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Subros Ltd.

BSE: 517168 Sector: Auto
NSE: SUBROS ISIN Code: INE287B01021
BSE 16:01 | 22 Mar 260.10 0.70
(0.27%)
OPEN

263.40

HIGH

263.40

LOW

259.60

NSE 15:48 | 22 Mar 259.85 0.25
(0.10%)
OPEN

260.00

HIGH

262.60

LOW

258.30

OPEN 263.40
PREVIOUS CLOSE 259.40
VOLUME 1062
52-Week high 379.10
52-Week low 206.45
P/E 20.94
Mkt Cap.(Rs cr) 1,697
Buy Price 257.00
Buy Qty 1.00
Sell Price 260.95
Sell Qty 4.00
OPEN 263.40
CLOSE 259.40
VOLUME 1062
52-Week high 379.10
52-Week low 206.45
P/E 20.94
Mkt Cap.(Rs cr) 1,697
Buy Price 257.00
Buy Qty 1.00
Sell Price 260.95
Sell Qty 4.00

Subros Ltd. (SUBROS) - Director Report

Company director report

Dear Members

Your Directors are pleased to present the 33rd Annual Report of the Company togetherwith the audited financial statements for the year ended March 31 2018.

FINANCIAL RESULTS

Standalone Consolidated
PARTICULARS Current year 2017-18 Previous year 2016-17 Current year 2017-18 Previous year 2016-17
(` in Lakhs) (` in Lakhs) (` in Lakhs) (` in Lakhs)
Revenue from operations (Net of excise duty) 191289 153493 191289 153492
Other income 743 728 738 727
Profit before depreciation interest and tax 21741 17503 21724 17491
Less: Financial Charges 4121 4791 4121 4791
Less: Depreciation 9200 8791 9200 8791
Add: Share of profits of joint venture (equity method) - - 11 2
Profit before Exceptional items 8420 3921 8414 3911
Less: Exceptional Items 182 3103 182 3103
Net profit before Taxation 8238 818 8232 808
Less: Tax 2176 -515 2176 -510
Profit after Taxation 6062 1333 6056 1318
Profit brought forward 21755 21178 21701 21156
Profit Available for appropriation 26051 21755 25988 21701

BUSINESS OPERATIONS

The net revenue from operations (net of excise duty) for the financial year ended March31 2018 at Rs. 1913 crores was higher by 24.63% over the previous year (Rs. 1535 croresin financial year ended March 31 2017). In line with Company's growth plans there iscontinued focused approach towards building additional capacities introduction ofefficient technologies in manufacturing process new product development and localization.

With the concerted efforts of the Company the Manesar Plant has been fully reinstatedand is operational after the fire incident. An interim claim amount has been received fromthe insurance company and the final claim is under settlement.

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 Company is setting-up a greenfield plant in Gujarat to meet supplies to the SuzukiMotor Gujarat Pvt Ltd. The Company expects growth in coming years due to increased shareof business from its existing customers and expansion of business in new domains likecommercial vehicles bus and rail air- conditioning.

DIVIDEND

Your Company has earned a net profit (after tax) of Rs. 60.62 crores as against Rs.13.33 crores in the previous year. The Board has recommend a dividend of Rs. 1.10 pershare (55% on the face value of equity shares of Rs. 2 each) for the financial year endedMarch 31 2018 as against Rs. 0.50 per share (25% 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. 794.20 Lakhs (approx) includingdividend tax.

TRANSFER TO RESERVES

Your Company proposes to transfer Rs. 150 Lakhs to the General Reserve and Rs.1250Lakhs to the Debenture Redemption Reserve.

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

(i) During the year under review Mr. Hanuwant Singh Independent Director passedaway on June 30 2017 and the Board deeply mourns this irreparable loss.

(ii) Pursuant to the provisions of Section 152 of the Companies Act 2013 Dr.

Jyotsna Suri Non Executive Director of the Company retires by rotation at the ensuingAnnual General Meeting and being eligible offers herself for reappointment. The briefresume of Dr. Jyotsna Suri as required under the Listing Regulations is provided in theNotice of the 33rd Annual General Meeting of the Company. The requisite resolutionpertaining to the reappointment appears at the respective items of the Notice along withthe Statement and is recommended to the Members for approval.

(iii) Declaration from Independent Director: The Company has received necessarydeclaration(s) from all the Independent Directors 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.

(iv) Board Evaluation: In compliance with the provisions of the Companies Act2013 the Board has formulated a framework inter alia for a formal mechanism ofevaluation of its performances as well as that of its committees and Directors includingthe Chairman of the Board. The Nomination & Remuneration Committee (NRC) has approvedthe formats for the evaluation of the Board Directors and Chairman of the Companyconsidering qualification expertise attributes and various parameters based on whichevaluation of the Board has to be carried out by the Company. There are no specificobservations on the board evaluation carried out during the year as well as for theprevious year. However the Members of the NRC noted the exceptional sagacity shown by Mr.Ramesh Suri Chairman relating to the reinstatement of the Manesar Plant after the firemishap had fully gutted it.

