Your Directors are pleased to present before you the 12th Annual Report on thebusiness and operations of the Company together with the Audited Financial Statements ofthe Company for the Financial Year ended March 31 2017.
The Company's financial performance for the year ended March 31 2017 is summarizedbelow:
| || |
Rupees (in Lacs)
|Particulars || |
For the year ended
| ||March 31 2017 ||March 31 2016 |
|Gross Sales & Other Income ||48564.18 ||44785.80 |
|Profit before Depreciation and Interest ||4737.42 ||7079.68 |
|Depreciation ||3200.36 ||2784.75 |
|Interest ||2886.70 ||2146.90 |
|Profit before Taxation ||(1349.64) ||2148.03 |
|Provision for Taxation (Deferred & Current) ||(966.77) ||224.17 |
|Profit after Taxation ||(382.87) ||1923.86 |
State of Company's Affairs and Future Outlook
During the financial year 2016-17 revenue from operations was Rs.48564.18 lacs ascompared to Rs. 44785.80 lacs in 2015-16 registering an increase of 8.44%.
The Company has achieved major milestones in setting up of two state of the artmanufacturing facilities at Bengaluru and Rohtak though the capex of these facilities hasimpacted the profitability of FY 16-17. Operating profit of the Company has declined by33.08% from Rs. 7079.68 lacs in 2015-16 to Rs. 4737.42 lacs in 2016-17. However thesecapex in new plants has widen the Company's product portfolio and has enhanced further itscapability as a niche auto components producer.
During the year under review financial results have been impacted due to the economicsituation of the Country. The ancillary character of the market has been affected due tothe demonetization effect but your Company's management has utilized this situation in anefficient manner for preventive maintenance of machines thus resulting in operationalefficiency. Your Company has taken measures to enhance operational efficiencies byfocusing on improving yields reducing rejections and enhancing capacity utilisation.
The Directors are contented to share that your Company is technology driven with highend machineries installed in its all facilities. With the state of art manufacturingfacilities the Company is functioning successively to strengthen its Customer Base. TheSales to other Customers like Bosch
Denso and Mitsuba has increased compared to last year still Hero MotoCorp Limited(HMCL) being the major customer. The Customer Profile for the financial year 2016-17 is asfollows:
With the increase in growth rate of Customers the Company is expecting to maintain ahealthy growth in its scale of operations and widen its geographical reach. It is alsoexpected to add new customers in the upcoming financial years.
The Company is working meticulously towards mitigating its concentration risk bydiluting the percentage of the concentration by increasing sales to other customers orentering new markets which is principally shown as the focus has been granted to newcustomers. The Company is successively clearing the major audits of its Customers in allplants and working towards entering into new verticals with the set-up of world classfacilities at Bengaluru and Rohtak plant.
Awards & Accolades
The Company is proud recipient of the following Awards as shown in Awards &Accolades Section:
1. Award for Supplier of the year by Mando Automotive India Pvt Limited.
2. Certificate of Supplier Quality awarded for fulfilling Quality Assurance Complianceby Hyundai Motor India Limited.
3. Certificate of Appreciation for superior performance in the field of Development byMaruti Suzuki India Limited.
4. Award for Outstanding performance in Quality by Denso India Limited.
5. Certificate of Appreciation for Outstanding Performance in the category of Qualityby Denso India Limited.
6. Award for excellence in running SAP operations.
7. Mistuba Supplier Award 2017.
Transfer to General Reserve
During the year under review the Company has not transferred any amount to GeneralReserves. The closing balance amount of Rs. 11463.43 Lacs (Previous year Rs. 11846.29lacs) will be retained as surplus in the statement of Profit and Loss Account.
The Board of Directors have not recommended any dividend for the Financial Year2016-17. The dividend paid during the previous year was 20% (Rs. 0.40 per equity share).
The Register of Members and Share Transfer Books shall remain closed from FridaySeptember 22 2017 to Friday September 29 2017 (both days inclusive).
The promoters of the Company i.e. Dayanand Munjal Investments Private Limited (DMIPL)hold 74795950 equity shares of Rs. 2/- each which represents 74.80% of the paid upequity capital of the Company.
Your company continues to be a subsidiary company of DMIPL.
