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Sharda Motor Industries Ltd.

BSE: 535602 Sector: Auto
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OPEN 875.65
52-Week high 1215.00
52-Week low 483.00
P/E 15.37
Mkt Cap.(Rs cr) 510
Buy Price 848.00
Buy Qty 5.00
Sell Price 885.00
Sell Qty 1.00
OPEN 875.65
CLOSE 857.00
52-Week high 1215.00
52-Week low 483.00
P/E 15.37
Mkt Cap.(Rs cr) 510
Buy Price 848.00
Buy Qty 5.00
Sell Price 885.00
Sell Qty 1.00

Sharda Motor Industries Ltd. (SHARDAMOTR) - Director Report

Company director report

Dear Members

Your Directors have pleasure in presenting the Thirty Fourth (34) Directors' Report onthe business and operations of the Company together with the financial statements for thefinancial year ended on 31st March 2019.




Year Ended 31st March 2019 Year Ended 31st March 2018 Year Ended 31st March 2019 Year Ended 31st March 2018
Revenue from operations 113987.27 120425.88 113987.27 120425.88
Other Income 2197.71 1780.30 2103.96 1699.30
Total Revenue 116184.98 122206.18 116091.23 122125.18
Profit before Financial Charges Depreciation 16730.72 21205.65 16636.19 21124.65
Less : Financial Costs 4.59 213.00 4.59 213.00
Less : Excise duty - 4881.31 - 4881.31
Profit before Depreciation Exceptional Items & Taxes 16726.13 16111.34 16631.60 16030.34
A. Depreciation 4096.83 4377.89 4096.83 4377.89
B. Exceptional items - 58.73 - 58.73
- Current Tax 4022.65 4088.59 4022.65 4088.59
- Deferred Tax Charged/ (Released) (179.39) (274.89) (179.39) (274.89)
Profit for the year before share of profit/(loss) of associates and joint ventures 8786.04 7861.02 8691.51 7780.02
Share of profit/(loss) of associates (net of tax) - - 674.24 879.32
Share of profit/(loss) of Joint venture (net of tax) - - 99.78 137.78
Profit for the year 8786.04 7861.02 9465.53 8797.12
Add: Profit brought forward from Previous year 13882.38 6915.96 16838.59 8936.08
Profit available for appropriation 22668.42 14776.98 26304.12 17733.20
Dividend 371.65 371.63 371.65 371.63
Tax on Dividend 76.61 75.67 76.61 75.67
Interim Dividend - 371.63 - 371.63
Tax on Interim Dividend - 75.67 - 75.67
Transferred to General Reserves - - - -
Balance carried forward to Balance Sheet 22220.16 13882.38 25855.85 16838.59
Paid-up equity share capital (Face value of Rs. 10/- each) 594.63 594.63 594.63 594.63


During the year under review the total revenue from operations and other income was116091.23 Lakhs as against 122125.18 Lakhs of previous year. Profit before taxation wasRs. 12534.77 Lakhs as against Rs. 11593.72 Lakhs of previous year (i.e. increased byapprox 8.12%) during the year whereas the finance cost has been reduced to Rs. 4.59 Lakhsfrom Rs. 213 Lakhs. Net Profit after taxes of the company has increased by approx 7.60 %year on year basis.

Consolidated performance

During the year under review the total revenue from operations and other income was116184.98 Lakhs as against 122206.18 Lakhs of previous year. Profit before taxation wasRs.12629.30 Lakhs as against Rs.11674.72 Lakhs of previous year (i.e. increased byapprox 8.18%) during the year whereas the finance cost has been reduced to Rs. 4.59 Lakhsfrom Rs.213 Lakhs. Net Profit after taxes of the company has increased by approx 11.77 %year on year basis.

Standalone performance

During the year under review the total revenue from operations and other income was116184.98 Lakhs as against 122206.18 Lakhs of previous year. Profit before taxation wasRs.12629.30 Lakhs as against Rs.11674.72 Lakhs of previous year (i.e. increased byapprox 8.18%) during the year and finance cost has been reduced to Rs. 4.59 Lakhs fromRs.213 Lakhs. Net Profit after taxes of the company has increased by approx 11.77 % yearon year basis.

