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Swaraj Engines Ltd.

BSE: 500407 Sector: Engineering
BSE 00:00 | 26 Oct 1673.80 -4.00






NSE 00:00 | 26 Oct 1674.55 -6.00






OPEN 1730.00
52-Week high 1989.90
52-Week low 1254.95
P/E 16.26
Mkt Cap.(Rs cr) 2,032
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 1730.00
CLOSE 1677.80
52-Week high 1989.90
52-Week low 1254.95
P/E 16.26
Mkt Cap.(Rs cr) 2,032
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Swaraj Engines Ltd. (SWARAJENG) - Director Report

Company director report

Your Directors present their 35th Annual Report together with Audited Accounts for thefinancial year ended 31st March 2021.


(Rs. in Crores)
Year Ended 31st March 2021 Year Ended 31st March 2020
Net Operating Revenue 986.57 773.30
Profit before Other Income Depreciation Finance Charges 135.66 100.43
Exceptional items and Tax
Other Income 8.59 12.78
Profit before Depreciation Finance Cost Exceptional items and Tax 144.25 113.21
Finance Cost 0.01
Depreciation and Amortisation Expense 19.77 20.13
Profit before Exceptional Items & Tax 124.48 93.07
Exceptional Items
Profit Before Tax 124.48 93.07
Tax Provision
– Current 35.95 24.67
– Deferred (4.01) (2.64)
Profit After Tax 92.54 71.04
Other Comprehensive Income (net of Tax) 0.05 (0.43)
Total Comprehensive Income 92.59 70.61

Performance Review

In the backdrop of COVID-19 scenario financial year 2020-21 was a challenging yearparticularly due to imposition of nationwide lockdown during first quarter. As a resultcountry's overall economy witnessed the sharpest decline in the first quarter of fiscal2021. Impacted by the same the Company's operations also remained suspended from 23rdMarch 2020 to 4th May 2020 and after restart of operation from 5th May 2020 theactivity level gradually picked up the pace from second quarter onwards. As agriculturesector remained unaffected during this slow down the tractor industry to which thecompany serves witnessed a strong growth during the financial year ended 31st March2021. Consequently your Company was also benefitted by the significant rise in enginedemand from Q2 onwards and registered an overall growth of 26% in its engine sales for thefinancial year 2020-21 over last year. In the process the Company crossed 100000 unitsfor the first time and posted its highest ever engine sales of 113269 units during FY21as against last year's sale of 89928 units.

Fuelled by higher engine sales volume the net operating revenue for FY 2020-21 stoodat Rs. 986.57 crores as against Rs. 773.30 crores of previous year - up 27.6%. Withcontinued focus on cost front the Company's Operating profit (EBITDA) margin at 13.8%improved by 80 basis points. While the Operating profit at Rs. 135.66 crores grew by 35.1%over last year Profit before tax at Rs. 124.48 crores registered a growth of 33.7% overlast year. Profit after tax (before other comprehensive income) of Rs. 92.54 crores(previous year - Rs. 71.04 crores) translated into Basic Earning Per Share of Rs. 76.27(previous year - Rs. 58.57). Total comprehensive income (net of tax) for the year stood atRs. 92.59 crores as against Rs. 70.61 crores of previous year.

Taking note of the emerging demand scenario in the coming years and to timely cater thecustomer requirements your Company has also approved capacity expansion programme toincrease its capacity to 150000 engines per annum from existing 135000 engines perannum. This capacity expansion will be fully financed through the internal resources andexpected to be available from Q2 FY22.

No material changes and commitments which could affect your Company's financialposition for FY 2020-21 have occurred between the end of the financial year of yourCompany and date of this report.


The fund position of the Company remained comfortable throughout the year under review.The Company after meeting the capital expenditure & working capital requirements tosupport operations has earned an income of Rs. 8.47 crores (previous year - Rs. 12.68crores) on its surplus funds.


Your Directors are pleased to recommend an equity dividend of Rs. 50.00 per share ofthe face value of Rs. 10.00 for the financial year ended 31st March 2021. Further theBoard over and above the said normal dividend has also recommended a special dividend ofRs. 19.00 per share taking the total dividend to Rs. 69.00 per share for the financialyear 2020-21 (previous year - Rs. 40.00 per share).

If approved by the Shareholders at the ensuing Annual General Meeting the above equitydividend will be paid to those shareholders whose names shall appear in the Register ofMembers as on the Book Closure date. The total equity dividend outgo for the financialyear 2020-21 will absorb a sum of Rs. 83.75 crores (previous year - Rs. 48.53 crores).Further the Board of your Company has decided not to transfer any amount to the GeneralReserves for the year under review.

