Your Directors are pleased to present the 34th Annual Report of the Companytogether with the audited financial statements for the year ended March 31 2019.
| ||Standalone ||Consolidated |
|Particulars ||Current Year 2018-19 ||Previous Year 2017-18 ||Current Year 2018-19 ||Previous Year 2017-18 |
| ||(Rs. In Lakhs) ||(Rs. In Lakhs) ||(Rs. In Lakhs) ||(Rs. In Lakhs) |
|Revenue from operations (Net of excise duty) ||212448 ||191289 ||212448 ||191289 |
|Other income ||1025 ||743 ||1030 ||738 |
|Profit before depreciation interest and tax ||23835 ||21741 ||23847 ||21724 |
|Less: Financial Charges ||4219 ||4121 ||4219 ||4121 |
|Less: Depreciation ||7885 ||9200 ||7885 ||9200 |
|Add: Share of profits/(loss) of joint venture (equity method) ||- ||- ||(1) ||11 |
|Profit before Exceptional items ||11731 ||8420 ||11742 ||8414 |
|Less: Exceptional items ||334 ||182 ||334 ||182 |
|Net profit before Taxation ||11397 ||8238 ||11408 ||8232 |
|Less: Tax ||3784 ||2176 ||3784 ||2176 |
|Profit after Taxation ||7613 ||6062 ||7624 ||6056 |
|Profit brought forward ||26052 ||21756 ||25988 ||21701 |
|Profit available for appropriation ||32765 ||26052 ||32711 ||25988 |
The net revenue from operations (net of excise duty) for the financial year ended March31 2019 at Rs. 2124 crores was higher by 11.06% over the previous year (Rs. 1913 croresin financial year ended March 31 2018). In line with your Company's growth plans thereis a focused approach towards introduction of efficient technologies in manufacturingprocess new product development and localization.
Your Company has received the proceeds of the insurance claim from the insurancecompany with respect to Manesar fire incident.
The performance of the Company is also discussed in Management Discussion and Analysisas stipulated under Regulation 34 of the Listing Regulations with the Stock Exchangeswhich forms part of the Directors' Report.
EXPANSION AND FUTURE PROSPECTS
The new greenfield plant being set-up in Gujarat to meet supplies to the Suzuki MotorGujarat Pvt Ltd is progressing as per schedule and is expected to commence full-edgedoperations by middle of 2019. In the coming years the Company will focus on growth in newdomains like commercial vehicles; bus rail and home air- conditioning.
Your Company has earned a net profit (after tax) of Rs. 76.13 crores as against Rs.60.62 crores in the previous year. The Board has recommended a dividend of Rs. 1.30 pershare (65% on the face value of equity shares of Rs. 2 each) for the financial year endedMarch 31 2019 as against Rs. 1.10 per share (55% on the face value of equity shares ofRs. 2 each) in the previous year. The dividend if approved by the Members at the ensuingAnnual General Meeting shall absorb a sum of Rs. 1022.39.Lakhs (approx) includingdividend distribution tax of Rs. 174.32 Lakhs.
TRANSFER FROM/TO RESERVES
Your Company proposes to transfer Rs. 150 Lakhs to the General Reserve and Rs. 250Lakhs is transferred on repayment of Non Convertible Debenture from Debenture RedemptionReserve.
EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS
There were no material changes and commitments that affect the financial position ofthe Company subsequent to the date of financial statement.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
During the year under review the following changes took place in the Board of yourCompany:
(i) Mr. Keiichi Yamauchi Alternate Director to Mr. Y. Iida vacated his office from9.08.2018
(ii) Mr. Keiichi Yamauchi was appointed as an Alternate Director to Mr. Y. Iida witheffect from 10.08.2018
(iii) Mr. Keiichi Yamauchi resigned from the post of Alternate Director with effectfrom 12.10.2018
(iv) Mr. Fumitaka Taki was appointed as an Alternate Director to Mr. Y. Iida witheffect from 18.10.2018
(v) Mr. Fumitaka Taki Alternate Director to Mr. Y. Iida vacated his office from5.02.2019
(vi) Mr. Toshihiro Saida was appointed as Nominee Director (Representative of DensoCorporation Japan) with effect from 6-2-2019.
