You are here » Home » Companies » Company Overview » SML ISUZU Ltd

SML ISUZU Ltd.

BSE: 505192 Sector: Auto
NSE: SMLISUZU ISIN Code: INE294B01019
BSE 00:00 | 21 Oct 752.45 17.05
(2.32%)
OPEN

746.05

HIGH

771.80

LOW

730.90

NSE 00:00 | 21 Oct 752.30 14.55
(1.97%)
OPEN

750.10

HIGH

772.00

LOW

730.05

OPEN 746.05
PREVIOUS CLOSE 735.40
VOLUME 22059
52-Week high 788.00
52-Week low 365.10
P/E
Mkt Cap.(Rs cr) 1,089
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 746.05
CLOSE 735.40
VOLUME 22059
52-Week high 788.00
52-Week low 365.10
P/E
Mkt Cap.(Rs cr) 1,089
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

SML ISUZU Ltd. (SMLISUZU) - Director Report

Company director report

The Directors are pleased to present their Thirty-Seventh Annual Report together withaudited financial statements for the financial year ended 31st March 2021.

PERFORMANCE REVIEW

During FY 2020-21 the Covid-19 pandemic significantly impacted the businesses andeconomies across the world. Due to reduced economic activity and restricted mobility GDPcontracted in many countries including India. The stringent measures taken by theGovernment of India to curb the spread of pandemic have had an inevitable impact on IndianEconomy. Consequently for FY 2020-21 GDP is expected to contract by 8.0 percent against4.2 percent growth achieved last year (FY 2019-20).

Domestic Commercial Vehicles Industry (CVI) which was already in the midst of adowncycle witnessed sharp volume contraction during FY 2020-21 as the Covid-19 pandemicadded to its woes. Although there has been some improvement in the volumes during H2 FY2020-21 with ease of lockdown restrictions the recovery was not uniform trucks beingsolely the driving force. Due to closure of schools & educational institutions andnegligible tourist operations throughout the year and work from home culture adopted bymost of the Corporates demand for buses has been impacted severely.

As a result during FY 2020-21 the domestic CVI registered decline of 21 percent withvolumes reaching at 568600 vehicles. Light Commercial Vehicles (LCVs) declined by 17percent with volumes at 407900 and Medium & Heavy Commercial Vehicles (M&HCVs)declined by 28 percent with volumes at 160700. The 5-12 ton GVW category in which theCompany principally operates declined by 44 percent with volumes reaching at 65100.

In line with the Industry the Company's sales volume also dropped significantlyreaching 5043 vehicles in FY 2020-21 (10533 in FY 2019-20) - a decline of 52 percentwhich has adversely impacted the revenue and profits of the Company.

The financial performance of the Company for the year ended 31st March 2021 issummarized below :

(Rs. in Crores)

Year ended 31st March 2021 2020
Sales Volume (No. of Vehicles) 5043 10533
Sale of Products (Net) and Other Operating Revenues 591.48 1154.16
Profit / (Loss) before Other Income Depreciation Finance Costs and Tax (68.35) 11.89
Add: Other income 4.49 5.14
Profit / (Loss) before Depreciation Finance Costs and Tax (63.86) 17.03
Less: Depreciation and Amortisation 46.17 40.72
Profit / (Loss) before Finance Costs and Tax (110.03) (23.69)
Less: Finance Costs 23.34 14.63
Profit / (Loss) before Tax (133.37) (38.32)
Less: Tax (Including Deferred Tax) 0.12 (17.26)
Profit / (Loss) after Tax (133.49) (21.06)
Add: Other Comprehensive Income / (Loss) [Net of Tax] 4.19 (2.43)
Total comprehensive income for the year (129.30) (23.49)

DIVIDEND

Keeping in view the financial position of the Company the Directors of your Companyhave not recommended any dividend for the Financial Year 2020-21.

Pursuant to Regulation 43A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 as amended the Board has approved and adopted a DividendDistribution Policy effective from 1st April 2021. The policy is available on theCompany's website at https://www.smlisuzu.com/Financials/DividendPolicy.aspx

MANAGEMENT DISCUSSION AND ANALYSIS

Management Discussion and Analysis which also covers the state of the Company'saffairs forms a part of this report.