During the year under review; the company has not changed the nature of its business.


In order to conserve cash for future Business requirements including Investmentrequired for BS VI Product Development the Board has not recommended any divided for thisfinancial year.

During the year under review the Company has not transferred any amount to theReserves.


The existing composition of the Board is fully in conformity with the Companies Act2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015("Listing Regulations").

Further all the Directors of the Company have given declaration that they are notdebarred from being appointed / re-appointed or continuing as Director of the Company bythe virtue of any Order passed by the SEBI Ministry of Corporate Affairs or any suchStatutory Authority. All the Independent Directors meets / fulfills the criteria /conditions of Independence as prescribed under the Companies Act and Listing Regulationsand are Independent of the Management of the Company.

Pursuant to the requirement of Regulation 17 (1A) of the Listing Regulations and otherapplicable provisions if any the shareholders of the Company by means of Postal Ballot /e-voting has accorded their approval for continuation of Directorship of Shri SatinderKumar Lamba has Independent Director on the Board of the Company for his remaining tenuretill February 4 2021.

During the year under review Shri Udyan Banerjee was appointed as an AdditionalDirector designated as Independent Director on the Board of the Company w.e.f. 13thFebruary 2019 and subject to the approval of members i.e. proposed before this AnnualGeneral Meeting to hold office for a term upto 31st December 2021.

Shri Ram Prakash Choudhary Non-Executive Director of the Company has resigned from theDirectorship of the Company with effect from the closing of business hours of 31stMarch 2019 due to the personal reasons.

The Shareholders of the Company (by means of Postal Ballot dated 27th May2019) has approved the Re-appointment of Shri Kishan Nagin Parikh & Shri Ashok KumarBhattacharya as Independent Directors of the Company for a second term of five consecutiveyears commencing with effect from 3rd September 2019 to 2ndSeptember 2024 and the Result on the same was declared on July 17 2019.

Shri Bireswar Mitra Whole Time Director of the Company vide. its Letter dated 12thAugust 2019 has tendered his resignation from the Directorship of the Company with effectfrom the closing of business hours of 2nd September 2019 due to personalreasons and health issues.

Based on the recommendation of Nomination and Remuneration Committee the Board ofDirectors of the Company at its Meeting held on 12th August 2019 hasappointed Shri Nitin Vishnoi as an Additional Director with effect from 3rdSeptember 2019 and who holds office as such till the ensuing Annual General Meeting. TheBoard of Directors has also appointed Shri Nitin Vishnoi as Whole Time Director of thecompany for a period of 5(Five) consecutive years from 3rd September 2019subject to the approval of Shareholders of the Company. The resolutions seeking member'sapproval for his appointment form part of the Noticeat Item Nos. 4 & 5 calling thisAnnual General Meeting.

Pursuant to section 152 of the Companies Act 2013 Shri Rohit Relan (DIN: 00257572)director of the Company is liable to retire by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment.

A brief profile of the above mentioned directors seeking appointment / re-appointmentat the ensuing Annual General Meeting (AGM) of the Company has been provided in theExplanatory Statement of the Notice of this AGM.

All of the Non-Executive Directors have extensive business experience and areconsidered by the Board to be independent in character and judgment of the management ofthe Company and free from any business or other relationship which could materiallyinterfere with the exercise of their independent judgment and had no pecuniaryrelationship or transactions with the Company other than sitting fees commission andreimbursement of expenses incurred by them for the purpose of attending meetings of theBoard/ Committee of the Company.

During the year under review there is no change in Key Managerial Personnel(s) of theCompany.


Number of Board and committee meetings including the date of the meeting and attendancethereof by each director during the year is given in Report on Corporate Governance thatforms part of this Annual Report. The intervening gap between any two meetings was withinthe period prescribed under the Companies Act 2013 and Listing Regulations.


Pursuant to the provisions of the Companies Act 2013 and Listing Regulations and otherapplicable provisions if any. The Board of Directors ("Board") at its meetingheld on 27th May 2019 carried out the performance evaluation of its ownperformance and that of its committees and individual directors.