Subsidiary Companies Joint Ventures Or Associate Companies
The Company neither has any Subsidiaries joint ventures or associate companies nor anycompany have become or ceased to be its Subsidiaries joint ventures or associatecompanies during the year under review.
Management Discussion and Analysis report
A detailed discussion on the business performance and future outlook forms part ofManagement Discussion and Analysis Report which is separately attached as Annexure A tothis Board's Report.
Board of Directors
a) Meeting of Board of Directors
A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe Financial Year 2016-17 4 (four) meetings of the Board of Directors of the Companywere held on 28-May-2016 13-Aug-2016 12-Nov-2016 and 13-Feb-2017. The intervening gapbetween the Meetings was within the period prescribed under the Companies Act 2013 andSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (hereinafter referred to as "SEBI LODR 2015"). For details ofthe meetings of the board please refer to the Corporate Governance Report which formspart of this Annual Report.
b) Details of Directors and Key Managerial Personnel
Mrs. Charu Munjal and Dr. Anil Kumar Gupta Whole Time Directors of the Company retireby rotation at the ensuing Annual General Meeting and being eligible offer themselves forre-appointment. Brief profile of the Director(s) as required by the SEBI LODR 2015 isgiven in the Notice / Corporate Governance Report forming part of this Annual Report.
The appointment/re-appointments form part of the Notice of the Twelfth Annual GeneralMeeting and the relevant Resolutions are recommended for your approval.
c) Declaration by Independent Director
The Company has received necessary declaration from each Independent Director underSection 149 (7) of the Companies Act 2013 that he/she meets the criteria of Independencelaid down in Section 149(6) of Companies Act 2013 and SEBI LODR 2015.
d) Board Evaluation
Pursuant to the provisions of the Companies Act 2013 and the Corporate Governancerequirements as prescribed by Securities and Exchange Board of India ("SEBI")under the SEBI LODR 2015 the Board is required to carry out an Annual Evaluation of itsown performance Board's committees and Individual Directors.
The performance of the Board as a whole it's Committee(s) and Individual Directorsincluding the Chairman of the Board was evaluated by a questionnaire formulated by theCompany.
The questionnaire was formulated based on the following criteria:
The Board composition and structure
Effectiveness of board processes
Information and functioning
The composition of committees
Effectiveness of committee meetings
The contribution of the individual director to the Board and committee meetings
Preparedness of Directors on the issues to be discussed
Meaningful and constructive contribution of Directors and their inputs inmeetings
e) Separate Meeting of Independent Directors
In terms of requirements under Schedule IV of the Companies Act 2013 and SEBI LODR2015 a separate meeting of Independent Directors was held on February 13 2017. In aseparate meeting of Independent Directors performance of non-independent directorsperformance of the board as a whole and performance of the Chairman was evaluated takinginto account the views of executive directors and non-executive directors. The same wasdiscussed in the board meeting that followed the meeting of the independent Directors atwhich the performance of the Board its committees and individual directors was alsodiscussed.
f) Policyon Directors'appointment and remuneration and other details
The Company's policy on Directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate GovernanceReport which forms part of the Board's report.
S. S. Kothari Mehta & Co. Chartered Accountants New Delhi were re-appointed asstatutory auditors of the company by the members in their Annual General Meeting held onSeptember 29 2016 for the financial year 2016-17 and they retire at the forthcomingAnnual General Meeting as per the provisions of Companies Act 2013 read with Companies(Audit and Auditors) Rules 2014.
ThusontherecommendationsoftheAuditCommittee and after due deliberation andconsideration the Board recommends the appointment of NSBP & Co. CharteredAccountants New Delhi (Firm Registration no. 001075N) as the Statutory Auditors of theCompany in place of retiring auditors for five years who will hold the office upto theconclusion of the 17th Annual General Meeting subject to the ratification of appointmentby shareholders at every annual general meeting.
The Report given by the Auditors S. S. Kothari Mehta & Co Chartered AccountantsNew Delhi on the financial statements of the Company for the financial year 2016-17 ispart of the Annual Report. There are no qualifications reservation adverse remarkobservations comments or disclaimer given by the Auditors in their Report.
Further with regard to section 134(3)(ca) of the Companies Act 2013 no frauds havebeen reported by the auditors under section 143(12) of the said Act.
