The Members SNL Bearings Limited
Your Directors have pleasure in presenting their Fortieth Annual Report together withAudited Financial Statements for the year ended March 31 2020
1. Financial Results
|Year ended ||31st March 2020 ||31st March 2019 |
| ||(Rs. in lakhs) ||(Rs. in lakhs) |
|Revenue from operations (Net) ||3414.18 ||4064.17 |
|Profit before tax ||555.10 ||1140.64 |
|Provision for taxation: || || |
|Current tax (net) ||137.69 ||321.38 |
|Deferred tax ||0.80 ||4.90 |
|Profit after taxation ||416.61 ||814.36 |
|Add: Balance brought forward ||2062.52 ||1467.51 |
|Add: Other Comprehensive Income for the year ||-16.23 ||-1.65 |
| ||2462.90 ||2280.22 |
|Appropriation: || || |
|Dividend ||288.92 ||180.58 |
|Tax on distributed profits ||59.39 ||37.12 |
|General Reserve ||- ||- |
|Capital Redemption Reserve ||- ||- |
|Outside basis Tax ||- ||- |
|Profit & Loss Account ||2114.59 ||2062.52 |
|Total ||2462.90 ||2280.22 |
Based on the Company's performance your Board of Directors have declared an InterimDividend of Rs. 3/- per share (i.e. 30%) of face value of Rs. 10/- each involving an outgoof Rs. 13061708/- (inclusive of dividend distribution tax) on March 06 2020 forthe F.Y. 2019-20 and paid to the shareholders whose name appeared in the Register ofMember as on March 17
2020. Your Company had paid a Final Dividend of Rs. 5 /- per equity share (i.e. 50%)for the previous financial year 2018-19.
Further your Directors do not recommend any final dividend for the financial March 312020.
Your Directors have proposed not to transfer any sums to the General Reserve.
3. State of Company's Affairs Operations & Future Outlook
The performance for the year has to be viewed in the context of the unfavorablemacro-economic environment and particularly the weak demand scenario for the auto sector.During F.Y. 2019-20 the overall automobile sales reported the sharpest decline of 18 percent year-on-year during the last five years on the back of price hikes in passengervehicles and two wheeler segments due to transition to stringent BS-VI emission normshigher insurance costs higher ownership costs liquidity crunch in the NBFC sector.Reduced turnaround time and increased load carrying capacity for CVs led to highinventories and slow movement in CV segment sales. Overall the challenges impacted thecompany's business significantly resulting in de-growth in our Revenues and Profitscompared to the year before.
Rating agencies have revised the outlook for auto sector from stable to negative as theoverall outlook especially in the automotive sector continues to lean towards beingchallenging with the
Covid-19 pandemic requiring a lockdown of all business activities for a greater part ofQ1. Recent relaxations in the restrictions have given hopes for gradual resumption insales and production over the coming quarters of F.Y. 2020-21.
Net revenues during the year at Rs. 3414.18 Lakhs (previous year Rs. 4064.17 lakhs) arelower by 16% due to lower sales. Profit after tax (PAT) at Rs. 416.61 lakhs (previous yearRs. 814.36 lakhs) has also dropped by 49% due to the fall in volumes despite continuingefforts to restrict operating and administrative expenses.
For F.Y. 2020-21 the outlook is still uncertain with the likelihood of furtherde-growth in revenues. Operating margins are also likely to be impacted due to lowercapacity utilization and lower absorption of overheads. Company management team will befocused on driving operational efficiencies to restrict costs further. The benefitsofGovernment support by way of a Relief package to boost slow consumer demand increasedliquidity and lower corporate taxes are likely to accrue over the medium term and theforecast of a normal monsoon should accelerate revival of rural demand for two wheelersand farm equipment. With the support of the holding company we shall strive to furtherimprove our quality and delivery of our products so as to enhance competitiveness withcustomers.
Your Company has been rated CRISIL A1' for the Short-term Bank facilityand the Company's long-term facilities have been rated at CRISIL A/ Negative'(outlook revised to Negative' from Stable' and Ratingreaffirmed) as on May 22 2020.