The performance of the Board was evaluated through the ratings given by each Directorbased on the structured questionnaire that was prepared after considering the approvedcriteria such as the Board composition and structure effectiveness of board processescontribution towards development of the strategy etc.

The performance of the committees was also evaluated by the Board after seeking inputs/ ratings from the committee members on the basis of the approved criteria such as thecomposition of committees effectiveness of committee meetings etc.

The report of performance evaluation was then discussed and noted by the Board ofDirectors.

The Board of Directors has reviewed the performance of the individual directorsincluding both independent and non-independent on the basis of the evaluation criterialike qualification & experience attendance of directors at Board and committeemeetings conflict of interest effective participation integrity knowledge &competencies domain knowledge compliance with code of conduct independent judgmentvision and strategy.etc.

In a separate meeting of independent directors performance of non-independentdirectors performance of the Board as a whole and performance of the Chairperson wasevaluated taking into account the views of executive directors and non-executivedirectors. The same was discussed in the next board meeting held after the meeting of theindependent directors at which the performance of the Board its committees andindividual directors was also discussed.

The Directors expressed their satisfaction with the evaluation process. The Board alsonoted that the Independent Directors fulfills the independence criteria as specified inthe Listing Regulations and are Independent of the Management of the Company.


Pursuant to Section 134(3) read with 178 of the Companies Act 2013 the nomination andremuneration policy of the Company which lays down the criteria for determiningqualifications competencies positive attributes and independence for appointment ofDirectors and policies of the Company relating to remuneration of Directors KMP and otheremployees is available on the Company's website at


Audit Committee comprises of five members out of which four are independent directorsincluding Shri Kishan N Parikh Independent Director is the Chairperson of the Committee.Smt. Sharda Relan Executive Director of the Company is also a Member of the Committee.All the members of committee have adequate financial & accounting knowledge andbackground. Detailed information regarding the number of committee meetings terms ofreference etc. are provided in the Corporate Governance Report forming part of this annualreport. All recommendations of the Audit Committee whenever made were accepted by theBoard during the financial year 2018-19.


The Board of the Company at its Meeting held on 5th April 2019 hasconsidered and approved the Scheme of Arrangement ("the Scheme") throughDemerger between the Company and NDR Auto Components Limited (Wholly Owned Subsidiary) andtheir respective shareholders creditors under Section 230 to 232 and any other applicableprovisions of Companies Act 2013 on a going concern basis w.e.f. December 312018 as onthe appointed date to demerge the Automobile Seating Business of the Company into NDR AutoComponents Limited. The Scheme is subject to the approval(s) of requisite authorities.


Secretarial Auditors & Auditors Reports

Pursuant to provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules2014 and other applicable provisions is anythe Board of Directors has appointed M/s.VKC & Associates Company Secretaries inpractice bearing CP No. 4548 as Secretarial Auditor of the Company to conductSecretarial Auditor the Company for the financial year 2018-19. The Secretarial AuditReport for the financial year ended 31st March 2019 is annexed herewith markedas Annexure I to this Report. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.

Statutory Auditors & Auditors Reports

Pursuant to the provisions of sections 139 and other applicable provisions of the Actand the Companies (Audit and Auditors) Rules 2014 M/s. Gupta Vigg & Co. CharteredAccountants (Firm Registration No. 001393N) were appointed by the Members as StatutoryAuditors of the Company for a term of 5 (five) consecutive years from the conclusion ofthe 32nd Annual General Meeting of the Company held on 30th August2017 till the conclusion of 37th Annual General Meeting of the Company to beheld in year 2022.

Further the Statutory Auditors have confirmed that they are not disqualified from beingcontinued as Statutory Auditors of the Company in terms of the provisions of Section139(1) Section 141(2) and Section 141(3) of the Act and the other applicable provisionsof the Companies (Audit and Auditors) Rules2014.

During the year under review there was no incident related to fraud which was reportedto the Audit Committee or Board of Directors under section 143(12) of the Companies Act2013 by the Statutory Auditors of the Company. Hence no detail is required to bedisclosed under Section 134 (3) (ca) of the said Act. The Auditors' Reports (Standalone& Consolidated) to the Shareholders does not contain any qualification reservation oradverse remarks. The notes on financial Statement referred to in the Auditors' Report areself-explanatory and do not require any further comments.