Explanation to Auditors' Remarks
The comments on statement of accounts referred to in the report of the auditors areself-explanatory.
During the year under review the Issued Subscribed and Paid-up Equity Share Capitalas on March 31 2017 was 10 Crores shares of Rs. 2/- each amounting to Rs. 20 Crore.
a) Your Company has not issued shares with differential voting rights nor grantedemployee stock options nor sweat equity. And also the Company has not accepted or repaidany Debentures Preference Share Capital and any Bond & Security during the financialyear and none of the Directors of the Company hold any shares or security of the Company.The Company does not have any Debentures Preferential Shares as on March 31 2017.
b) Your company has not made any provisions of money for purchase of its own shares byemployees or by trustees for the benefit of employees during the year under review.
During the year the Company has not accepted any fixed deposit.
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 Satyender Kumar & Associates a proprietorship firm of Company Secretariesto undertake the Secretarial Audit of the Company. Secretarial Audit Report in prescribedformat MR-3 is annexed as Annexure - E to this Board's Report.
Explanation to Secretarial Audit Report
The Company has initiated the process for transfer of unclaimed shares to unclaimedsuspense account and the Unclaimed Suspense Account has already been opened by the Companywith one of the depository. The Company shall transfer the unclaimed shares to the saidaccount in due course of time.
The Company is taking effective steps that all statutory forms are filed within theprescribed time limit.
The Audit Committee comprises mainly of Independent Directors and the composition is asunder:
|Mr. Surrinder Lal Kapur ||- Chairman |
|Mr. Bhagwan Dass Narang ||- Member |
|Dr. Vinayshil Gautam ||- Member |
|Mr. Sunil Kant Munjal ||- Member |
|Dr. Anil Kumar Gupta ||- Member |
The terms of reference of the Audit Committee are wide enough to cover the mattersspecified for the Audit Committee under SEBI LODR 2015 as well as Section 177 of theCompanies Act 2013; the detailed terms of reference are as mentioned in the Annexure B ofthe Board's Report. During the year the Board has accepted all recommendation of AuditCommittee and accordingly no disclosure is required to be made in respect ofnon-acceptance of the recommendation of the Audit Committee by the Board.
Nomination and Remuneration Committee
Nomination and Remuneration Committee (NRC) has been constituted according to Section178(5) of the Companies Act 2013 and the composition is as under:
|Dr. Vinayshil Gautam ||- Chairman |
|Mr. Bhagwan Dass Narang ||- Member |
|Mr. Surrinder Lal Kapur ||- Member |
|Mr. Sunil Kant Munjal ||- Member |
The detailed terms of reference are as mentioned in the Annexure B of the Board'sReport.
Corporate Social Responsibility (CSR) Policy
The Corporate Social Responsibility Committee has been constituted as per theprovisions of Section 135 of the Companies Act 2013 and the composition is as under:
|Mr. Bhagwan Dass Narang ||- Chairman |
|Dr. Anil Kumar Gupta ||- Member |
|Mrs. Charu Munjal ||- Member |
The details about the policy indicating the activities to be undertaken by the Companyactivities implemented by the company and the amount spent on CSR activities as per theprovisions of Companies (Corporate Social Responsibility Policy) Rules 2014 is annexedas Annexure - F of the Board's Report.
Risk Management Policy
In order to mitigate the risks the Company has adopted the implementation of the riskmanagement policy focusing on the elements of risks which in the opinion of the Board maythreaten the existence of the company.
The Company has constituted a risk management committee the constitution and the termsof reference of the same are mentioned in the Annexure B of the Board's Report.
Disclosure on Establishment of a Vigil Mechanism
The Company has adopted a policy on vigil mechanism for directors and employees toreport their genuine concerns or grievance to be the Vigilance and Ethics Officer. Thepolicy is available on the company's website www.shivamautotech.com.
Material Changes Affecting the Financial Position of the Company
There are no material changes and commitments affecting the financial position of thecompany which have occurred between the end of the financial year of the company to whichthe financial statements relate and on the date of this report.
Your Company was able to raise the short-term/long term funds needed for its workingcapital related requirements & term loans for new capital expenditure at reasonablerates. By efficient management of working capital the Company has been able to reducesome interest cost. The Company continues to focus on judicious management of its workingcapital. During the year under review the financial position of the Company wassatisfactory.