The Company continues to focus on judicious management of its working capital.Receivables inventories and other working capital parameters are continuously monitored. a.Public Deposits
During the year the Company has not accepted any deposits from the public/ Membersunder Section 73 of the Companies Act 2013 read with Companies (Acceptance of Deposits)
Rules 2014. As on 31.3.2020 there are no fixed deposits with the Company. b.Particulars of Loans Guarantees or Investments
During the year under review the Company has not advanced any loans given guaranteesonly certain investments of temporary surplus funds in Mutual Funds has been done withBoard's approval.
5. Directors and Key Managerial Personnel Retirement by Rotation
In accordance with the provisions of Section 152 and the Articles of Association of theCompany Mr. Satish Rangani (DIN. 00209069) will retire by rotation at the ensuing AnnualGeneral Meeting of the Company and being eligible has offered himself for re-appointment.
Mr. Jayavardhan Dhar Diwan was appointed as an Independent Director of the Company onJanuary 29 2015 for a term of 5 years and members of the Company approved his appointmentas Independent Directors of the Company at Annual General Meeting held on July 28 2015.His first term expired on January 28 2020 and he is eligible for re-appointment of secondterm up to five (5) consecutive years as per the provisions of sections 149 and 152 andother applicable provisions of the Companies Act 2013.
The Board of Directors at its meeting held on January 27 2020 on the recommendationof the
Nomination and Remuneration Committee and considering his qualifications knowledgevast business experience and contributions made by him during his tenure havere-appointed Mr. Diwan as an Independent Director of the Company not liable to retire byrotation for a second term w.e.f. January 28 2020 up to February 15 2021 as consentedby him subject to approval of the shareholders at the ensuing Annual General Meeting.
All Independent Directors have submitted the Declaration of Independence as requiredpursuant to Section 149(6) of the Companies Act 2013 and Regulation 16 of the SEBI(Listing
Obligations and Disclosure Requirements) Regulations 2015 stating that they meet thecriteria of independence provided therein. The composition of the Board duly meets thecriteria stipulated in Section 52 of the Companies Act 2013 and Regulation 17 of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
For the F.Y. 2019-20 the Board has carried out an annual performance evaluation of itsown and that of its Committees and individual directors using various performanceevaluation criteria on the forms circulated to and filled in by the directors. Thefeedback has been shared and discussed. The Independent Directors Mr. JayavardhanDhar Diwan Mr. Vivek Sahai and Mr. Claude Alex D'Gama Rose have met separately on6th March 2020 and have conveyed to the Chairman of the Board their satisfaction withthe working of the Board.
Key Managerial Personnel
Pursuant to the provisions of Sections 2(51) 203 of the Companies Act 2013 read withThe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 thefollowing are the Key Managerial Personnel:
|Mr. Krishna Kant Prasad Sinha - ||General Manager |
| ||(Designated as CEO w.e.f. 21.05.2019) |
|Mr. Ram Narayan Sahu - ||Finance Head |
| ||(Designated as CFO w.e.f. 21.05.2019) |
|Mr. Kamlesh Sondigala - ||Company Secretary and Compliance Officer |
Familiarization Programme for Independent Directors
In order to familiarize the Independent Directors with the business the Company makesa presentation covering nature and scope of business nature of industry in which Companyoperates profitability and future scope. Regularly at meetings updates are given to theBoard by the Company's Senior Management in areas of operations industry and regulatorytrends competition and future outlook.
The Board has on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors senior management and theirremuneration. As part of its policy the company strives to ensure that the Remuneration toDirectors KMP's and Senior Management involves a balance between fixed and incentive payreflecting short and long term performance objectives appropriate to the working of theCompany and its goals. The remuneration policy is posted on the company's website atwww.snlbearings.in. Details of remuneration paid to Directors KMP and the IndependentDirectors forms part of the Corporate Governance Report attached to this Report. Meetings
During the year 5 (five) Board meetings and 4 (four) Audit and held (details are givenin Corporate Governance Report). The intervening gap between the meetings was less than120 (one hundred and twenty) days. The date for the next meeting is fixed in advance atthe previous meeting for both Board and Audit committee meetings.
6. Subsidiary Associate and Joint Venture Companies
As of March 31 2020 the Company does not have any Subsidiary Associate and JointVenture Companies.
