To the Members
The Board of Directors has pleasure in presenting 33rd Annual Report of the Company forthe year ended 31 March 2020.
(` in million)
|Particulars ||Financial Year ended ||Financial Year ended |
| ||31 March 2020 ||31 March 2019 |
|Revenue from Operations ||16178 ||16644 |
|Add: Other Income ||227 ||163 |
|Total Income ||16405 ||16807 |
|Less: Total Expenditure ||13341 ||14569 |
|Profit before tax (PBT) ||3064 ||2238 |
|Less: Tax expenses ||603 ||752 |
|Net Profit after tax (PAT) ||2461 ||1486 |
|Add: Other Comprehensive Income ||(7) ||3 |
|Total Comprehensive Income ||2454 ||1489 |
During the financial year 2019-20despite challenging economic environment theCompany's revenue was down only by 2%. Profit Before Tax (PBT) improved to Rs. 3064million from Rs. 2238 million in the previous year aided by operational efficiencies andabsence of expenses that were recorded in previous year in the process of businesscombination. Improvement of Profit After Tax (PAT) from Rs. 1486 million to Rs. 2461million was driven by lower tax expenses as a result of Company adopting to new tax regimeunder section 115BAA. Total Comprehensive Income increased from Rs 1489 million to Rs.2454 million driven by improved PBT and PAT.
The Financial Statements have been prepared in accordance with Indian AccountingStandards (Ind-AS).
The Company continues to remain debt free and generated adequate cash flows to meet itsworking capital needs. Working capital was managed well. Investments in short-term mutualfunds were reduced to Rs. 131.66 million as at 31 March 2020 as compared to Rs. 1757.24million as at 31 March 2019. Trade Receivables reduced by Rs. 104.24 million incommensurate with revenue reduction. Cash and Cash Equivalents as at 31 March 2020 wasRs. 4146.51 million compared to Rs. 219.09 million as at 31 March 2019. For more detailson financial position please refer Management Discussion and Analysis.
The business of the Company has not undergone any change in the financial year underreview.
Transfer to Reserves
The Directors of the Company do not propose to transfer any amount to reserves duringthe financial year under review.
Post Balance Sheet event
Except what has been stated in this annual report there is no other reportable eventcomprising material changes and commitments between the date of financial year end and thedate of this report affecting the financial position of the Company.
Your Directors are pleased to recommend a dividend of Rs. 50/- per equity share of Rs.10/- each fully-paid (500%) for the year ended 31 March 2020. The payment is subject toapproval of shareholders at ensuing Annual General Meeting ('AGM') of the Company.Dividend if declared at AGM will be paid within 30 days from thereof.
Investor Education and Protection Fund
Pursuant to Section 124 of the Companies Act 2013 (the Act') and Rules madethereunder unclaimed amount pertaining to dividend paid by the Company and erstwhile ABCBearings Limited(amalgamated) for the financial year 2012-13 along with underlying shareswherever applicable would be due for transfer to Investor Education and Protection Fund(IEPF') in the month of August and September 2020. Further unclaimed dividendamount pertaining to interim dividend declared by the Company for financial year 2013-14would be due for transfer to IEPF in the month of December 2020.
During the year under review the Company transferred unclaimed dividend amount of Rs.717870/- pertaining to erstwhile ABC Bearings Limited (amalgamated) along withunderlying 4409 equity shares of Rs. 10 each to IEPF. The Company also transferreddividend of Rs. 718477/- for the financial year 2018-19 against the shares alreadytransferred to IEPF.
Four Board meetings were held during the financial year 2019-20. For details pleaserefer Annexure - I.
In addition to the above one meeting of the Independent Directors was also held on 7February 2020 which was attended by Mr. Bushen Lal Raina (DIN: 00182160) and Mrs. N SRama (DIN: 06720033) without participation of Non-Independent Directors and members ofmanagement.