Cost Auditors & Cost Audit Report

In terms of Section 148 of the Companies Act 2013 read with Companies (Cost Recordsand Audit) Rules 2014 and based on the recommendation of audit committee the Board ofDirectors of the Company has appointed M/s. Gurdeep Singh & Associates (holding M.No.9967) as Cost Auditors of the Company for conducting the cost audit for the Financial Year2019-20 subject to ratification of remuneration by the members in the ensuing AnnualGeneral Meeting. The Company has received a letter from Cost Auditors of the Company tothe effect that their appointment is within the limits prescribed as per the CompaniesAct 2013 and are not disqualified from being appointed as Cost Auditors of the Company.

Further the Company has made and maintained all such accounts and cost records asspecified in section 148 of the Companies Act2013 read with sub rule (5) of rule 8 of theCompanies (Accounts) Rules 2014.


During the year under review your company has made donation of Rs. 12.90 Lacks toSharda CSR Foundation Trust ("Trust") which is a philanthropic arm of theCompany the Trust has undertaken several activities including the Distribution of SchoolBags and Stationary among School children's for the promotion of education other severalprojects and programmes based on the recommendation of the Corporate Social ResponsibilityCommittee of the Company especially in the area of Education & Healthcare was alsoundertaken by Trust like Donation of Speech Hi-Fi device for Deaf and Dumb Student ofPadsad Karnbadhir Vidhyalay in Nasik as a drive to promote education among disabledstudents and the Company has also donated as sum of Rs. 1 Lacs towards to Rotary Club inNasik as its contribution in Mini Marathon held in February 3 2019 in Nasik Maharashtrato create general awareness among the People in the Healthcare Sector. Apart from theabove the Company is committed towards making a sustainable impact on the society throughits CSR projects and programmes in the long term like Building of Medical Centers clinicsand dispensaries.

The purpose of the trust is to sponsor various projects like Blood Donation CampsToilet Construction in the poor rural sectors Stationary donation and infrastructuredevelopment to the low income government schools blanket distribution to the poor andneedy people of slum communities. The Company is moving rapidly towards achieving its goalby increasing the pace of the activities at various levels.

CSR Committee of the Company has identified certain long term projects and programmeswhich will be focused in the coming years in the area of education & healthcare. Thesecan be implemented through Sharda CSR Foundation Trust or any other implementing agency inthe most effective way to reach the society at large.

Details of composition of Committee no. of meetings attendance at the meetings areprovided in the Corporate Governance Report forming part of this annual report. CorporateSocial Responsibility Policy of the company is available on the website of the Company(

In terms of Section 135 and rules made thereunder an annual report on CSR activitiesexpenditure committee composition etc. is provided as Annexure II to theDirector's report.


In accordance with Section 134 (3) (a) of the Companies Act 2013 an extract of theannual return in the prescribed format is appended as Annexure III to theDirectors' Report. The Annual Report for period is available on website of the Company


The details in terms of sub-section 12 of Section 197 of the Companies Act 2013 readwith Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 are forming part of this report as Annexure IV.

The statement containing details of employees as required under Section 197(12) of theCompanies Act 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 forms part of this report as Annexure V.


The particulars of Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo as required under Section134(3)(m) of the Companies Act 2013 read withRule8(3) of the Companies (Accounts) Rules 2014 are annexed here with marked as AnnexureVI to this Report.


The particulars of Loans guarantees and investments under section 186 have beendisclosed in the financial statements.


The particulars of contracts or arrangements with related parties referred to insection 188(1) of the Companies Act 2013 in Form AOC - 2 are appended as Annexure VIIforming part of this report.

Further in pursuant to the Amendment in SEBI Listing Regulations 2018 the transactionsof the Company with the following Persons: (belonging to the promoter/promoter groupholding 10% or more shareholding in the Company) of:

> Ajay Relan (Promoter/ Managing Director) holding 32.41 % of Equity Shares in theCompany

> Ritu Relan (Member of Promoter Group) holding 12.49 % of Equity Shares in theCompany are prescribed in the Related Party Disclosures in Note No. 35 of Notes toFinancial Statements for year ended March 312019 forms part of this Annual Report.