CORPORATE GOVERNANCE

A report on corporate governance together with the Certificate from M/s. A. Arora &Co. a firm of Practicing Company Secretaries confirming compliance with corporategovernance norms as stipulated under the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 forms a part of this report.

INDUSTRIAL RELATIONS

Industrial relations and work atmosphere remained cordial throughout the year withsustained communication and engagement with workforce through various forums.

SAFETY HEALTH AND ENVIRONMENT

The Company continues to demonstrate strong commitment to safety health andenvironment which have been adopted as core organizational values. The Company ensuressafety and audits its facilities in accordance with statutory and regulatory requirements.The Directors review these areas periodically through reports and presentations made atthe Board Meetings. Employees are continuously made aware of hazards / risks associatedwith their job and their knowledge and skills are updated through requisite training tomeet any emergency. Medical check-ups and eco-friendly activities are conductedperiodically. Safe disposal of hazardous waste is ensured through recyclers /co-processors of hazardous wastes. Effluent treatment plant and online monitoring systemshave been installed for the treatment of trade & domestic effluents and usage oftreated water for other processes like green belt maintenance.

For safety of its employees/workers the Company is strictly adhering to the safetyprocedures & protocols prescribed by the Government for prevention of Covid-19.Further vaccination of employees is being ensured through vaccination camps at theCompany's Plant / Offices.

The Company continues to maintain and uphold ISO 14001:2015 (Environmental ManagementSystem) IATF 16949: 2016 (Automotive Quality Management System) ISO 27001:2013(Information Security Management System) ISO 9001:2015 (Quality Management System) andISO 45001:2018 (Occupational Health & Safety Management System) certifications.

CURRENT BUSINESS ENVIRONMENT

After reporting a sharp 29 percent contraction in the volumes during FY 2019-20 andfurther 56 percent contraction in H1 FY 2020-21 the CV industry witnessed someimprovement in the demand during H2 FY 2020-21 post relaxation of the lockdown relatedrestrictions. Industry volumes grew by 18% during H2 FY 2020-21 although on aconsiderably lower base. However in the current fiscal (2021-22) the growth momentum hasbeen stalled due to sudden and severe onset of second wave of the pandemic resulting inlockdown in most of the States leading to disruption in the supply chain. As a resultsale of commercial vehicles has been impacted adversely during April 2021 and is likely toremain under pressure for some time at least during Q1 FY 2021-22.

Amidst such challenging scenario the Company is ensuring to meet customers'requirements and continuing its focus on customer reach product development operationalefficiencies and cost optimization. Further on export front the Company is aggressivelyworking towards expanding its product portfolio for the international markets /territories strengthening brand image outside India and exploring new markets &customers.

Current scenario and outlook for CV industry are discussed in detail in the ManagementDiscussion and Analysis which forms part of this report.

DIRECTORS

The Board on the recommendation of its Nomination & Remuneration Committeere-appointed Mr.Tadanao Yamamoto as Whole-time Director of the Company designated asDirector-Quality Assurance for a further period of one year with effect from 30thNovember 2020 subject to approval of the Members at the ensuing Annual General Meetingof the Company and of the Central Government if required.

The tenure of Mr. Gopal Bansal Whole-time Director & CFO completed on 10thFebruary 2021. Accordingly he ceased to be Director of the Company with effect from 10thFebruary 2021. The Board at its meeting held on 5th February 2021 recorded its deepappreciation for the outstanding work done by him during his long association with theCompany.

Mr. Masaki Morohoshi tendered his resignation as Director of the Company with effectfrom 10th March 2021. The Board at its Meeting held on 26th March 2021 recorded itsdeep appreciation for his valuable contributions to the Company.

The Board on the recommendation of its Nomination & Remuneration Committee hasappointed Mr. Takuro Horikoshi as an Additional Director of the Company with effect from19th May 2021 subject to approval of the Members at the ensuing Annual General Meetingof the Company.