Dividend Distribution Policy

The Board of your Company in its Meeting held on 20th April 2021 has also approved theDividend Distribution Policy containing the parameters mentioned in Regulation 43A(2) ofthe Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015. The same is attached as "Annexure-A" and formspart of this Annual Report.

Current Year's Review

With the Government's continued focus on rural sector good rabi crop harvestingadequate financing availability and prediction of normal monsoon it is expected that thetractor demand is likely to continue its growth trajectory in FY22 as well. However therecent surge in COVID-19 pandemic could pose some challenges.


The Company has laid down adequate internal financial controls with reference tofinancial statements commensurate with the size scale and complexity of its operations.Based on the results of such assessments carried out by Management no reportable materialweakness or significant deficiencies in the design or operation of internal financialcontrols was observed. Nonetheless your Company recognizes that any internal controlframework no matter how well designed has inherent limitations and accordingly regularaudits and review processes ensure that such systems are reinforced on an ongoing basis.Your Company uses SAP ERP Systems as a business enabler and to maintain its Books ofAccount. The transactional controls built into the SAP ERP system also help to strengthenthe processes related to segregation of duties appropriate level of approval mechanismsand maintenance of supporting records.


The Management Discussion and Analysis Report for the year under review as stipulatedunder the SEBI (Listing Obligations and Disclosures Requirements) Regulations 2015 formspart of this Annual Report.


All related party transactions that were entered during the financial year 2020-21 werein the ordinary course of the business and were on arm's length basis. All such relatedparty transactions are placed before the Audit Committee for approval whereverapplicable. Prior omnibus approval for normal transactions is also obtained from the AuditCommittee for the related party transactions which are of repetitive nature as well as forthe transactions which cannot be foreseen and the same are subsequently shared with AuditCommittee on quarterly basis. The policy on materiality of and dealing with related partytransactions as approved by the Audit Committee and the Board of Directors is uploaded onthe website of the Company and the link for the same is The disclosure of material related partytransactions pursuant to Section 134(3)(h) of the Companies Act 2013 in Form AOC-2 isannexed as "Annexure B" to this report.


In view of the leadership transition that was going through at Mahindra & Mahindra(M&M) and related change in his role Dr. Pawan Goenka decided to step down from hisposition as Non-Executive Director of the Company effective from closing business hours of20th July 2020. The Board of Directors placed on record their deep sense of gratitude forDr. Goenka for his purposeful and focused leadership visionary approach and notablecontributions over last 10 years that has built a strong culture of excellence and growthmindset and has brought the Company to its present position of eminence.

Mr. Subhash Mago upon completion of his tenure as Whole Time Director & ChiefExecutive Officer on 31st March 2020 ceased to be a Director of the Company with effectfrom 1st April 2020. Your Board has placed on record its sincere appreciation of thevaluable contributions made by Mr. Mago during his tenure as Director of the Company.

Mr. Harish Chavan joined the Board with effect from 1st April 2020. Further Mr.M.S.Grewal who was co-opted on the Board as Additional Director with effect from 20thApril 2021 was also appointed as Whole Time Director of the Company designated as WholeTime Director and Chief Executive Officer for a period from 20th April 2021 to 31st July2022. Mr. Grewal holds office upto the date of the forthcoming Annual General Meeting. TheCompany has received notice under Section 160 of the Companies Act 2013 from Membersignifying intention to propose Mr. M.S.Grewal for the office of Director at theforthcoming Annual General Meeting.

In terms of Section 152 of the Companies Act 2013 Mr. Vijay Varma and Mr.S.Durgashankar shall retire by rotation at the forthcoming Annual General Meeting andbeing eligible offer themselves for re-appointment.

Independent Directors

The Company has received declarations from all the Independent Directors of the Companyconfirming that they meet the criteria of independence as prescribed both under theCompanies Act 2013 and SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015.

Board Evaluation

Pursuant to the provisions of the Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 a system has been put in place to carry out anannual performance evaluation of the Board its Committees and individual Directors.Criteria for performance evaluation is covered in the Corporate Governance Report.

Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committeeframed a policy on appointment of Directors and Senior Management and their remuneration.The Remuneration Policy is covered in the Corporate Governance Report.

Board Meetings and Annual General Meeting

A calendar of Meetings is prepared and circulated in advance to the Directors. Duringthe year four Meetings of Board and four meetings of the Audit Committee were convenedand held. The details are covered in the Corporate Governance Report. The intervening gapbetween the Meetings was within the period prescribed under the Companies Act 2013.

