The Directors are pleased to present the 60th Annual Report of your companyon the business and operations of the Company alongwith Audited Accounts and the Auditors'Report thereon for the Financial Year ended 31st March 2017.
|Particulars: ||Year Ended ||Year Ended |
| ||March 31 ||March 31 |
| ||2017 ||2016* |
|Net Revenue from Operations ||32879.61 ||31008.52 |
|Profit before Interest and ||4082.39 ||4032.15 |
|Depreciation || || |
|Less : Interest ||1575.15 ||1662.48 |
|Depreciation ||1231.39 ||1199.68 |
|Profit before Tax before ||1275.85 ||1169.98 |
|Exceptional Item || || |
|Exceptional Item ||0.00 ||0.00 |
|Profit before Tax and after ||1275.85 ||1169.98 |
|Exceptional Item || || |
|Less: Provision for Taxation ||288.40 ||232.00 |
|Provision for Deferred Tax ||38.63 ||358.38 |
|MAT Credit Entitlement ||- ||(232.00) |
|Less: (Excess)/Short provision of tax for earlier years written back/provided ||(95.68) ||(6.88) |
|Profit after Tax ||1044.50 ||818.48 |
|Add: Balance Brought forward from last year ||6297.48 ||5751.88 |
|Profit available for appropriations ||7341.98 ||6570.36 |
|Appropriations: || || |
|Proposed Dividend ||185.18 ||185.18 |
|Tax on Dividend ||37.70 ||37.70 |
|Transfer to General Reserve ||50.00 ||50.00 |
|Balance carried forward ||7069.10 ||6297.48 |
|Total ||7341.98 ||6570.36 |
Financial year 2016-17 was marked by couple of major events
(Demonetization in India and implementation of Bharat Standard VI norms). These alongwith the diesel ban of 2000 CC above hugely impacted the automotive industry. The autoindustry for the last year grew at 5% while the last quarter was a negative at 0.19%.
During the Financial Year 2016-17 your Company on standalone basis has recorded aturnover of Rs. 328 crores higher by approximately 6% as compared to last Financial Year2015-16 with turnover of Rs. 310 crores. Profit after tax (PAT) for the Company was at Rs.10 crores higher by approximately 27% as compared to PAT of Rs. 8 crores in previous year2015-16. The JV Company Nippon Leakless Talbros Private Limited (LTL) recorded a turnoverof Rs. 108 crores higher by approximately 4% as compared to last Financial Year 2015-16with turnover of Rs. 103 crores. PAT of LTL was at Rs. 12 crores higher by approximately11% as compared to PAT of Rs. 11 crores in previous year 2015-16.
The JV Company Magneti Marelli Talbros Chassis Systems Private Limited (MMT) haswitnessed its best ever performance in the financial year under review and continues tobring momentum and work towards expanding its portfolio to OEMs with the leading clientbeing Maruti Suzuki India Limited. This JV Company saw a 40% revenue growth during thisfinancial year because of higher volumes. The Company also achieved the highest margin inthis business in the last quarter of this financial year. MMT has recorded a turnover ofRs. 85 crores higher by approximately 40% as compared to last Financial Year 2015-16 withturnover of Rs. 61 crores. PAT of MMT was at Rs. 1 crores as compared to loss of Rs. 4crores in previous year 2015-16.
TalbrosMarugo Rubber Private Limited (TMR) another JV Company has recorded a turnoverof Rs. 30 crores higher by approximately 47% as compared to last Financial Year 2015-16of Rs. 20 crores.
During the financial year 2016-17 turnover of your Company after consolidation withproportionate shares in JV companies was Rs. 428 crores higher by approximately 9% ascompared to last Financial Year 2015-16 of Rs. 391 crores. PAT for the Company onconsolidated basis was at Rs. 15 crores higher by approximately 61% as compared to PAT ofRs. 9 crores in previous year 2015-16
In the gasket business the focus is going to be on Original Equipment Manufacturing(OEMs) business both domestically and globally as there is a huge market for exports. TheCompany has also targeted new countries like Turkey USA and Japan and is exporting tothem. Your Company has also taken another initiative by strengthening our relationshipwith our technical partners Sanwa Packing
Industries Limited Japan for two new product i.e.Heat Shield which is within thegasket product line and manufacture of gaskets using post coatings technology which willstart in October this year. Your Company hopes to achieve a business of Rs. 20 crores fromthese two products in next couple of years.