Mr. Yugo Hashimoto Managing Director & CEO of the Company tendered hisresignation with effect from 19th May 2021. The Board at its Meeting held on 26th March2021 placed on record the outstanding work done by Mr. Yugo Hashimoto during hisassociation with the Company and also appreciated his extraordinary leadership qualitiesdedication hard work and the professional expertise.

The Board on the recommendation of its Nomination & Remuneration Committeeappointed Mr. Junya Yamanishi as Managing Director & CEO in place of Mr. YugoHashimoto with effect from 20th May 2021 for a period of five years subject to approvalof the Members at the ensuing Annual General Meeting of the Company and of the CentralGovernment if required.

At the last Annual General Meeting held in August 2020 the Members had approved theappointment of Mr. Noboru Murakami as Non-Executive Director.

Mr. Gota Iwanami retires by rotation and being eligible offers himself forre-appointment.

Mr. Eiichi Seto retires by rotation and being eligible offers himself forre-appointment.

The details of the Directors being recommended for appointment / re-appointment arecontained in the Notice convening the ensuing Annual General Meeting of the Company.

All the independent Directors have given declaration to the Company that they meet thecriteria of 'independence' set out in the SEBI (LODR) Regulations 2015 and the CompaniesAct 2013. The Board is of the opinion that the Independent Directors of the Company holdhighest standards of integrity and possess requisite expertise and experience required tofulfill their duties as Independent Directors.

KEY MANAGERIAL PERSONNEL (KMPs)

In terms of the applicable provisions of the Companies Act 2013 Mr. Yugo HashimotoManaging Director & CEO Mr. Rakesh Bhalla Chief Financial Officer and Mr. ParveshMadan Company Secretary are the Key Managerial Personnel of the Company as on 31stMarch 2021.

The tenure of Mr. Gopal Bansal Whole-time Director & CFO completed on 10thFebruary 2021 accordingly the Board has appointed Mr. Rakesh Bhalla as new ChiefFinancial Officer of the Company w.e.f. 11th February 2021.

Mr. Yugo Hashimoto tendered his resignation with effect from 19th May 2021 and theBoard has appointed Mr. Junya Yamanishi as Managing Director & CEO w.e.f. 20th May2021. On his appointment as Managing Director & CEO Mr. Yamanishi will be a KMP underthe provisions of the Companies Act 2013.

NOMINATION AND REMUNERATION POLICY

Based on the recommendations of its Nomination & Remuneration Committee the Boardhas adopted a Nomination and Remuneration Policy which is attached as Annexure A.

SUBSIDIARIES JOINT VENTURES AND ASSOCIATE COMPANIES

The Company does not have any Subsidiary Joint Venture or Associate Company.

RELATED PARTY TRANSACTIONS

All related party transactions that were entered into during the financial year were atarm's length in the ordinary course of business and in compliance with the applicableprovisions of the Companies Act 2013 and the Listing Regulations. There were no materialtransactions made by the Company during the year that would have required Members'approval.

All related party transactions are placed before the Audit Committee for approval.Prior omnibus approval of the Audit Committee is obtained for the transactions which arerepetitive in nature.

The Company has adopted a policy to deal with related party transactions as approved bythe Board of Directors. It is available on the Company's website at web link:http://smlisuzu.com/Financials/RPTPolicy.aspx.

In terms of Section 134(3)(h) of the Companies Act 2013 there are no transactions tobe reported in Form AOC-2. The details of the related party transactions as per Ind-ASare set out in Note 36 to the Financial Statements.

ANNUAL RETURN

In terms of Section 92(3) of the Companies Act 2013 and Rule 12 of the Companies(Management and Administration) Rules 2014 the Annual Return of the Company is availableon the website of the Company at the web link:https://smlisuzu.com/Upload/AGMNotice/AnnualReturn.pdf

MEETINGS OF THE BOARD

Six Board meetings were held during the year as detailed in the Corporate GovernanceReport which forms part of this report.

AUDIT COMMITTEE

The Audit Committee comprises of three independent Directors Mr. S.K. Tuteja asChairman Mr. Sudhir Nayar and Mr. Chandra Shekhar Verma.

Mr. Gopal Bansal Whole-time Director & CFO ceased to be the Member of theCommittee upon completion of his term on 10th February 2021.