The Members of NRC also unanimously commended the performance of Ms. Shradha SuriManaging Director in providing guidance and directions during the fire crisis in theManesar Plant and re-instating within the shortest possible time.

(v) Board Meeting: The Board of Directors met five times during the financial year2017-18 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.

(iv) Policy on Directors' appointment and remuneration: The policy of the Companyon Directors' appointment and remuneration including criteria for determiningqualifications positive attributes and other matters are available on the website(www.subros.com/investors) 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 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 and incurred a loss of THB 8.62 Lakhs as against THB 6.73Lakhs. As the business of the subsidiary is not forthcoming the Board has approved theclosure of Thai Subros Limited.

Denso Subros Thermal Engineering Centre India Limited a Joint Venture achievedconsistent revenue of Rs. 1557 Lakhs. The Company earned a marginal increase in profitafter tax at Rs. 41.25 Lakhs during the year as against profit of Rs.7.34 Lakhs in theprevious year. Your Company is holding 26% share in this Joint Venture.

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

Pursuant to Section 92(3) of the Companies Act 2013 and Rule 12 of the Companies(Management and Administration) Rules 2014 the extract of annual return in Form MGT-9is annexed as Annexure-2 to this report and forms integral part of this 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 general meeting. TheAuditors' Report to the Members for the year under review does not contain anyqualification 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 2018-19. The ratification of remunerationpayable to Cost Auditors for the financial year 2018-19 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. CompanySecretaries as Secretarial Auditors to conduct the audit of secretarial and relatedrecords of the Company for the financial year ended 2018-19. The Secretarial Audit Reportfor the financial year ended March 31 2018 is annexed as Annexure-3 and the same isself-explanatory. The said Secretarial Audit Report does not contain any qualification oradverse remark.

FIXED 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 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 - 4 and forms integralpart of this Report.

RISK MANAGEMENT

The Company has a well defined risk management policy and framework in place to ensureproper identification and treatment of risks. The identification and mitigation ofstrategic business operational and process risks are carried out for all functions. Thekey strategic risks along with mitigation plan are presented to the risk managementcommittee on half-yearly basis. Some of the risks which may pose challenges are set out inthe Management Discussion and Analysis which forms part of this Annual Report. Theimplementation of the ERM framework has progressed well.

VIGIL MECHANISM

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 of the Company have notreported any frauds under Section 143(12) of the Companies Act 2013 and rules madethereunder

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. One Complaint was received under the Policy during the yearand the same was disposed off.

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-5 and forms integral parts of this Report.

LISTING

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 year2017-18 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

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 industries likeBanking Administration and Technical and bring specific competencies relevant to theCompany's business. Information flow from Management to the Board and Committees aretimely and of acceptable quality. The Board deliberations and participation of memberswere found to be quite satisfactory and the Board's overall functioning is effective.

NON-CONVERTIBLE DEBENTURES

The Company has allotted Secured Redeemable Non-Convertible Debentures (NCDs) onprivate placement basis for an amount of Rs. 50 crores on August 22 2018. The issue ofNCDs were approved vide Postal Ballot notice dated March 29 2017 details of which aregiven in the Corporate Governance Report which forms part of this Report.

CREDIT RATING

ICRA has reaffirmed/assiagned the Long Term and Short Term Ratings at [ICRA] A+ and[ICRA] A1+. The NCD Program has been assigned a rating of [ICRA]A+.

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- 6 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.

OTHER DISCLOSURES

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.

ACKNOWLEDGMENT

Your Board of Directors wishes to convey their appreciation to all the employees fortheir enormous efforts as well as their collective contribution to the Company'sperformance. Your Directors acknowledge with gratitude the co-operation and supportextended by Company's bankers Canara Bank Kotak Mahindra Bank & other Banks and ourcollaborators Denso Corporation Japan and Suzuki Motor Corporation Japan for theircontinued support. Your Directors also take this opportunity to convey heartfelt gratitudeto the Company's valued customers particularly Maruti Suzuki India Limited Tata MotorsLimited Mahindra & Mahindra Limited Renault Nissan Automotive India Pvt. Ltd andForce Motors Limited for the trust and confidence reposed by them in the Management fortheir unstinted cooperation and support provided to the Company.

Last but not the least the Board wishes to thank all Members vendors and businessassociates for their trust and continuous support to the Company.

For and on behalf of the Board of Directors

RAMESH SURI

Chairman (DIN: 00176488)

Place: New Delhi

Dated: 28 May 2018th