7. Business Risk Management
The Company has in place an enterprise risk management framework to identify risks andminimize their adverse impact on business and strives to create transparency which in turnenhances the Company's competitive advantage. The Company has identifiedhigh share ofsales to the holding company as a concern area associated with its operations and isworking towards progressively reducing this share. Another risk to operations arises fromthe expiry of leases in respect of certain portions of the company's factory land andbuildings as the Lessor is under liquidation proceedings by the Official Liquidator in theDelhi High Court. The High Court order could affect operations. As part of its action planfor risk mitigation the Company has been successfully impleaded in the proceedings andhas filed its application seeking certain reliefs. The company is hopeful that there willbe a favorable outcome to its offer to renew the leases for reasonable terms and atfavorable rates.
8. Conservation of energy technology absorption foreign exchange earnings andoutgo
Information pursuant to Section 134(3)(m) of the Companies Act 2013 and Rule no.8 ofCompanies (Accounts) Rules 2014 are given as below: a. Measures taken for conservationof energy
During the year Company has replaced old blackening furnace of 54 KW with a newfurnace of 30 KW which has resulted in energy saving of 17280 KWH per month amounting toRs. 13 Lakhs. b. Technology absorption
With the objective of improving productivity as well as quality during the year theCompany has continued its efforts on improvements in process parameters and reduction incycle times. Improvements made on press machines for manufacturing cage bearings byreduction in set-up time and resetting time. As a result average production quantity hasincreased. Upgradation of technology is a key focus area and the Company has initiatednecessary mapping of its machines with this objective and management is taking all effortstowards developing low cost technological solutions. c. Foreign exchange earnings &outgo for the year ended 31st March 2020
|Foreign Exchange Earnings : ||Export of goods ||- Rs. 27.12 lakhs |
|Foreign Exchange Outgo : ||Raw materials & Components ||- Rs. 186.01 lakhs |
| ||Consumables Spares tools ||- Rs. 1.76 lakhs |
| ||Fixed Assets ||- Rs. 255.35 lakhs |
9. Industrial Relations/ Vigil Mechanism and Whistle Blower Policy
During the year the Company maintained cordial relations with the workmen's unions.Regular training programmes are conducted for imparting understanding of bearing andengineering principles modern manufacturing practices and in attitudinal and behaviouralaspects. The Company has formulated and implemented the whistle Blower Policy/ VigilMechanism. This has provided a mechanism for Directors and employees of the Company andother persons dealing with the Company to report to the Chairman of the Audit Committeeany instance of unethical behaviour actual or suspected fraud or violation of theCompany's code of conduct. More details about this Policy are given in the CorporateGovernance Report which forms part of this Annual Report. The Whistle Blower Policy isavailable on the Company's website viz. www.snlbearings.in.
Your Company hereby affirms that no complaints were received during the year.
10. Safety Healthy & Environment
The Company is committed to establish and maintain safe working environment thatpromotes good health and high performance of the employees and simultaneously takesmeasures to protect the environment. We also ensure that safety behaviour is welldemonstrated by our employees while working on the shop floor by using personal protectiveequipment's as required. The Company's plant at Ranchi has been awarded internationallyrecognized external certification viz. ISO14001:2015 (for adherence to environmentalprocesses) OHSAS:18001:2007 (for Health
& Safety) and IATF:16949:2015 (quality management system). The Company is in theprocess of adopting new external certification viz. ISO 45001:2018 (for
Work force is trained at regular intervals in preventive aspects of safety andprevention of work related accidents. Besides creating general awareness among employeestowards environmental protection the management encourages initiatives which are targetedtowards conserving natural resources and improvements in resource efficiency across allprocesses.
Consequent upon the re-opening of the plant post Covid-19 lockdown the employees havepainstakingly adhered to the SOPs prescribed by the authorities to ensure socialdistancing norms for staying safe and healthy. Usage of prescribed PPEs by all employeesand frequent sanitization of the workplace / employees by washing of hands is alsometiculously followed.
11. Corporate Social Responsibility
In line with the activities specifiedin schedule VII relating to the provisions ofsections 135 of the
Companies Act 2013 your company has been focusing on:
Promotion of education
Employment enhancing vocational skills
Promoting social business projects
Contribution to funds set up by Central/State Government's for social economicdevelopment and relief.