We strive to attain high standards of corporate governance while dealing with all ourstakeholders and have complied with all the mandatory requirements relating to CorporateGovernance as stipulated in Para C of Schedule V of Listing Regulation. The "Reporton Corporate Governance" forms an integral part of this report and is set out asseparate section to this annual report. A certificate from M/s. Gupta Vigg & Co.Chartered Accountants the statutory auditors of the Company certifying compliance withthe conditions of corporate governance stipulated in Para E of Schedule V of ListingRegulations is annexed with the report on corporate governance.


The Management Discussion and Analysis Report for the year under review as stipulatedunder Regulation 34(2)(e) read with Para B of Schedule V of the Listing Regulation ispresented in a separate section forming part of this Annual Report.


The Company has a vigil mechanism for directors and employees to report their genuineconcerns. Vigil Mechanism / Whistle Blower policy is available on the Company's


The Company has not accepted any deposits from the public covered under chapter V ofthe Companies Act 2013 during the year under review and no amount was outstanding as onthe date of Balance Sheet.


No material changes and commitments which affect the financial position of theCompany have occurred during the year and between the end of the financial year underreview and the date of this report whereas the company has shifted its entire operationsof Automobile Business of Binola Unit located in Haryana to other units located in Stateof Haryana since the customer has planned to shift its Manufacturing Facility to otherstate therefore the operations of Air Conditioning Cabinet Business carried out at BinolaUnit has been discontinued. Closure of Binola Unit does not materially affects financialposition of the Company.


During the year under review no significant and material orders have been passed bythe regulators or courts or tribunals impacting the going concern status and company'soperations in future.

In the matter of the petition vide. Company Petition "C.P. No.61 (ND)/2017"[Rohit Relan & Ors. Vs. Sharda Motor Industries Limited & Ors.] filed with Hon'bleNational Company Law Tribunal Delhi (‘NCLT') under section 241242 of the CompaniesAct 2013 by Mr. Rohit Relan & Others has also been disposed off by the Hon'ble NCLTvide its Order dated May 20 2019 in line with the Memorandum of Family Settlement(MOFS) entered between Shri Ajay Relan Shri Rohit Relan Smt. Sharda Relan and otherRelan family Members.

In view of the MOFS and disposing off the aforesaid Company Petition by Hon'ble NCLTthe Company Appeals (AT) No. 332 & 378 of 2018 filed against the Interim Order datedSeptember 20 2018-of the Hon'ble NCLT in Company Petition (C.P. No. 61(ND)/2017) has beenDisposed off by the Hon'ble National Company Law Appellate Tribunal (NCLAT) vide. itsOrder dated July 17 2019. After disposal of the Company Appeal No.332 of 2018 by Hon'bleNCLAT vide its Order Dated 17th July 2019 and in view of MOFS the result ofresolution at items no. 4 of Notice of 33rd AGM for re-appointment as Directorby rotation of Shri Bireshwar Mitra (DIN: 06958002) was declared and the Resolution atItem No. 3 of the Notice of said meeting for the re-appointment as Director by rotation ofShri Rohit Relan (DIN:00257572) being taken at 34th AGM as per the requirementof law.

In the matter of the Company Petition ‘CP No. 242 (ND)/2017' [Sharda MotorIndustries Ltd. V/s. M/s.Toyo Sharda India Pvt. Ltd. &. Ors] filed by the Company withthe Hon'ble National Company Law Tribunal Delhi (‘NCLT') under section 241242 ofthe Companies Act 2013 has been withdrawn by the Company in the view of MOFS and theHon'ble NCLT has passed the final order on 7th August 2019 in this regard.

Copies of all the above mentioned interim and final orders are available on the websiteof the Company and also on the websites of the National StockExchange of India Limited and BSE Limited.