All the recommendations made by the Audit Committee during the year were accepted bythe Board.

PARTICULARS OF EMPLOYEES

The information as per Section 197 of the Companies Act 2013 read with Rule 5 (1) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 formspart of this Report is attached as Annexure B.

The disclosure as per Section 197 of the Companies Act 2013 read with Rule 5 (2) andRule 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014 is provided in a separate annexure forming part of this Report. That annexure is notbeing sent to the Members and others entitled to this Report and the financial statementsas provided in Section 136 (1) of the Companies Act 2013. Any member interested inobtaining a copy of the said Annexure may write to the Company Secretary atinvestors@smlisuzu.com.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013

The Company has not given any loans guarantees or made any investments during theyear which would be covered by Section 186 of the Companies Act 2013.

AMOUNTS PROPOSED TO BE CARRIED TO RESERVES

No amount proposed to be transferred to General Reserves.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY

No material changes have occurred or commitments made after 31st March 2021 which mayaffect the financial position of the Company or require disclosure.

SUSTAINABILITY INITIATIVE

Your Company is conscious of its responsibility towards preservation of naturalresources and continuously takes initiatives to reduce consumption of electricity andwater.

RISK MANAGEMENT

The primary objective of risk management is to protect the Company against risks to thevalue of the business its capital and its continuity. In order to achieve the objectiveand for better governance the Board has constituted a Risk Management Committee (RMC)comprising two independent Directors and one non-executive Director.

RMC is entrusted with the functions of determining efficacy of risk managementframework of the Company evaluation of risks and mitigating measures. The Company hasadopted a formal Risk Management Policy based on the recommendations of RMC.

The Policy sets out key risk areas - financial risks (including risk to assets)commodity price risks foreign exchange fluctuation risks legislative and regulatoryrisks environmental risks (including natural disasters) operational risks IT &Cyber Security risks risks relating to employment and manpower and individual largetransactional risks. The Managing Director & CEO identifies and proposes action inrespect of all risks through his management team as and when any are perceived or foreseenor inherent in operations; analyses these and then reports to RMC for its review andguidance. The Directors also bring to the notice of and caution the Committee of a riskperceived by them.

CORPORATE SOCIAL RESPONSIBILITY

The Corporate Social Responsibility (CSR) Committee comprises of one IndependentDirector - Dr. (Mrs.) Vasantha S. Bharucha as Chairman and two Executive Directors- Mr.Yugo Hashimoto the Managing Director & CEO (upto 19th May 2021) and Mr. TadanaoYamamoto Director-Quality Assurance. Mr. Junya Yamanishi on his appointment as ManagingDirector & CEO will be the Member of the Committee w.e.f. 20th May 2021.

On the recommendations of the Committee the Board has adopted Company's policy on CSRwith key thrust areas defined as - promoting healthcare and sanitation supportingeducation of girl child and under privileged children sponsoring vocational education /technical education etc.

Annual Report on CSR activities for the year ended 31st March 2021 is attached asAnnexure C.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act and Listing Regulations performanceevaluation of the Board and its Committees and all the Directors has been carried out andthe details are covered in the Corporate Governance Report.

CHANGE IN THE NATURE OF BUSINESS

There has been no change in the nature of business of the Company during the year.

SHARE CAPITAL

There was no change in the Company's issued subscribed and paid-up equity sharecapital during the year.

DEPOSITS

During the year the Company has not accepted any deposit under Chapter V of theCompanies Act 2013.

SIGNIFICANT ORDERS PASSED BY REGULATORS COURTS OR TRIBUNALS IMPACTING GOING CONCERNAND COMPANY'S OPERATIONS

To the best of our knowledge the Company has not received any such orders fromregulators courts or tribunals or any other authority during the year which may impactthe going concern status of the Company or its operations in future. Further there is noproceeding pending under the Insolvency and Bankruptcy Code 2016.