The Independent Directors of the Company meet at least once in every financial yearwithout the presence of Non-Independent Directors Executive Director and any othermanagement personnel. The meeting(s) is conducted in a manner to enable the IndependentDirectors to discuss matter pertaining to inter alia review of performance ofNon-Independent Directors and the Board as a whole assess the quality quantity andtimeliness of flow of information between the Company's management and the Board that isnecessary for the Board to effectively and reasonably perform their duties. During theyear one meeting of Independent Directors was held on 22nd January 2021.

The 34th Annual General Meeting of the Company was held on 20th July 2020.

Directors' Responsibility Statement

Pursuant to Section 134(5) of the Companies Act 2013 your Directors based onrepresentations received from the Operating Management and after due enquiry confirmthat:

a) in the preparation of Annual Accounts for the financial year ended 31st March 2021the applicable accounting standards have been followed;

b) in the selection of accounting policies consulted the Statutory Auditors andapplied them consistently and made judgments and estimates that are reasonable andprudent so as to give a true and fair view of the state of affairs of the Company as at31st March 2021 and of the profit of the Company for the year ended on that date;

c) proper and sufficient care has been taken 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 irregularities;

d) the Annual Accounts have been prepared on a going concern basis;

e) adequate Internal Financial Controls to be followed by the Company have been laiddown and such Internal Financial Controls were operating effectively during the FinancialYear ended 31st March 2021;

f) proper systems have been devised to ensure compliance with the provisions of allapplicable laws and such systems were adequate and operating effectively throughout theFinancial Year ended 31st March 2021.

Audit Committee

During the year ended 31st March 2021 the Audit Committee comprised of the followingDirectors viz. Mr. Dileep C. Choksi (Chairman of the Committee) Mr. Sudhir Mankad Mr.S.Durgashankar and Mrs. Neera Saggi. Except Mr. S.Durgashankar all the Members areIndependent Directors. All the Members of the Committee possess strong accounting andfinancial management knowledge. The Company Secretary of the Company is the Secretary ofthe Committee.

All the recommendations of the Audit Committee were accepted by the Board.

F. CORPORATE GOVERNANCE Corporate Governance

A Report on Corporate Governance along with a Certificate from the Auditors of theCompany regarding the compliance of conditions of Corporate Governance as stipulated underSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 forms part ofthis Annual Report.

Vigil Mechanism / Whistle Blower Policy

The Company has a vigil mechanism through Whistle Blower Policy to deal with instanceof fraud and mismanagement if any. The details of the Policy is explained in theCorporate Governance Report and also posted on the website of the Company.

The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013

The Company has put in place anti sexual harassment policy in line with therequirements of the Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013. The policy is gender neutral. Internal Complaints Committee has beenset up to redress the complaints received if any regarding sexual harassment. During theyear no complaint was received.

Risk Management

Pursuant to the requirement of Regulation 17 of SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Company is having Risk Managementframework covering identification evaluation and control measures to mitigate theidentified business risks. Further in its meeting held on 20th April 2021 the Board hasalso constituted a Risk Management Committee comprising of the following Directors viz.Mrs. Neera Saggi Mr. Vijay Varma and Mr. M.S.Grewal.


Key Managerial Personnel (KMP)

While Mr. Subhash Mago Whole Time Director & Chief Executive Officer Mr.M.S.Grewal Company Secretary and Mr. Rajinder Arora Chief Financial Officer weredesignated as the Key Managerial Personnel as on 31st March 2020 consequent tocompletion of his tenure as Whole Time Director and Chief Executive Officer on 31st March2020 Mr. Subhash Mago ceased to be a Director of the Company with effect from 1st April2020. Further Mr. M.S.Grewal was appointed as Chief Executive Officer and Mr. Rajesh K.Kapila as Company Secretary of the Company with effect from 1st April 2020. Accordinglyduring the year under review the following were designated as the Key ManagerialPersonnel of the Company pursuant to Sections 2(51) and 203 of the Companies Act 2013read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014: Mr. M.S.Grewal Chief Executive Officer Mr. Rajinder Arora Chief Financial OfficerMr. Rajesh K. Kapila Company Secretary

Employees' Stock Option Scheme

The Nomination and Remuneration Committee of the Board of the Directors of the Companyinter alia administers and monitors the Employees' Stock Option Scheme-2015 ("theScheme") of the Company. The Scheme is in compliance with SEBI (Share Based EmployeeBenefits) Regulations 2014 ("SBEB Regulations"). Pursuant to the said Schemethe Nomination and Remuneration Committee during FY 2020-21 have granted 914 options toeligible employees and allotted 6194 equity shares against the vesting. No employee hasbeen issued stock options during the year equal to or exceeding 1% of the issued capitalof the Company at the time of grant. Information as required under the SBEB Regulations isprovided in the Annual Accounts which has been uploaded on the Company's website and canbe accessed at the web-link

Industrial Relations

Industrial relations remained cordial throughout the year under review.