(vii) Mr. Arvind Kapur was appointed as an Independent Director from 6.02.2019
(viii) Mr. Fumitaka Taki was appointed as an Alternate Director to Mr. Y. Iida witheffect from 07.02.2019
(ix) Mr. G.N Mehra Mr. K.R Ramamoorthy Mr. M.A Pathan Mr. Shailendra Swarup and Mrs.Meena Sethi were re-appointed as Independent Director(s) (for a second term in the office)from 1.4.2019.
(x) Pursuant to the provisions of Section 152 of the Companies Act 2013 Mr. Y IidaNon Executive Director of the Company retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re- appointment. The brief resume of Mr. YIida as required under the Listing Regulations is provided in the Notice of the 34thAnnual General Meeting of the Company. The requisite resolution pertaining to there-appointment appears at the respective items of the Notice along with the Statement andis recommended to the Members for approval.
Declaration from Independent Director: The Company has received necessarydeclaration(s) from all the Independent Director(s) of the Company as laid down underSection 149(7) of the Companies Act 2013 confirming that they meet the criteria as laiddown under Section 149(6) of the Companies Act 2013 and the Listing Regulations.
Board Meeting: The Board of Directors met six times during the financial year2018-19 the details of which are given in the Corporate Governance Report which formspart of this Annual Report. The intervening gap between any two meetings was within theperiod prescribed under the Companies Act 2013.
Policy on Directors' appointment and remuneration: The policy of the Company onDirectors' appointment and remuneration including criteria for determining qualificationspositive attributes and other matters are available on the website(www.subros.com/investors) of the Company.
The Composition of Audit Committee of the Company is described in Corporate GovernanceReport as stipulated under Listing Regulations which forms part of this Report.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134 (5) of the Companies Act 2013 your Directors herebyconfirm that: (a) In the preparation of the annual accounts the applicable accountingstandards have been followed along with proper explanation relating to materialdepartures; (b) The Directors have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the profit and loss of the Company for that period; (c) TheDirectors have taken proper and sufficient care for the maintenance of adequate accountingrecords 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; (d)The Directors have prepared the annual accounts on a going concern basis; (e) TheDirectors have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and (f)The Directors have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
SUBSIDIARIES AND JOINT VENTURES
Thai Subros Limited the subsidiary company in Thailand did not have any businessoperations during the year. Thai Subros Limited is under voluntary liquidation and thedate of dissolution being 9th January 2019. During the year this subsidiaryincurred a loss of THB 4.36 Lakhs as against THB 8.62 Lakhs.
The name of Denso Subros Thermal Engineering Centre India Limited has been changed toDenso Subros Thermal Engineering Centre India Private Limited (DSTEC). DSTEC a JointVenture achieved revenue of Rs. 1898 Lakhs during the financial year 2018-19. The Companyincurred a loss of Rs. 3.23 Lakhs during the year as against profit after tax of Rs. 41.25Lakhs in the previous year. Your Company is holding 26% share in this JointVenture.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Companies Act 2013 and IND AS 110 - Consolidated FinancialStatements read with IND AS 31 - Interest in Joint Ventures your Directors have pleasurein attaching the Audited Consolidated Financial Statements which forms part of thisAnnual Report.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE OUTGO
The information in terms of Section 134(3)(m) of the Companies Act 2013 read withrelevant rules is annexed herewith as Annexure-1 and forms integral part of this report.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return as on 31st March 2019 in Form MGT 9 in termsof provisions of Section 134(3) and other applicable provisions of the Companies Act 2013read with Rules thereto is available on website of the Company www.subros.com/investors/financialreportsand forms integral part of this Annual Report.
AUDITORS AND AUDITOR'S REPORT
Statutory Auditors: M/s Price Waterhouse Chartered Accountants LLP CharteredAccountants hold office until the conclusion of the 37th annual generalmeeting. The Auditors' Report to the Members for the year under review does not containany qualification reservation or adverse remark. The observations of the Auditors and therelevant notes on accounts are self-explanatory and therefore do not call for any furthercomments.