The Forging Division in addition to capturing the agri market has forayed into globalOE car segment and is in talks with a large two wheller manufacturer for its forgingrequirements. With a view to diversify its geographic risks new customers have beenapproached. We are focused on enhancing our internal efficiencies and leverage on ourtechnological know-how to supply best in class products to our customers. The revenuesfrom Forging division stood at Rs. 71 crores in the year under review against revenues ofRs. 62 crores during previous year. As part of its constant endeavour to reduce costs andimprove profitability your Company has decided on partial strategic disinvestment of itsnon-core materials business assets at its Sohna Plant. The non-core material businessassets at Sohna Plant will be sold to the Indian affiliate of M/s. Interface PerformanceMaterials USA who are pioneers and leaders of gaskets materials worldwide. Thisdisinvestment will help the Company to achieve two important things:
Enable Company to source materials locally leading to faster turnaround time inexecuting client orders which will result in reduction of imports by 15% therebyreducing the working capital requirements and the exposure to foreign exchangefluctuations.
The total savings expected to accrue from the strategic disinvestment will be in therange of Rs. 7-10 Million per annum. The savings in operational costs reduction in rawmaterial inventory and working capital investments will reduce the interest burden andtherefore enhance the profitability of the The JV Company Nippon Leakless Talbros PrivateLimited (LTL) has been exploring various options to increase its presence in two wheelergasket business. LTL has been constantly developing gaskets for new models to be launchedby Hero Honda & Yamaha in the coming financial year.
LTL is in constant touch with Toyota to develop gaskets for its four wheeler and it isexpected that mass production will be started in the month of September 2017.
The second JV Company Magneti Marelli Talbros Chassis Systems Pvt Ltd (MMT) is tryingto enter higher value- added products such as the front axle and is in talks with MarutiSuzuki
India Limited on the same and also on of expanding its range of products with them. MMTis enjoying the bull run with Maruti because they are supplying to their fast movingmodels such as Baleno Breeza which are doing very well and has also secured a large orderfrom Jaguar Land Rover.
Talbros Marugo Rubber Private Limited (TMR) the third JV Company is also on the righttrack. They are increasing their customer profile and looking very aggressively on exportsas well. TMR has also received new business from Honda and Daimler for hanger andanti-vibration parts.
India has emerged as one of the fastest growing economies in recent times. The Indianeconomy is expected to embark on higher economic growth trajectory in FY 18 owing toproactive measures taken by the government as well as favorable economic conditionsexpected to prevail during the course of the year. The main driving forces in FY 18 wouldbe increased government spending in infrastructure pick up in private investment goodmonsoon expected surge in consumer spending with pent up demand being satiated. The Goodsand Services Tax (GST) which is likely to be implemented from July 1 2017 has potentialto spur the economy further. The economic outlook of the Indian economy looks positivewith the country expected to grow at more than 7.5% in FY 18 before moving past the 8%trajectory in FY 19. Certain threats however prevail in terms of upside risk toinflation increasing global commodity prices especially crude oil prices slower growthin investment and credit rising bad loans issue and uncertain trade prospects withappreciating rupee and uncertain global economic conditions. Globally protectionismadopted by the US and higher interest rates by the Fed revival in European countries andhigher growth in China causing diversion of funds from India could counter the prospectivegrowth story of the country.
The long-term outlook remains positive for the automotive industry with all majorglobal players having a base in India for manufacturing global sourcing. Correction infuel prices and lower finance cost should further add domestic growth in the short tomedium term. Regular product launches planned by OEMs will keep customer excitement.levels up and create demand and is favourable for overall industry growth.
The future outlook of your Company remains positive as your Company along with itsJoint Venture Companies is actively working on both the strategic front and the operationsfront to take advantage of the turning trends which includes Research and Developmentimproving operational performances focus on quality broadening the customer base etc.
DIVIDEND & TRANSFER TO RESERVES
Your Directors are pleased to recommend 15% dividend for the year 2016-17subject to the approval of members at the ensuing Annual General Meeting. The total outgoon account of dividend (including Dividend Distribution Tax) for the financial year2016-17 will be ` 222.88 lacs. Also the Directors have proposed to transfer an amount of `50.00 lacs to General Reserve.
TRANSFER OF UNPAID DIVIDEND TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
In terms of provisions of Section 125 of the Companies Act 2013 the unclaimed finaldividend pertaining to the financial year 2008-09 amount aggregating to ` 96323/- wastransferred to the "Investor Education and Protection Fund" established by theCentral Government.
The Company shall transfer the unclaimed dividend for the year 2009-10 to InvestorEducation and Protection Fund on or before 19th August 2017 upon completion of 7 yearsfrom the date of transfer of said dividend into the Unclaimed Dividend Account incompliance with the provisions of Section 125 of the Companies Act 2013.