POLICY ON PREVENTION PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE

The Company has adopted a policy in line with the provisions of the Sexual Harassmentof Women at Workplace (Prevention Prohibition and Redressal) Act 2013 and the Rulesthere under. The Policy aims to provide protection to women at the workplace and preventand redress complaints of sexual harassment and for matters connected or incidentalthereto with the objective of providing a safe working environment. The Company has alsoconstituted an Internal Complaints Committee in accordance with the Act to inquire intocomplaints and take appropriate action.

The Company has not received any complaint of sexual harassment during the year.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has adopted a whistle blower policy to provide formal mechanism to theDirectors and the employees to report their concerns about unethical behaviour actual orsuspected fraud or violation of the Company's code of conduct or ethics policy or toreport genuine concerns or grievances including instances of leak or suspected leak ofunpublished price sensitive information pursuant to SEBI (Prohibition of Insider Trading)Regulations 2015. It provides for adequate safeguards against victimization of DirectorsEmployees and any other person who avail of the mechanism and provides for direct accessto the Chairman of the Audit Committee.

Whistle Blower Policy of the Company is available on the Company's website at web link:http://smlisuzu.com/Financials/WhistleBlowerPolicy.aspx.

SECRETARIAL STANDARDS

The Company has duly complied with the applicable Secretarial Standards on meeting ofBoard of Directors (SS-1) and General Meetings (SS-2) issued by the Institute of CompanySecretaries of India (ICSI).

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act 2013 the Directorsto the best of their knowledge and ability confirm that:

(a) in the preparation of the annual accounts for the year ended 31st March 2021 theapplicable accounting standards have been followed and proper explanations providedrelating to material departures if any;

(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fairview of the state of affairs of the Company as at 31st March 2021 and of the profit ofthe Company for the year ended on that date;

(c) they have taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities;

(d) they have prepared the annual accounts on a going concern basis;

(e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and are operating effectively;

(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems are adequate and operating effectively.

FAMILIARISATION PROGRAMME FOR INDEPENDENT DIRECTORS

The details of familiarisation programme for Independent Directors in respect of theirroles rights & responsibilities nature of the industry in which Company operatesbusiness model of the Company and related matters are available on the website of theCompany at web link: http://smlisuzu.com/Financials/FamiliarisationProgramme.aspx

SECRETARIAL AUDIT

Pursuant to the provisions of Section 204 of the Companies Act 2013 and The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 M/s A. Arora &Co. a firm of Company Secretaries in practice were appointed as the Secretarial Auditorsof the Company to carry out the Secretarial Audit of the Company for FY 2020-21.

The Secretarial Audit Report for the year under review does not contain anyqualification and is attached as Annexure D.

STATUTORY AUDITORS

M/s. Walker Chandiok & Co LLP Chartered Accountants (Firm Registration No.001076N/N500013) was appointed as the Statutory Auditors of the Company at its 36thAnnual General Meeting for a period of five years.

The Auditors' Report to the Members of the Company for the year under review does notcontain any qualification.

INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO FINANCIAL STATEMENTS

Based on the work performed by the internal statutory and secretarial auditors and thereviews carried out by the Management and the relevant Board Committees the Directors areof the opinion that the Company has in place adequate internal financial controls withreference to financial statements commensurate with the size and nature of the businessof the Company. During the year such controls were tested and no reportable materialweaknesses in the design or operation were observed.

CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The required information on conservation of energy technology absorption and foreignexchange earnings and outgo as stipulated in the Companies Act 2013 is attached asAnnexure E.

COST RECORDS

There are no cost records which are prescribed under Section 148(1) of the CompaniesAct for any of the products manufactured / services rendered by the Company.

BUSINESS RESPONSIBILITY REPORT

As per Regulation 34 of the SEBI Listing Regulations 2015 a Business ResponsibilityReport for FY 2020-21 is attached as Annexure F and forms part of this Report.

ACKNOWLEDGMENTS

Your Directors express their grateful appreciation for the co-operation received fromthe concerned Government departments banks dealers and other business constituentsduring the year under review. Your Directors also wish to place on record their deep senseof appreciation for the committed services of the employees of the Company at all levels.

FOR AND ON BEHALF OF THE BOARD OF DIRECTORS

S.K. TUTEJA YUGO HASHIMOTO
Dated: 19th May 2021 Chairman Managing Director & CEO

.