Directors and Key Managerial Personnel
During the year under review:
Mrs. Rupa Mahanty (DIN: 06746148) ceased to be an Independent Director of theCompany w.e.f. 30 September 2019 on completion
of her tenure of 5 years.
Mrs. N S Rama (DIN: 06720033) was appointed as an Additional and IndependentDirector of the Company w.e.f. 25 October 2019.
Mr. Ajay K Das (DIN: 02697466) resigned as a Director of the Company w.e.f. close ofbusiness hours on 4 February 2020.
Mr. Douglas Smith (DIN: 02454618) was appointed as an Additional Director of theCompany w.e.f. 7 February 2020.
Mr. Soumitra Hazra who was acting as the Company Secretary of the Company since1998 retired from service with effect from 25 September 2019 on attaining age of 60years.
Mr. Mandar Vasmatkar was appointed as the Company Secretary w.e.f. 1 October 2019.
In the opinion of the Board Mrs. Rama possess integrity expertise and experience asrequired by an Independent Director. The Board of Directors placed on record deepappreciation for valuable contribution made by Mrs. Rupa Mahanty Mr. Ajay K Das and Mr.Soumitra Hazra.
Annual Declarations from Independent Directors
The Company has received necessary declarations from all Independent Directors of theCompany confirming that each of them has met with criteria of independence laid down inSection 149 of the Act and Regulation 16 of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (Listing Regulations'). All the IndependentDirectors have registered themselves with Indian Institute of Corporate Affairs (IICA) asrequired by the Ministry of Corporate Affairs.
Audit Committee Meetings
Four meetings of the Audit Committee were held during the financial year 2019-20. Fordetails please refer Annexure - I.
Recommendations of the Audit Committee to the Board of Directors
During the financial year 2019-20 the Board of Directors of the Company accepted allrecommendations put forth to it by the Audit
The Company has adopted a Whistle Blower Policy in terms of which the Directors andAssociates of the Company have access to The Timken Helpline a toll freephone number that any Associate can call if he has any concern or question which he isnot willing to discuss face to face with his Supervisor Manager or a member of the HumanResource Team or Senior Management. This Helpline is available around the clock everyday. No call tracing or recording devices are ever used and if the Associate so wisheshe/she may remain completely anonymous. In terms of the said Policy Associates of theCompany have also got direct access to the Chairman of the Audit Committee to reportmatters of exceptional nature.
The Company follows Open-door Policy and adequate safeguards have been provided againstvictimization of reporting Associates.
The Whistle Blower Policy of the Company is disclosed on the Company's website -www.timken.com/en-in.
Nomination and Remuneration Committee
Two meetings of the Nomination and Remuneration Committee were held during thefinancial year 2019-20. For details please refer
Annexure - I.
Nomination and Remuneration Policy
Based on recommendation of the Nomination and Remuneration Committee the Board haslaid down a Policy for remuneration of directors key managerial personnel and otheremployees and also criteria for determining qualifications positive attributes andindependence of a director. For details please refer Annexure - II. The Nomination andRemuneration Policy of the Company is disclosed on the Company's website -www.timken.com/en-in
For details please refer Annexure - I.
Formal Annual Evaluation of the Board of Directors its Committees and individualDirectors
As specified by the Nomination and Remuneration Committee of the Board performanceevaluation of the Board of Directors as a whole various Committees of the Board andindividual Directors was carried out by the Board of Directors based on criteria ofevaluation of performance already approved.
Ratio of Remuneration
Pursuant to Section 197 of the Act read with Rule 5 of the Companies (Appointment andRemuneration of Managerial Personnel) Rules
2014 as amended from time to time applicable details are given in the attachedstatement marked as Annexure - III.
Information required under Section 197(12) of the Act read with Rules 5(2) and (3) ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 asamended from time to time is annexed to this report. However the Report and FinancialStatements are being sent to all the shareholders of the Company excluding aforesaidinformation. Any shareholder interested in obtaining such information may write to theCompany Secretary at the Registered Office of the Company. The said information is alsoavailable for inspection at the Registered Office during working hours up to the date ofAGM.
