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Subros Ltd.

BSE: 517168 Sector: Auto
NSE: SUBROS ISIN Code: INE287B01021
BSE 00:00 | 26 Nov 336.75 -15.00
(-4.26%)
OPEN

349.45

HIGH

352.25

LOW

332.15

NSE 00:00 | 26 Nov 336.60 -15.10
(-4.29%)
OPEN

352.00

HIGH

352.00

LOW

334.00

OPEN 349.45
PREVIOUS CLOSE 351.75
VOLUME 7280
52-Week high 418.00
52-Week low 283.00
P/E 35.86
Mkt Cap.(Rs cr) 2,197
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 349.45
CLOSE 351.75
VOLUME 7280
52-Week high 418.00
52-Week low 283.00
P/E 35.86
Mkt Cap.(Rs cr) 2,197
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Subros Ltd. (SUBROS) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the 36th Annual Report of the Companytogether with the audited financial statements for the year ended March 31 2021.

FINANCIAL RESULTS

Standalone Consolidated
Particulars Current Year 2020-21 Previous Year 2019-20 Current Year 2020-21 Previous Year 2019-20
(Rs. in Lakhs)
Revenue from operations (Net of excise duty) 179565 199280 179565 199280
Other income 1031 1999 1031 2035
Profit before depreciation interest and tax 16409 20903 16409 20938
Less: Financial Charges 1625 3634 1625 3634
Less: Depreciation 9211 9030 9211 9030
Add: Share of profits/loss of joint venture (equity method) - - 68 (8)
Profit before Exceptional items 5573 8239 5641 8266
Less: Exceptional items - (4129) - (4129)
Net profit before Taxation 5573 12368 5641 12395
Less: Tax 902 3912 902 3912
Profit after Taxation 4671 8456 4739 8483
Profit brought forward 40582 32765 40553 32711
Profit available for appropriation 44924 40582 44964 40553

BUSINESS OPERATIONS

The net revenue from operations for the financial year ended March 31 2021 isRs. 1795.65 crores as against Rs. 1992.80 crores in the previous financial year.However the Net Profit before tax is Rs. 55.73 crores as compared to Rs. 123.68 crores inthe previous financial year. The outbreak of Covid-19 pandemic has created economicdisruption throughout the world including India. The Company and its joint venture'soperations have been adversely impacted due to the consequent lockdown announced by theGovernment of India due to which the operations were suspended for part of the firstquarter and gradually resumed with requisite precautions.

The Company and its joint venture have considered the possible effects that may resultfrom COVID-19 in the preparation of these consolidated financial results for the quarterand year ended March 31 2021. While assessing the carrying value of its assets andliabilities the Company and its joint venture have considered internal and externalinformation available and based on such information and assessment have concluded thatno further adjustments are required to be made to these consolidated financial results.However given the evolving scenario and uncertainties with respect to nature andduration the impact of the pandemic may differ from that estimated as at the date ofapproval of these consolidated financial results. The Company and its joint venture willcontinue to closely monitor any material changes to future economic conditions.

The performance of the Company is also discussed in Management Discussion and Analysisas stipulated under

Regulation 34 of the Listing Regulations with the Stock Exchanges which forms part ofthe Directors' Report.

EXTERNAL ENVIRONMENT AND ECONOMIC OUTLOOK

The effect of Covid-19 was felt on the Company's operations during first quarter of thefinancial year. However recovery was seen in the passenger car segment in second quarterfollowed by recovery in truck segment. Bus AC segment did not show much demand throughoutthe year mainly due to lack of demand of staff buses due to extended work from home forthe most industries specially IT and ITES & closure of schools and less demand for thetourist buses. However Air-conditioners for ambulances did show demand coming in duringfinancial year. The second wave of Covid-19 is likely to have impact on most of thevehicle segments in first quarter of financial year 2021-22 but situation is likely toimprove from second quarter onwards in passenger car segment provided pandemic does notlead to repeat & extended market lockdowns. However CV segment specially thepassenger carriers (buses) may perform similar to financial year 2020-21 due to continuedsubdued demand for staff buses school buses and tourist buses due to covid impact. Trucksegment may perform similar to financial year 2020-21 though second Covid-19 wave impactand duration would certainly have some impact to this segment also. Railway segment islikely to perform similar to the financial year 2020-21 although demand for rail coachesand suburban air conditioned trains might be slightly lesser than financial year 2020-21due to focus on railways for supporting the pandemic related essential goods movementduring early part of financial year 2021-22. Performance of Home AC segment in financialyear 2021-22 would also depend on the market lockdowns and consumer sentiments due tosecond wave and may impact peak summer season sales in first quarter and might performsimilar to financial year 2020-21.