The shareholders who have not encashed their dividend warrants for the financial year2009-10 or any subsequent year are requested to lodge their claims for revalidation ofdividend warrants. The Company is specifically intimating those members who have so farnot claimed the unpaid dividend for the year 2009-10.
The paid up capital of the company as on 31st March 2017 was ` 1234.563 lacs.During the year under review the company did not issue any class or category of sharesEmployee Stock Options Convertible securities and consequently no change in the capitalstructure since previous year.
FIXED DEPOSIT SCHEME
The Fixed Deposit Scheme of the Company continued during the year. The total amountoutstanding as on 31st March 2017 stands at Rs. 8.26 crores.
During the financial year ended 31st March 2017 five (5) meetings of the Board ofDirectors were held on the following dates:
21st May 2016
15th June 2016
10th August 2016
14th November 2016
14th February 2017
The gap between any two meetings was not more than 120 days as mandated under theprovisions of Section 173 of the Companies Act 2013.
Your directors intrinsically believe in the philosophy of Corporate Governance and arecommitted to it for the effective functioning of the Board.
No Director resigned from the Company during the reporting period.
KEY MANAGERIAL PERSONNEL
As on date company has following key managerial personnel in compliance with theprovisions of section 203 of the Companies Act 2013.
|1. Mr. Umesh Talwar ||- Vice Chairman & Managing Director |
|2. Mr. Manish Khanna ||- Chief Financial Officer |
|3. Mrs. Seema Narang ||- Company Secretary |
During the year Mr. Naveen Gupta resigned from the position of Chief Financial Officerw.e.f 14.06.2016.
All directors key managerial personnel and senior management have confirmed to complywith the company's Code of conduct.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirement under Section 134(3)(c) of the
Companies Act 2013 your Directors hereby state and confirm: a) That in thepreparation of the annual accounts the applicable accounting standards have been followedand that no material departure was made for the same; b) That Directors have selected suchaccounting policies and applied them consistently and made judgments and estimates thatare reasonable and prudent so as to give a true and fair view of the state of affairs ofthe Company at the end of the financial year and of the profitof the
Company for the period ended on March 31 2017; c) That Directors have taken proper andsufficient care for the maintenance of adequate accounting records in accordance with theprovisions of Companies Act 2013 for safeguarding the assets of the Company and forpreventing and detecting fraud and other irregularities; d) That Directors have preparedthe annual accounts on a going concern basis; e) That the directors have laid downinternal financial control to be followed by the Company and that such internal financialcontrols are adequate and were operating effectively; f) That Directors had devised propersystem to ensure compliance with the provisions of all applicable laws and that suchsystems were adequate and operating effectively.
DECLARATION GIVEN BY INDEPENDENT DIRECTOR UNDER SECTION 149(6)
The independent Directors have confirmed and declared that they fulfill the criteria ofindependence as per the provisions of Section 149(6) of the Companies Act 2013 and are notdisqualified to act as an Independent Director. The Board is also of the opinion theIndependent Directors fulfillthe independence requirement in strict sense and are eligibleto continue as independent Directors of the company.
DIRECTORS RETIRING BY ROTATION
In accordance with the provisions of Companies Act 2013 and the Articles of Associationof the company Mr. Navin Juneja (DIN 00094520) retire by rotation and being eligible offerhimself for re-appointment.
Details of the proposal for his re-appointment are mentioned in the explanatorystatement annexed to the notice of the 60th Annual General Meeting. The board recommendshis reappointment.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
Loans guarantees and investments covered under Section 186 of the Companies Act 2013form part of the notes to the financial statements provided in this Annual Report.
The Audit Committee held five (5) meetings during the year. The members of the AuditCommittee are:-
|Name of Director || ||Category |
|Mr. V. Mohan ||Chairman ||Independent Director |
|Mr. Anil Kumar ||Member ||Independent Director |
|Mehra || || |
|Mr. Rajive Sawhney ||Member ||Independent Director |
|Mr. Amit Burman ||Member ||Independent Director |
|Mr. Vidur Talwar ||Member ||Non- Executive Director |
|Mr. Anuj Talwar ||Member ||Executive Director |
The Chief Financial Officer Statutory Auditors and the Internal
Auditor of the Company are permanent invitees to the meetings of the Audit Committee.It is a practice of the Committee to extend an invitation to Cost Auditor to attend themeeting as and when required.
Mrs. Seema Narang Company Secretary is the Secretary of the Audit Committee.