Cost Auditors: The Company has re-appointed M/s. Chandra Wadhwa & Company CostAccountants as Cost Auditors of the Company to conduct the audit of cost recordsmaintained by the Company for the financial year 2019-20. The ratication of remunerationpayable to Cost Auditors for the financial year 2019-20 is being sought from the Membersof the Company at the ensuing Annual General Meeting. Pursuant to Section 148 of the Actyour Company has filed the Cost Audit Report for FY 2017-18 and the cost accounts andrecords as required to be maintained under Section 148 of the Act are duly made andmaintained by the Company.
Secretarial Auditors: The Company has re-appointed M/s. RSM & Co. CompanySecretaries as Secretarial Auditors to conduct the audit of secretarial and relatedrecords of the Company for the financial year ended 2019-20. The Secretarial Audit Reportfor the financial year ended March 31 2019 is annexed as Annexure-2 and the same isself-explanatory. The said Secretarial Audit Report does not contain any qualification oradverse remark.
During the year under review your Company has neither invited nor accepted anydeposits from the Public.
SIGNIFICANT & MATERIAL ORDERS PASSED BY THE REGULATORS
No significant material orders were passed by the Regulators or Courts or Tribunalsimpacting the going concern status and Company's operations in future.
INTERNAL FINANCIAL CONTROLS
The adequacy of Internal Financial Controls is discussed in Management Discussion andAnalysis as stipulated under the Listing Regulations with the Stock Exchanges whichforms part of this Report.
LOANS GUARANTEES OR INVESTMENTS
The Company has not made any transaction relating to inter-corporate loans andinvestment during the year.
CORPORATE SOCIAL RESPONSIBILITY
The Company has formulated a Corporate Social Responsibility (CSR) Policy to undertakeCSR initiatives as specified in Schedule VII of the Companies Act 2013. The Company hasconstituted a robust and transparent governance structure to oversee the implementation ofCSR Policy in compliance with the requirements of Section 135 of the Companies Act2013.The Annual Report on CSR activities is annexed as Annexure-3 and forms integral partof this report.
The Company has a risk management policy and framework in place to ensure properidentification and treatment of risks. The identification and mitigation of strategicbusiness operational and process risks are carried out for all functions. The keystrategic risks along with mitigation plan are presented to the risk management committeeon half-yearly basis. Few of such risks which may pose challenges are set out in theManagement Discussion and Analysis which forms part of this Annual Report. Theimplementation of the ERM framework is continuously evolving and has progressed wellduring the financial year 2018-19.
Pursuant to Section 177(9) of the Companies Act 2013 the Company has established aVigil Mechanism for directors employees suppliers contractors and other stakeholders ofthe Company. The same is also intended to cover the Whistle Blower Policy under theListing Regulations. The purpose and objective of this Policy is to cover serious concernsthat would have a larger impact on image and values of the Company due to incorrectfinancial reporting or improper conduct. The Whistle Blower Policy has been placed on thewebsite of the Company www.subros.com/investors.
The Statutory Auditors Cost Auditors or Secretarial Auditors have not reported anyfrauds under Section 143(2) of the Companies Act 2013 and rules made thereunder.
The Company has in place a Sexual Harassment Policy in line with the requirements ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013. The Internal Complaints Committee has been set up to redress complaints receivedregarding sexual harassment. No Complaint was received during the year in this regard.
RELATED PARTY TRANSACTIONS
The Board of Directors has formulated a Related Party Transaction Policy fordetermining material related party transactions. The Related Party Transaction Policy isavailable on the website of the Company. A statement of all particulars of Contracts orArrangements with related parties referred to in Section 188(1) of the Companies Act2013 is annexed as Annexure-4 and forms integral part of this Report.
The Equity Shares of your Company continue to be listed on BSE Limited (BSE) NSELimited (NSE) and Delhi Stock Exchange Limited (DSE). The listing fees for the year2018-19 have been paid to the said stock exchanges except to DSE as Securities andExchange Board of India has withdrawn the recognition granted to DSE on November 19 2014.
ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD
The Board has carried out an annual evaluation of its own performance board committeesand individual directors in accordance with the provisions of the Companies Act 2013SEBI Listing Regulations and Guidance Note issued by SEBI. In a separate meeting ofindependent directors the performance of non-independent directors Chairman and ManagingDirector and Board as a whole was evaluated taking into account the view of all the boardmembers. The Board members have adequate expertise drawn from diverse domains likebanking administration strategic and technical and bring specific competencies relevantto the Company's business. Information flow from Management to the Board and Committeesare timely and of acceptable quality. The Board deliberations and participation of memberswere found to be quite satisfactory and the Board's overall functioning is effectiveduring the year under review.
In compliance with the provisions of the Companies Act 2013 the Board has formulateda framework inter alia for a formal mechanism of evaluation of its performances as wellas that of its committees and Directors including the Chairman of the Board. TheNomination & Remuneration Committee (NRC) has since approved the formats for theevaluation of the Board Directors and Chairmanof the Companyconsidering qualificationexpertise attributes and various parameters based on which evaluation of the Board has tobe carried out by the Company. There are no specific observations on the board evaluationcarried out during the year as well as for the previous year.
PREFERENTIAL ALLOTTMENT OF EQUITY SHARES
During the year under review the Company has issued and allotted 5247150 equityshares on December 7 2018 at a price of Rs. 400 per equity share (face value of Rs 2each) on preferential basis to Denso Corporation Japan for an amount of Rs 209.88 crores.The said issue of equity shares was approved by the shareholders in the extra-ordinarygeneral meeting held on 26th October 2018. The details of which are also givenin the Corporate Governance Report which forms part of this Report.
ICRA has assigned the Long Term Ratings at [ICRA] AA- "Stable" and for ShortTerm Ratings at [ICRA] A1+. The NCD Program has been assigned a rating of[ICRA]AA-"Stable".
CORPORATE GOVERNANCE AND SHAREHOLDERS INFORMATION
The Company is committed to maintain the highest standards of corporate governance. TheCompany has complied with the corporate governance requirements as stipulated under theListing Regulations. A report on Corporate Governance along with a Certificate from thePracticing Company Secretaries of the Company regarding compliance on the conditions ofcorporate governance pursuant to Listing Regulations is annexed herewith and formsintegral part of this Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosure in respect to remuneration and other details as per the provisions ofSection 197(12) of the Companies Act 2013 read with Rule 5(1) of Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 are provided in the Annexure-5 tothis Report.
Disclosure in respect to remuneration and other details as per the provisions ofSection 197(12) of the Companies Act 2013 read with Rule 5(2) and 5(3) of Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are provided in theAnnexure to this Report having regard to the provisions of the first proviso to Section136(1) of the Companies Act 2013 the Annual Report excluding the said statement ofemployees under Section 197(12) of Companies Act 2013 is being sent to the Members of theCompany. The said information is available for inspection at the registered office of theCompany during working hours and any Member interested in obtaining said statement maywrite to the Company Secretary at the registered office of the Company.
The Company has complied with the secretarial standards issued by the Institute ofCompany Secretaries of India on meetings of Board of Directors and General Meetings.
Your Board wishes to convey their appreciation to all the employees for their enormousefforts as well as their collective contribution to the Company's performance. YourDirectors acknowledge with gratitude the co-operation and support extended by theCompany's bankers Canara Bank Yes Bank HDFC Bank Kotak Mahindra Bank & otherBanks and our collaborators Denso Corporation Japan and Suzuki Motor Corporation Japanfor their continued support. Your Directors also take this opportunity to convey heartfeltgratitude to the Company's valued customers particularly Maruti Suzuki India LimitedTata Motors Limited Mahindra & Mahindra Limited Renault Nissan Automotive India Pvt.Ltd Ashok Leyland Limited and Force Motors Limited for the trust and confidence reposedby them in the Management for their copious co-operation and support provided to theCompany.
Last but not the least the Board wishes to thank all Members vendors and businessassociates for their trust and constant support to the Company.
| ||For and on behalf of the Board of Directors |
| ||RAMESH SURI |
| ||Chairman |
| ||(DIN: 00176488) |
|Place: New Delhi || |
|Dated: May 21 2019 || |