For the financial year ended 31.3.2020 an aggregate amount of Rs. 22.42 lakhs has beencontributed to various organizations doing commendable work for the cause of promotingeducation to the under privileged sections of society viz; i. Sankalp (A pledge to change)- Running schools providing education to the poor sections of society in slums in andaround Jamshedpur Dhanbad and other backward areas of Jharkhand. ii. TISS (Tata Instituteof Social Sciences): Running scholarship scheme through Vidyasaarathi (VSS) an onlineplatform operated transparently by TISS for needy students particularly in the state ofJharkhand where the Company's plant is located. iii. Ugam Foundation Runs theKasturba Gandhi Balika Vidyalaya (KGBV) scheme which was launched by the Government ofIndia in August 2004 for setting up residential schools at upper primary level for girlsbelonging predominantly to the SC ST OBC and minorities in difficult areas. Currentlythey are running KGBV in Jharkhand (Hazaribag District) for adolescent girls with theproject expected to reach 10 KGBV 150 teachers and 3900 girls. At the Company's requestthe Foundation has successfully completed signing of the work order with the districteducation department and started conducting programmes at KGBV Mandar located in Ranchiclose to the SNL Plant.
Detailed report on CSR activities including amount spent is given in Annexure I.12. Corporate Governance
Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aManagement Discussion and Analysis Corporate Governance Report and Auditors' Certificateregarding compliance of conditions of Corporate Governance are made part of the AnnualReport. Details of Board meetings held during the year under review and the composition ofthe various committees are included therein.
The Code of Conduct for directors and Senior Management personnel of the Company asapproved by the Board has been affirmed on an annual basis by all the Directors Company
Secretary Finance Head (CFO) and the General Manager (CEO) of the Company. AllIndependent
Directors have also submitted the declaration of independence confirming that they meetthe criteria of independence as provided under section 149 of the Companies Act 2013.
The relevant certification on the various matters specified under Regulation 17(8) ofSEBI (LODR)
Regulations 2015 has been done by CEO and CFO.
During the year under review the Company has complied with all the applicableSecretarial Standards.
All pecuniary relationships or transactions of the Non-executive directors vis--visthe Company along with criteria for such payments and disclosures on remuneration ofDirectors along with their shareholding are disclosed in Form MGT-9 which forms a part ofthis Report. There are no relationships between the Directors inter-se.
13. Extract of Annual Return
The details forming part of the extract of the Annual Return (MGT-9) as required underthe
Companies Act 2013 is given in Annexure II.
14. Directors' Responsibility Statement
Pursuant to the requirements under Section 134 (3) (c) of the Companies Act 2013 yourDirectors state that: i. in the preparation of annual accounts the applicable AccountingStandards have been followed along with proper explanations relating to materialdepartures if any have been furnished; ii. the accounting policies have been selectedand these have been applied consistently and judgments and estimates made thereon arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany as at 31st March 2020 and of the profit of the Company for that period; iii.proper and sufficient care for the maintenance of adequate accounting records has beentaken in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities; iv.the Annual Accounts have been prepared on a going concern basis. v. internalfinancialcontrols have been laid down and being followed by the Company and that suchfinancial controls are adequate and are operating effectively. vi. proper systems toensure compliance with the provisions of all applicable laws have been devised and thatsuch systems are adequate and operating effectively.
15. Related Party Transactions (RPT) on an arm's length basis and wereAllRPTthatwereenteredinto during the financial in the ordinary course of business. TheCompany had obtained approval of the members of the Company for Material RPT's enteredwith its holding Company M/s. NRB Bearings Limited at 39th
Annual General Meeting for the F.Y. 2019-20. There were no other materially significantRPT by the Company with promoters Directors key managerial personnel or other designatedpersons other than the same.
All RPT are placed before the audit committee as also the board for approval. Priorapproval of the audit committee is obtained on periodic basis for transactions which areforeseen and repetitive in nature. The compliance of the transfer pricing norms inrelation to such transactions is certified by the tax advisors.
The RPT policy as approved by the Board is uploaded on the Company's website. Theparticulars of contracts or arrangements with related parties referred to in Section 188(1) of the Companies Act 2013 in Form AOC-2 pursuant to Section 134 (3) (h) of the Actand Rule 8(2) of the Companies (Accounts) Rules 2014 is attached as Annexure-IIIto this Report.
16. Internal Control System
There are adequate internal financial controls in place with reference to the financialstatements. The upgraded ERP system provides reports to validate the required internalfinance controls.