EXPANSION AND FUTURE PROSPECTS

During the year the Company is planning for capacity enhancement at Karsanpura plantin line with the manufacturing plans of new models by the OEMs along with continued focuson localization and cost optimization activities. The research and development activitiesshall continue to focus on new product development and new product introduction inElectric & Hybrid vehicles Passenger vehicles Commercial vehicles Off-road vehiclesand product range expansion in Home AC and Railway segments.

DIVIDEND

Your Company has earned a net profit (after tax) of Rs. 46.71 crores as against Rs.84.56 crores in the previous year. The Board has recommended a dividend of Rs. 0.70 pershare (35% on the face value of equity shares of Rs. 2 each) for the financial year endedMarch 31 2021 as against Rs. 0.80 per share (40% 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. 456.65 Lakhs (approx).

The Dividend Distribution Policy of the Company is available on the Company's websiteat www.subros.com/investors.html

TRANSFER TO RESERVES

Your Company proposes to transfer Rs. 150 Lakhs to the General Reserve and Rs. 250Lakhs is transferred from the Debenture Redemption Reserves to the General Reserve onaccount of repayment of Non-Convertible Debentures.

MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THEFINANCIAL YEAR AND DATE OF THE REPORT

There were no material changes and commitments that affect the financial position ofthe Company subsequent to the date of financial statement.

CAPITAL AND DEBT STRUCTURE

During the year there is no change in the Capital Structure of your Company. Howeveryour Company has redeemed the last tranche of Non-Convertible Debentures. Accordingly theentire issue of Non-convertible Debentures of Rs. 50 crores stands redeemed on April 302020.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

The Board expresses profound grief and sorrow on the sudden and untimely demise of Mr.Ramesh Suri Chairman of the Company on 12th May 2021. His demise is anirreparable loss to the Company. The Board expresses sincere gratitude and place on recordsincere appreciation for the invaluable guidance and contribution made by him towardsgrowth and development of the Company.

Ms. Shradha Suri Managing Director of the Company has been appointed as Chairperson& Managing Director of the Board/ Company with effect from May 26 2021. During theyear under review the following changes took place in the Board and Key ManagerialPersonnel of your Company:

i. Mr. Toshihiro Saida Nominee Director of DENSO Corporation Japan resigned witheffect from December 12 2020.

ii. Mr. Tomoaki Yoshimori was appointed as Nominee Director of DENSO Corporation Japanwith effect from December 12 2020.

iii. Mr. Yasuhiro Iida Nominee Director of DENSO Corporation Japan resigned witheffect from March 30 2021.

iv. Mr. Hidemasa Takahashi was appointed as Nominee Director of DENSO CorporationJapan with effect from March 30 2021.

v. Mr. Fumitaka Taki vacated his office on March 30 2021 and was appointed asAlternate Director to Mr. Hidemasa Takahashi with effect from the same date.

vi. Mr. Manoj K. Sethi resigned as Chief Financial Officer with effect from March 312021.

vii. Mr. Hemant Kumar Agarwal was appointed as Chief Financial Officer of the Companywith effect from April 1 2021.

viii. Mr. Parmod Kumar Duggal was appointed as Chief Executive Officer of the Companywith effect from April 1 2021.

Pursuant to the provisions of Section 152 of the Companies Act 2013 Dr. Jyotsna SuriDirector of the Company retires by rotation at the ensuing Annual General Meeting andbeing eligible offers herself for re-appointment. The brief resume of Dr. Jyotsna Suri asrequired under the Listing Regulations and Secretarial Standards is provided in the Noticeof the 36th Annual General Meeting of the Company. The requisite resolutionpertaining to the re-appointment appears at the respective item of the Notice along withthe Statement and is recommended to the Members for approval.

Declaration from Independent Directors: 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 five times during the financial year2020-21 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 is available on the websitewww.subros.com/investors.html of the Company.

AUDIT COMMITTEE

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 accounting standards havebeen followed along with proper explanation relating to material departures;

(b) The Directors have selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period;

(c) The Directors 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) The Directors have prepared the annual accounts on a going concern basis;

(e) The Directors have laid down internal financial controls to be followed by theCompany and that such internal financial controls are adequate and were operatingeffectively; and

(f) The Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.

SUBSIDIARIES AND JOINT VENTURES

DENSO Subros Thermal Engineering Centre India Private Limited a Joint Ventureachieved revenue of Rs. 1865 Lakhs during the financial year 2020-21. The Joint Ventureachieved a profit of Rs. 260.99 Lakhs during the year as against loss of Rs. 31.61 Lakhsin the previous year. Your Company is holding 26% shares in this Joint Venture.

The Company does not have any subsidiary.

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 a 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 March 31 2021 in Form MGT 9 in terms of provisionsof Section 134(3) and other applicable provisions of the Companies Act 2013 read withRules thereto is available on website of the Company www.subros.com/investors.htmland forms integral part of this Annual Report.