Particulars of Employees

The statement of Disclosure of Remuneration under Section 197(12) of the Companies Act2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 is annexed herewith as "Annexure C". The Company had noemployee who was in receipt of remuneration of not less than Rs. 10200000 during theyear ended 31st March 2021 or not less than Rs. 850000 per month during any part of theyear.

Safety Health and Environmental Performance

Your Company's commitment towards Safety Occupational Health and Environment is beingcontinuously enhanced. The Company encourages involvement of all its employees inactivities related to safety including promotion of safety standards. This is also toensure sustainable business growth. The Company has a well-established SafetyOccupational Health and Environmental Policy which inter alia ensures safety of publicemployees plant and equipment by ensuring compliance with all statutory rules andregulations on regular basis. During the year no major accident has occurred. YourCompany also imparts training to its employees as per the predefined training calendarcarries out statutory safety audits of its facilities as per legal requirement andpromotes eco-friendly activities.

The Company's plant is certified under OHSAS 45001:2018 and EMS ISO 14001:2015.


Statutory Auditors and Auditors' Report

M/s B.K.Khare & Co. Chartered Accountants (ICAI Firm Registration Number 105102W)were appointed as the Statutory Auditors of the Company to hold office for a term of 5years from the conclusion of the 31st Annual General Meeting ("AGM") held on24th July 2017 until the conclusion of the 36th AGM of the Company to be held in the year2022.

Pursuant to the Notification issued by the Ministry of Corporate Affairs on 7th May2018 amending Section 139 of the Companies Act 2013 the mandatory requirement forratification of appointment of Auditors by the Members at every AGM has been omitted andhence your Company has not proposed ratification of appointment of M/s B.K.Khare &Co. Chartered Accountants at the forthcoming AGM.

The Report given by the Auditors on the financial statements of the Company is part ofthe Annual Report. There has been no qualification reservation or adverse remark ordisclaimer given by the Auditors in their Report.

Secretarial Auditors

Pursuant to Section 204 of the Companies Act 2013 and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Company has appointed M/s A. Arora& Co. Company Secretaries in practice (CP No. 993) to undertake the Secretarial Auditof the Company. The Report of the Secretarial Audit is annexed herewith as "AnnexureD". The Secretarial Audit Report does not contain any qualification reservation oradverse remark or disclaimer.

Cost Records and Cost Audit

The Company is maintaining cost records as prescribed under the provisions of Section148(1) of the Companies Act 2013. The Board had appointed M/s V.Kumar & AssociatesCost Accountants (Firm Registration Number 100137) as Cost Auditor for conducting theaudit of cost records of the Company for the Financial Year 2020-21.

The Board of Directors on the recommendation of the Audit Committee appointed M/sV.Kumar & Associates Cost Accountants (Firm Registration Number 100137) as the CostAuditors of the Company for the Financial Year 2021-22 under Section 148 of the CompaniesAct 2013. M/s V.Kumar & Associates have confirmed that their appointment is withinthe limits of Section 141(3)(g) of the Companies Act 2013 and have also certified thatthey are free from any disqualifications specified under Section 141(3) and proviso toSection 148(3) read with Section 141(4) of the Companies Act 2013.

The Audit Committee has also received a Certificate from the Cost Auditors certifyingtheir independence and arms length relationship with the Company.

As per the provisions of the Companies Act 2013 the remuneration payable to the CostAuditor is required to be placed before the Members in a General Meeting for theirratification. Accordingly a Resolution seeking Members' ratification for the remunerationpayable to M/s V.Kumar & Associates Cost Auditors is included in the Notice conveningthe Annual General Meeting.


