with the provisions of theIndustrial Disputes Act 1947 your Company has closed the said loss-making undertaking(Machine Shop-I) in Dharuhera Plant (Haryana) w.e.f. 26th June 2018 andsettled the accounts of 104 workers after paying their legal/statutory dues. Theproduction lines that have been closed will not impact the turnover adversely rather willhave a positive impact on overall performance and profitability.
During the year under report the Industrial relations with personnel remained cordialat all Plants. Your Directors wish to place on record their appreciation of the sincereand unstinted support provided to the Company by its employees at all levels.
The Board wishes to place on record its sincere appreciation for the continuedassistance and support extended to the Company by Financial Institutions Banks andvarious departments of Central and State Governments. Your Directors acknowledge withgratitude the encouragement and support extended by Company's valued customers businessassociates and shareholders.
| ||On behalf of the Board of Directors |
| ||Arvind Kapur |
| ||Chairman CEO & |
|Place : New Delhi ||Managing Director |
|Date : August 03 2018 ||(DIN: 00096308) |