During the year under review NDR Auto Components Limited was incorporated as WhollyOwned Subsidiary of the Company as Special Purpose Vehicle (SPV) wherein the entireAutomobile Seating Business of the Company is to be Demerged as separate entity post thesanction/ approval of Scheme of Arrangement through Demerger by the requisite Authorities.

Financial performance for the FY 2018-19 of the Subsidiary Associates and JointVenture Companies are disclosed in the financial statements which forms part of thisannual report. A statement in form AOC-1 containing the salient features of the financialstatements of the subsidiary joint ventures and associate companies is provided as AnnexureVIII.

During the year under review the Company has entered into a Joint Venture (JV)Agreement in February' 2019 with Eberspaecher Exhaust Technology International GmbH (EET)of Germany in ration of 50:50 for Business Development of BS VI Norms of CommercialVehicle segment in India. This Joint Venture is expected to bring benefits to both the JVPartners i.e. the Company & EET. Pursuant to which from April 2019 onwards till thedate of this reports both the Joint Venture partners have equally invested in"Exhaust Technology Private Limited" to undertake the Business Activities.


In line with the new regulatory requirements the Company has formally framed a RiskAssessment and Risk Minimization Procedure to identify and assess the key risk areas andmonitor the same. The Board periodically reviews the risks and suggests steps to be takento control the risks.

Details on the Company's risk management framework risk evaluation riskidentification etc. is provided in the Management Discussion and Analysis Report formingpart of this report.


The Company values the dignity of individuals and strives to provide a safe andrespectable work environment to all its employees. The Company is committed to provide anenvironment which is free of discrimination intimidation and abuse.The Company believesthat it is the responsibility of the organisation to protect the dignity of its employeesand also to avoid conflicts and disruptions in the work environment due to such cases.

The Company has put in place a ‘Policy on redressal of Sexual Harassment at WorkPlace' as per the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013 ("Sexual Harassment Act"). As per the policy any employeemay report his / her complaint to the Redressal Committee / Internal Complaints Committeeconstituted with duly compliance under the Sexual Harassment Act for this purpose totheir Manager or HR personnel. We affirm that adequate access has been provided to anycomplainant who wished to register a complaint under the policy but no complaint wasreceived / filed by any person during the year under review and no complaint is pending tobe resolved as at the end of the year.


In terms of Section 134(3) (c) read with 134(5) of the Companies Act 2013 it ishereby stated that:

(a) In the preparation of the annual accounts the applicable accounting standards hadbeen followed;

(b) Appropriate accounting policies have been selected and applied consistently andjudgment sand estimates made are reasonable and prudent so as to give a true and fair viewof the state of affairs of the company as at 31st March 2019 and of the profitand loss of the company for the year ended on that date;

(c) Proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the company and for preventing and detecting fraud and other irregularities;

(d) The annual accounts have been prepared on a going concern basis;

(e) Internal financial controls have been laid down to be followed by the company andthat such internal financial controls are adequate and were operating effectively;

(f) Proper systems have been devised to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.


The details in respect of internal financial control and their adequacy are included inthe Management Discussion and Analysis Report which forms part of this annual report.


The applicable Secretarial Standards i.e. SS-1 and SS-2 relating to ‘Meetings ofthe Board of Directors' and ‘General Meetings' respectively have been duly followedby the Company.


Your Company has been able to operate efficiently because of the professionalismcreativity integrity and continuous improvement in all functional areas to ensureefficient utilization of the Company's resources for sustainable and profitable growth.The Directors acknowledge their deep appreciation to employees at all levels for theirtotal dedication hard work commitment and collective team work which has enabled theCompany to remain at the forefront of the industry despite increased competition andchallenges.

Your Directors take this opportunity to express their grateful appreciation for theexcellent assistance and co-operation received from its customers your Directors alsoextend their appreciation to Bankers Credit rating Agencies and various departments ofCentral and State Government(s).

Your Directors also would like to thank all the shareholders for their continuedsupport & co-operation.

On behalf of the Board of Directors

For Sharda Motor Industries Limited

Sharda Relan Ajay Relan
Date : 12th August 2019 Co-Chairperson Managing Director
Place : New Delhi (DIN:00252181) (DIN:00257584)