Further last improvements by way of biometric attendance and linked leave records andpayroll systems have been implemented with existing system. The Internal Auditors havebeen regularly reviewing the same and their recommendations for improvements have beenincluded in the ERP upgrade implementation. During the year under review these controlswere evaluated and no significant weakness was identified either in the design oroperation of the controls.
This formalized system of internal control facilitates effective compliance of Section138 of the Companies Act 2013 and the Listing Regulations.
Your Company's Statutory Auditors have in their report confirmed the adequacy of theinternal control procedures.
17. Particulars of Employees
In terms of the provisions of Section 197(12) of the Act there are no employees of theCompany drawing remuneration in excess of the limits set out in the said provision.
The disclosure pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are annexed to this report at AnnexureIV.
18. Auditors Statutory Auditor
Appointment of M/s Walker Chandiok & Co. LLP Chartered Accountants as statutoryauditors were approved at the 38th Annual General Meeting held on August 1 2018 for aterm of five (5) years upto March 31 2023.
Pursuant to the provisions of Section 148 of the Companies Act 2013 and the Companies(Cost Records and Audit) Rules 2014 the products manufactured by the Company and based onthe criteria laid down under the aforesaid rules Cost Audit is not applicable to yourCompany. However from the F.Y. 2018-19 maintenance of prescribed Cost records isapplicable to your Company and accordingly such accounts and records are made andmaintained by the Company. Secretarial Auditor
Pursuant to the provision of section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Board hasappointed Mr. Upendra Shukla Practicing Company Secretary to carry out Secretarial Auditof the Company for the Financial Year 2019-20. The report of the Secretarial Auditor isannexed to this report as
Explanation or Comments on disqualifications reservations adverse remarks ordisclaimers in the auditor's reports There have been no disqualificationsreservations adverse remarks or disclaimers in the auditor's reports requiringexplanation or comments by the Board.
19. Significant and Material Orders passed by the Regulators or the Courts or theTribunals
There are no orders passed by the Regulators or Courts or Tribunals impacting the goingconcern status of the Company's operation.
20. Change in nature of business
During the year under review there was no change in the nature of the business carriedon by the Company.
21. Disclosure under Sexual Harassment of Women at the Workplace (PreventionProhibition and Redressal) Act 2013
In accordance with the provisions of the Sexual Harassment of Women at the Workplace
(Prevention Prohibition and Redressal) Act 2013 the Company is not required to setupInternal
Complaints Committees (ICC) to redress complaints as the Company has no women employeeand during the year under review there were no complaints received. 22. Materialchanges and commitments if any affecting the financial position of the
There are no material changes and commitments other than the impact of the lockdownrestrictions arising from Covid-19 pandemic affecting the financialposition of theCompany which have occurred between the close of the financial year on March 31 2020 towhich the financial statements relate and the date of this Report.
However the COVID-19 pandemic has had an unprecedented impact on the nation thepeople and the economy and business. The government announced a stringent nationwidelockdown from March 25 2020 to control the spread of COVID-19. However even before thenationwide lockdown various state governments and local administrations had implementeddifferent containment measures such as sealing borders closing public places suspendingtransport services and state-specific lockdown. The operations of the Company wereseverely disrupted.
The Company has moved at speed to support its stakeholders and maintain operationsthrough crisis and prepare for business in a new normal. The Company's utmost priority hasbeen the health safety and well-being of our people and partners. The Company has rapidlyimplemented protocols for safe operations. However compliance with the restrictions onnumber of employees and the shift working hours permitted has resulted in non-optimumcapacity utilisation which your Company expects will improve as lockdown conditions aregradually relaxed. Ranchi plant and all warehouses of the Company have on the date of thisreport been opened with the requisite government permissions and adherence to highestsafety standards. While we are seeing some demand revival in the farm equipment and 2wheeler categories the overall demand has contracted to a great extent and the exact timewhich these categories and the other segments like Commercial vehicles and Passengervehicles will take to recover fully remains to be seen.
The Board wishes to acknowledge and express their gratitude for the whole heartedsupport and cooperation extended by the shareholders NRB group Company's bankerscustomers suppliers and all employees of the Company for their efforts in a difficultyear.
For and on behalf of the Board of Directors
SNL Bearings Limited Harshbeena Zaveri
Place : Mumbai Date : June 23 2020