MANAGEMENT DISCUSSION AND ANALYSIS
As required under the listing SEBI (Listing Obligations and Disclosures Requirements)Regulations 2015 MD&A is enclosed as Annexure I and is part of this Report.
RELATED PARTY DISCLOSURES
Related party transactions are reviewed and approved by Audit committee and are alsoplaced before the Board for necessary approval. The Company has developed standardoperating procedures for the purpose of identification and monitoring of suchtransactions. party transactions There are no materially significant made by the Companywith Promoters Directors Key
Managerial Personnel or other related parties which may have a potential conflict withthe interest of the Company at large. The contracts or arrangements of the Company withrelated parties during the period under review referred to in Section 188(1) of theCompanies Act 2013 were in ordinary course of business and on arms' length basis and inaccordance with the shareholders' approval by way of special resolution. During the yearCompany had not entered into any contract/ arrangement/ transactions with related partieswhich could be considered material in accordance with the related party transaction policyof the Company.
The board has approved policy for related party transactions in terms of provision ofRegulation 23 of SEBI (Listing Obligation &
Disclosure Requirements) Regulations 2015 which is available on company's website atfollowing link: http://www.talbros. com/investors/investor-corporate/related-party-policy/The prescribed Form AOC- 2 giving particulars of contracts or arrangements with relatedparties referred to in sub-section (1) of section 188 is attached as Annexure II.
INTERNAL FINANCIAL CONTROL
The Board has adopted the policies and procedures for ensuring the orderly andefficient conduct of its business including adherence to the Company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial disclosures.
Company has appointed M/s. Mazars Advisory Private Limited for carrying out theassignment of Internal Control over Financial Reporting.
REMUNERATION POLICY & BOARD EVALUATION
The Board on the recommendation of the Nomination & Remuneration Committee forselections and appointments of Directors senior management and decides theirremuneration after reviewing their qualifications positive attributes independence ofdirectors board diversity. Remuneration Policy of the company is based on the fundamentalprinciples of payment for performance potential growth and aligning remuneration withthe longer term interests of the Company and its shareholders promoting a culture ofmerit recognition and creating a linkage to corporate and individual performance. Thecriteria for performance evaluation of directors cover the areas relevant to theirfunctioning as member of Board or its Committees thereof. The manner in which theperformance evaluation of the board and its committees thereof the chairman and thedirectors individually has been carried out has been explained in the Corporate GovernanceReport.
A Certificate from the Statutory Auditors regarding compliance of the conditions ofCorporate Governance as per the requirement of SEBI (Listing Obligations and DisclosuresRequirements) Regulations 2015 is enclosed as part of Corporate Governance Report.
The Board of Directors support the concept of Corporate Governance and having regard totransparency accountability and rationale behind the decisions have made properdisclosures separately under the heading "Corporate Governance".
RISK MANAGEMENT POLICY
Risk management forms an integral part of management policy and is an ongoing processintegrated with operations.
The Company has formulated a policy and process for risk management. The Company hasset up a core group of leadership team which identifies assesses the risks and thetrends exposure and potential impact analysis at different level and lays down theprocedure for minimization of the risks.
Company has identified various strategic operational and financial risks which mayimpact company adversely; however management believes that the mitigation plans foridentified risks are in place and may not threaten the existence of the company.
Pursuant to the provisions of section 177(9) & (10) of the
Companies Act 2013 a vigil mechanism for directors and employees to report genuineconcerns has been established. Details of establishment of vigil mechanism/ whistle blowerare disclosed in the Corporate Governance Report.
The policy on vigil mechanism is available on company's website atwww.talbros.com.
During the year under review no employee was denied access to the Audit Committee.
LISTING OF SHARES
The Equity Shares of the Company are listed on the BSE Limited (BSE) Mumbai andNational Stock Exchange of India Limited.
CORPORATE SOCIAL RESPONSIBILITY
Talbros Automotive Components Ltd. (TACL) has formulated Corporate SocialResponsibility (CSR) policy which encompasses its philosophy and guides its sustainedefforts for supporting socially useful programs for welfare and sustainable development ofthe weaker sections of the society specially the children and contributed to SaveraAssociation Talwar Foundation Roshni Education Society Dhanpatmal
Virmani Education Trust & Management Society and other NGO committed for attendingto education and nutrition needs of the under privileged children. As per Section134(3)(o) of the Companies Act 2013 and the Companies (Corporate Social Responsibility)Rules 2014 read with various clarifications issued by Ministry of Corporate Affairs theCompany has undertaken activities as per the CSR Policy (available on company's websitewww.talbros.com) and further details of the CSR activities are contained in the Annexure- III forming part of this Report.