Significant or Material Orders passed by the Regulators
No significant or material orders were passed by the Regulators or Courts or Tribunalswhich impact the going concern status and Company's operations in future.
Changes in the Nature of Business
There is no change in the nature of the business of the Company during the FinancialYear 2016-17.
Extract of Annual Return
The extract of Annual Return in format MGT-9 for the Financial Year 2016-17 isenclosed as Annexure - C of the Board's report.
Particulars of Loan Guarantees and Investments under Section 186 of the Companies Act2013
The Company has neither given any loans/guarantees/ provided sercurity and nor anyinvestments have been made by the Company.
Particulars of Contracts or Arrangements with Related Parties
All contracts /arrangements/transactions entered by the Company during the financialyear with the related parties were in the ordinary course of business and on arm's lengthbasis and do not attract the provisions of Section 188 of the Companies Act 2013. Duringthe year the Company had not entered into any contracts /arrangements/transactions withrelated parties which could be considered material in accordance with the policy of theCompany on materiality of related party transactions. Suitable disclosure as required bythe IND AS 24 has been made in the notes to the Financial Statements.
Conservation of Energy Technology Absorption Foreign Exchange Earnings and Outgo
The Company continues to use the latest technologies for improving the productivity andquality of its products and components. The details of Energy Technology AbsorptionForeign Exchange Earnings and Outgo are attached as Annexure - D of the Board's Report.
Statement in Respect of Adequacy of Internal Financial Control with Reference to theFinancial Statements
Your company has adequate internal control for its business processes acrossdepartments to ensure efficient operations compliance with internal policies applicablelaws and regulations. The internal controls are complemented on an on-going basis by anextensive program of internal audits being implemented throughout the year. The internalcontrols are designed to ensure that the financial and other records of the company arereliable for preparing financial statement and other data for maintaining theaccountability of assets in conformity with established accounting principles and that theassets of the company are adequately safe-guarded against any significant misuse or loss.
The Company also has an internal audit system which is conducted by an independent firmof Chartered Accountants. A summary of Internal audit report and observations thereon arereviewed by the Audit Committee on regular basis and have been found to be adequate.
The shares of your Company are listed at The National Stock Exchange of India Limitedand The BSE Limited and pursuant to the SEBI LODR 2015 the Annual Listing fees for theyear 2017-18 have been paid to them well before the due date i.e. April 30 2017. TheCompany has also paid the annual custodian fees for the year 2017-18 in respect of Sharesheld in dematerialized mode to National Securities Depository Limited (NSDL) & CentralDepository Services Limited (CDSL).
The Company has complied with the requirements of Corporate Governance as stipulatedunder the SEBI LODR as applicable.
Your Company is committed to follow the highest standards and principles of CorporateGovernance with all integrity and fairness. The Company always places major thrust onmanaging its affairs with diligence transparency responsibility and accountabilitythereby upholding the important dictum that an organisation's corporate governancephilosophy is directly linked to high performance.
A certificate from the Practising Company Secretary regarding the compliance of theconditions of Corporate Governance by the Company stipulated under SEBI LODR 2015 is alsoattached to the Board's Report.
Separate detailed chapters on Corporate Governance Additional Shareholder informationand Management Discussion and Analysis are attached herewith and form part of this ReportDeclaration by CEO/CFO that the Board Members and Senior Management Personnel havecomplied with the Code of Conduct for the Financial Year 2016-17 is annexed with thisreport.
Disclosures under Sexual Harassment of Women at Workplace (Prevention Prohibition& Redressal) Act 2013
Your Company is committed to provide work environment that ensures every employee istreated with dignity and respect and afforded equitable treatment. The Company has adoptedthe policy for prevention of sexual harassment at workplace. An appropriate complaintmechanism in the form of "Complaints Committee" has been created in the Companyfor time-bound redressal of the complaint made by the victim. The annual report has beenduly submitted to the District Officer of Department of Women and Child Developmentstating that no complaints have been received by the Company.