Keeping with Company's core value of Good Corporate Citizenship your Company iscommitted to its social responsibility by taking various initiatives which would benefitthe society at large. In line with the Company's CSR Policy and CSR thrust areas yourCompany's CSR efforts continue to be directed towards education including vocationalskills training public health environment and community welfare. Your Company continuedits CSR initiative by providing medical equipment & material to PGIMER Chandigarh andGeneral Medical College Hospital Chandigarh including to fight COVID-19 pandemic. TheSkill Development Centre started in the adopted villages (Kambala & Kambali) inassociation with State Govt. has supported the local youth for starting own venture orgetting suitable placement. The Mobile Medical Care initiative in collaboration with GVKEMRI (MMU) during the year served to 7 villages covering around 12500 people. To supportin training and skill enhancement of the students of Diesel & Tractor Mechanic streamthe Company provided engines to various Govt. ITIs/ Polytechnics. Under the Company'sinitiative called "Prerna" various trainings were organized to empower ruralagriculture farming women through integrated rural development programme to provide andpromote innovative farm practice knowledge & technology. The Company also installedsanitary napkin vending machines in the Govt. Girls Schools at nearby villages. Cleaningof a pond at village Kambali was undertaken during the year to improve its water quality.The Company also continued its efforts towards Swachh Bharat in adopted villages saplingplantation organizing medical and blood donation camps celebration of festivals withunder privileged public awareness camps for road safety and pollution etc.

Further in compliance with Section 135 of the Companies Act 2013 read with theCompanies (Corporate Social Responsibility Policy) Rules 2014 the Company's CorporateSocial Responsibility (CSR) Committee currently comprises of Mr. Sudhir Mankad (Chairman)and Mr. Vijay Varma Mr. Rajesh Jejurikar and Mr. Harish Chavan as its members. Consequentto completion of his tenure as Whole Time Director and Chief Executive Officer of theCompany on 31st March 2020 Mr. Subhash Mago ceased to be Director of the Company andMember of CSR Committee with effect from 1st April 2020. In his place Mr. Harish Chavanhas been inducted as Member of CSR Committee with effect from 1st April 2020. The AnnualReport on CSR activities is annexed as "Annexure E" to this report.

Sustainability Initiative

Your Company is conscious of its responsibility towards preservation of naturalresources and continuously taking various initiatives to reduce the consumption ofelectricity and water. As required under Regulation 34(2)(f) of the Listing Regulationsthe Business Responsibility Report of your Company in the prescribed format is availableas a separate section as "Annexure F" and forms part of this Annual Report.

Energy Conservation Technology Absorption and Foreign Exchange Earnings and Outgo

Particulars in respect of the above activities stipulated under Section 134(3)(m) ofthe Companies Act 2013 read with Rule 8 of the Companies (Accounts) Rules 2014 isannexed herewith as "Annexure G".

J. SECRETARIAL Share Capital

Consequent to allotment of 6194 equity shares of Rs. 10/- each to eligible employeesduring the year against the exercise of the options vested to them under the Company'sEmployees' Stock Option Scheme-2015 the Paid-up Equity Share Capital of the Company as on31st March 2021 stood at 12138375 equity shares of Rs. 10/- fully paid up (previousyear - 12132181).

Annual Return

Pursuant to Section 92(3) read with Section 134(3)(a) of the Companies Act 2013 theAnnual Return as on 31st March 2021 is available on the Company's website on

Particulars of Loans Guarantees and Investments

During the year under review the Company has not extended any loans given guaranteesor provided securities and made investments except placing corporate deposits as shown inNote 2.9 to the Financial Statements.


The Company has not accepted deposit from the public falling within the ambit ofSection 73 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules2014.

The Company has not made any loans / advances and investment in its own sharesassociates etc. during the year.

Compliance with Secretarial Standards on Board and General Meetings

During the Financial Year your Company has complied with applicable SecretarialStandards issued by the Institute of Company Secretaries of India.

Change in the Nature of Business

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


The Company is not paying any commission to the Whole Time Director(s). However WholeTime Director(s) is eligible for grant of Stock Options of the Company subject toapproval of the Nomination and Remuneration Committee.

The Company has no holding / subsidiary company.

Your Directors state that no disclosure or reporting is required in respect of thefollowing items as there were no transactions / events happened on these items during theyear under review:

1. issue of equity shares with differential voting rights or sweat equity.

2. significant or material orders passed by the Regulators / Courts / Tribunal whichimpact the going concern status of the Company and its future operations.

3. voting rights which are not directly exercised by the employees in respect of sharesfor the subscription / purchase for which loan was given by the Company (as there is noscheme pursuant to which such person can beneficially hold shares as envisaged underSection 67(3)(c) of the Companies Act 2013).

4. fraud reporting by the auditors.


Your Directors take this opportunity to acknowledge the contributions of all thestakeholders and are grateful for the cooperation of various Government Authoritiesexcellent support received from the Shareholders Banks and other Business Associates. TheDirectors also recognise and appreciate the hard work and efforts put in by all theemployees and their continued contribution to the Company.

Place : S.A.S. Nagar (Mohali) (SUDHIR MANKAD)
Date : 20th April 2021 Chairman