AUDITORS AND AUDITORS REPORT
M/s. S. N. Dhawan & Co. (Firm registration No.000050N). Chartered Accountants havebeen holding the office of statutory auditors of Company since 2001 and thus they havealready completed two consecutive terms of five consecutive years. The present statutoryauditors hold office till the conclusion of the forthcoming AGM and would retire at theconclusion of the said meeting and would not be eligible for reappointment.
M/s. CMRS & Associates Chartered Accountant Branch Auditor for Pune Plant holdoffice until the conclusion of the ensuing Annual General Meeting of the Company and wouldretire at the conclusion of the said meeting and would not be eligible for reappointment.
In accordance with the provisions of Section 139 of the ActM/s. J C Bhalla & Co(JCB) have been recommended to be the new Statutory Auditors and M/s. A. R. Sulakhe&Co Chartered Accountant Pune to conduct the audit of the Pune Plant of the Company for aterm of five years as recommended by
Audit Committee of the Company and subject to shareholders' approval in the ensuingAnnual General Meeting of the Company All observations made in the Auditors' Report andnotes to the accounts are self-explanatory and do not call for any further comments underSection 134 of the Companies Act 2013. The Auditor's Report does not contain anyqualification or adverse remarks.
The Board has re-appointed Mrs. Kiran Sharma (membership no. 4942 & certificate ofpractice no. 3116) a practicing Company Secretary for carrying out secretarial audit interms of the provisions of Section 204 of the Companies Act 2013 for the financial year2017-18. Secretarial audit report for the financial year ended 31st March 2017as provided by M/s. Kiran Sharma & Associates Practicing Company Secretary is annexedto this Report as Annexure IV.
The report does not contain any qualification or adverse remarks.
The Board of Directors on recommendation of the Audit
Committee has re-appointed M/s Vijendra Sharma & Co. Cost accountants (FirmRegistration No. 00180) as Cost Auditors of the Company for the Financial Year 2017-18for conducting the audit of the cost records maintained by the Company subject to theratification of the remuneration to be paid to the Cost Auditor by the shareholders inensuing Annual General Meeting.
A certificate from them has been received to the appointment as Cost Auditors of theCompany if made would be in accordance with the limits specified under Section 141 ofthe Companies Act 2013 and rules framed there under.
STATEMENT CONTAINING SALIENT FEATURES OF THE FINANCIAL STATEMENT OF SUBSIDIARIES/ASSOCIATE COMPANIES/JOINT VENTURES
Statement pursuant to Section 129(3) of the Companies Act 2013 related to AssociateCompanies and Joint Ventures as on 31st March 2017 in Form AOC-1 is annexed tothis Report as Annexure V.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION RESEARCH AND DEVELOPMENT AND FOREIGNEXCHANGE EARNINGS AND OUTGO
In accordance with the requirements of Section 134(3)(m) of The Companies Act 2013read with Rule 8(3) of The Companies (Accounts) Rules 2014 statement showing particularswith respect to Conservation of Energy Technology Absorption and Foreign ExchangeEarnings and Outgo are annexed hereto as Annexure VI and form part of this report.
PARTICULARS OF EMPLOYEES AND RATIO OF DIRECTOR REMUNERATION TO MEDIAN EMPLOYEES'REMUNERATION
There is no employee drawing salary above the limits prescribed under Section197(12).Hence there is no information required as provided under Section 197(12) of theCompanies Act 2013 read with Rule 5 of The Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014. The ratio of the remuneration of each director to themedian employee's remuneration and other details in terms of Section 197(12) of theCompanies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are forming part of this report Annexure -VII.The Board of Directors wishes to express their appreciation to all the employees for theiroutstanding contribution to the operations of the Company during the year. It is thecollective spirit of partnership across all sections of employees and their sense ofownership and commitment that has helped the Company to grow.
EXTRACT OF THE ANNUAL RETURN
The extract of the annual return in Form MGT-9 is enclosed as a part of this report incompliance with Section 134(3) of the Companies Act 2013 as Annexure VIII.
Your Directors gratefully acknowledge the support given by our customers shareholdersemployees financial institutions and banks and all other stakeholders and we lookforward to their continued support.
|For and on behalf of the Board |
|Umesh Talwar ||Anuj Talwar |
|Vice Chairman & Managing Director ||Joint Managing Director |
|Place: New Delhi || |
|Date: May 24 2017 || |