Directors' Responsibility Statement
Pursuant to the provisions of Section 134 (5) of the Companies Act 2013 as amendedwith respect to the directors' responsibility statement it is hereby confirmed:
(i) That in preparation of annual accounts for the financial year ended March 31 2017the applicable accounting standards have been followed along with proper explanationrelating to the material departures;
(ii) That the directors' of the company have selected such accounting policies andapplied them consistently and made judgements and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as atMarch 31 2017 and of the losses of the Company for the financial year ended March 312017;
(iii) That the directors' of the company have taken proper and sufficient care 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; and
(iv) That the directors' of the company have prepared the annual accounts on a goingconcern basis.
(v) That the directors in the case of a listed company had laid down internalfinancial controls to be followed by the company and that such internal financial controlsare adequate and were operating effectively.
(vi) That the directors had devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
The details required pursuant to Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in Corporate GovernanceReport attached as Annexure - B of the Board's report.
Particulars of Employees
The information required under Section 197 of the Act read with Rule 5(2) of Companies(Appointment and
Remuneration of Managerial Personnel) Rules 2014 is attached as Annexure - G of theBoard's report.
Environment Health & Safety
TheCompanyhastakenan initiativeto preserve environment by indulging in paper recyclingactivity. The paper recycling pertains to the processes of reprocessing waste paper forreuse. Recycling paper preserves trees and forests. Every ton of recycled paper savesabout 17 trees. Recycled paper serves as an environmental friendly resource for papermanufacturers saving costs and energy. The company has recycled approx. 31238 kgs ofwaste paper till March 31 2017 contributing in saving 536 nos. of trees.
The Company is very keen on its responsibilities with respect to the clean environment.Company's Health and Safety Policy commits to provide a healthy and safe work environmentto all employees.
The Company regularly conducts counselling and safety review meetings for the employeesto appraise and educate them on the adoption of safety measures and avoidance of unsafepractices. Safe operating procedures standards and systems have been laid down at allmanufacturing locations. Prompt medical assistances are provided to its employees. TheCompany has an internal plant dispensary which operates round the clock and is managed bythe supported medical staff who are available for addressing health issues of employees.
Human Resource Development
Your Directors place on record their appreciation for the significant contribution madeby all employees who through their competence dedication hard work cooperation andsupport have enabled the Company to cross new milestones on a continual basis.
Your Company treats its "human resources" as one of its most importantassets. Your Company continuously invests in attraction retention and development oftalent on an ongoing basis. The Company's thrust is on the promotion of talent internallythrough job rotation and job enlargement.
The SEBI LODR 2015 mandated the formulation of certain policies for all listedcompanies. All our corporate governance policies are available on our website www.shivamautotech.com.
Following are the policies adopted by the company with their web links:
|Policy ||Web link |
|Code of Conduct ||http://www.shivamautotech.com/Uploads/image/34imguf_ |
|Prohibition of Insider Trading ||http://www.shivamautotech.com/Uploads/image/38imguf_ |
|Payment to Non- Executive Directors ||http://www.shivamautotech.com/Uploads/image/33imguf_PaymenttoNED.pdf |
|Board Diversity Policy ||http://www.shivamautotech.com/pdf/Board_Diversity_Policy.pdf |
|Records and Archives Policy ||http://www.shivamautotech.com/pdf/records_and_archives_policy.pdf |
|Related Party Transaction Policy ||http://www.shivamautotech.com/pdf/RPT_policy.pdf |
|Anti-Harassment Policy ||http://www.shivamautotech.com/pdf/Anti_harassment_Policy.pdf |
|Corporate Social Responsibility Policy ||http://www.shivamautotech.com/pdf/CSR_POLICY.pdf |
|Risk Management Policy ||http://www.shivamautotech.com/pdf/Risk_Management_Policy.pdf |
|Whistle Blower Policy ||http://www.shivamautotech.com/pdf/Whistle_Blower_Policy.pdf |
Your Company's organisational culture upholds professionalism integrity and continuousimprovement across all functions as well as efficient utilisation of the Company'sresources for sustainable and profitable growth.
The Directors express their appreciation for the sincereco-operationandassistanceofCentralandStateGovernment Authorities Bankers CustomersSuppliers and Business Associates. Your Directors also wish to place on record their deepsense of appreciation for the committed services by your Company's employees. YourDirectors acknowledge with gratitude the encouragement and support extended by our valuedshareholders.