AUDITORS AND AUDITOR'S REPORT

Statutory Auditors: M/s Price Waterhouse Chartered Accountants LLP CharteredAccountants will 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 2021-22. The ratification of remunerationpayable to Cost Auditors for the financial year 2021-22 is being sought from the Membersof the Company at the ensuing Annual General Meeting.

Secretarial Auditors: The Company has re-appointed M/s. RSM & Co.Company Secretaries as Secretarial Auditors to conduct the audit of secretarial andrelated records of the Company for the financial year ended 2021-22. The Secretarial AuditReport for the financial year ended March 31 2021 is annexed as Annexure-2 and the sameis self-explanatory. The said Secretarial Audit Report does not contain any qualificationor adverse remark.

DEPOSITS

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 order was 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 andguarantees.

Details related to the investments made by the Company are given in Note 5(a)(ii) tothe Standalone Financial Statement of the Company.

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 Act 2013.The Annual Report on CSR activities is annexed as Annexure-3 and forms integral part ofthis report. This Policy is placed on the website of the Companywww.subros.com/investors.html.

RISK MANAGEMENT

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 2020-21.

In addition to the ongoing Risk Management activities the Company has focused onreviewing and mitigating the Cyber Security related risk.

VIGIL MECHANISM

Pursuant to Section 177(9) of the Companies Act 2013 the Company has established aVigil Mechanism/ Whistle Blower Policy for directors employees suppliers contractorsand other stakeholders of the Company. The purpose and objective of this Policy is tocover serious concerns that would have a larger impact on image and values of the Companydue to incorrect financial reporting or improper conduct. The Whistle Blower Policy hasbeen placed on the website of the Company www.subros.com/investors.html The StatutoryAuditors Cost Auditors or Secretarial Auditors have not reported any frauds under Section143(2) of the Companies Act 2013 and rules made thereunder.

SEXUAL HARASSMENT

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.

During the year the Company did not receive any complaint.

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.

LISTING

The Equity Shares of your Company continue to be listed on BSE Limited (BSE) NationalStock Exchange of India Limited (NSE) and Delhi Stock Exchange Limited (DSE). The listingfees for the year 2020-21 have been paid to the said stock exchanges except to DSE asSecurities and Exchange Board of India has withdrawn the recognition granted to DSE onNovember 19 2014.

ANNUAL EVALUATION

In compliance with the provisions of the Companies Act 2013 Listing Regulations andGuidance Note issued by SEBI the Board has formulated a framework inter alia for aformal mechanism of evaluation of its performance as well as that of its committees anddirectors.

In this regard the Board has inter alia carried out an annual evaluation of theperformance of all the independent director(s). The Nomination & RemunerationCommittee ("NRC") inter alia reviewed the performance of directors and theBoard as a whole and its committee(s). The Independent Directors inter alia reviewedperformance of non-independent directors the Board as a whole and its committees andassessed the quality quantity and timeliness of flow of information between the Company'smanagement and the Board.

The evaluation criteria of the performance of every director Board & itscommittees included inter alia their structure/ composition meeting attendanceexpertise drawn from diverse domains banking administration strategic and technical andbring specific competencies relevant to the Company's business. The Board membersparticipation and overall functioning was quite satisfactory and effective during the yearunder review. There are no specific observations on the Board evaluation carried outduring the year as well as for the previous year.

CREDIT RATING

ICRA has assigned / reaffirmed the Long Term Ratings as [ICRA] AA- "Stable"and for Short Terms Ratings as [ICRA] A1+ "Stable".

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 second 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.

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. All Policies of the company are available on the website ofthe Company www.subros.com/investors.html.

BUSINESS RESPONSIBILITY REPORT

A report on adoption of responsible business practices in the interest of the socialgovernance and environmental perspective are as vital as their financial and operationalperformance. Conforming to the requirements of the clause (f) of sub-regulation (2) ofRegulation 34 of Securities and Exchange Board of India the Business Responsibility Reportfor Financial Year 2020-21 is annexed herewith and forms integral part of this Report.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

The disclosure related to IEPF related activities during the year under review forms apart of the report on Corporate Governance.

COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has complied with the Secretarial Standards issued by the Institute ofCompany Secretaries of India on meetings of Board of Directors its Committee(s) andGeneral Meetings.

ACKNOWLEDGMENT

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 Company'sbankers HDFC Bank Kotak Mahindra Bank & other Banks and our collaborators DENSOCorporation Japan and Suzuki Motor Corporation Japan for their continued support. YourDirectors also take this opportunity to convey heartfelt gratitude to the Company's valuedcustomers particularly Maruti Suzuki India Limited Tata Motors Limited Mahindra &Mahindra Limited Renault Nissan Automotive India Pvt. Ltd and Force Motors Limited forthe trust and confidence reposed by them in the Management for their copious co-operationand support provided to the Company.

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

SHRADHA SURI
Chairperson & Managing Director
(DIN: 00176902)
Place: New Delhi
Dated: June 29 2021

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