Risk Management Policy
The Board of Directors of the Company has adopted a Risk Management Policy for theCompany. The Policy has identified certain categories of risks that the Company may facein areas such as strategic operational financial market compliance and informationtechnology.
Descriptions for each of the risks identified in each of these areas in the Risk Matrixare documented and recorded in a structured format covering nature of risk severity ofrisk chance of occurrence of risk chance of detection and control mechanism available.
Each aspect of severity occurrence and detections are assigned with values on a scaleof 1-5. These values are multiplied to determine the Risk Priority Number (RPN). Therisks based on RPN are thereafter prioritized and analyzed and strategy for mitigationis developed accordingly.
After going through above exercise the Company's Risk Matrix has been finalized. TheRisk Management Committee reviewed Risk Matrix and informed to the Board that risk profileof the Company did not undergo any change except for risk arising due to CoVID-19. TheBoard has taken note of the same and agreed with observations of the Risk ManagementCommittee.
Corporate Social Responsibility
During the year the Company spent Rs 33583280/- on Corporate Social Responsibility('CSR') activities. CSR Policy (its implementation and development) and annual report onCSR activities is marked as Annexure IV. For CSR Committee composition please refer toAnnexure - I.
M/s Deloitte Haskins & Sells LLP Chartered Accountants (Registration No.117366W/W-100018) have been appointed as the Statutory Auditors of the Company for aperiod of 5 years from conclusion of 30th AGM till 35th AGM. In terms of the Companies(Amendment) Act 2018 earlier requirement of ratification of appointment of statutoryauditors is no longer required to be taken at subsequent four AGMs.
Hence this item has not been included in the Notice convening the 33rd AGM.
Mr. Nagarjun Y G (A: 52406 & CP No: 19301) Company Secretary in Practice wasappointed by the Board of Directors as the Secretarial Auditor to carry out SecretarialAudit for the financial year 2019-20 in terms of Section 204 of the Act and Mr. Nagarjun YG has since submitted the Secretarial Audit Report. A copy of the said Report is annexedas Annexure - V.
In terms of Section 148 of the Act the Company is required to maintain cost recordsand have audit of its records by Cost Accountants. The Company has maintained the costrecords as required under Section 148 of the Act. M/s. Shome & Banerjee (FirmRegistration No. 000001) were appointed as Cost Auditors of the Company to conduct theCost Audit for the financial year 2019-20. The Cost Audit for FY 2019-20 is currently inprogress. The Cost Audit Report for FY 2018-19 was filed on 4 October 2019 (withinstipulated due date).
Qualifications in Audit Reports
The reports issued by Statutory Auditors Secretarial Auditor and Cost Auditors duringthe year do not contain any material qualification reservation or adverse remark ordisclaimer having adverse impact on the Company. During the year under review there wereno frauds reported by the Auditors to the Audit Committee or the Board under Section143(12) of the Act.
Related Party Transactions
All transactions with related parties were entered in the ordinary course of businessand were on arm's length basis. However in terms of provisions of Section 134(3)(h) ofthe Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 a summary of relatedparty transactions in the ordinary course of business and on arm's length basis is givenin Form AOC-2 attached to this Report marked as Annexure - VI. The Policy for materialrelated party transactions can be seen at www.timken.com/en-in. In terms of applicableprovisions of laws details of related party transactions are given in financialstatements.
Listing with Stock Exchanges
The Company confirms that it has paid Annual Listing Fees for the financial year2020-21 to National Stock Exchange of India Limited and BSE Limited where the Company'sshares are listed.
As required pursuant to Section 92(3) of the Act and the Companies (Management andAdministration) Rules 2014 an extract of annual return in Form MGT - 9 is attachedherewith as a part of this Report marked as Annexure VII. Further a copy of Annual Returnfiled during the year under review is placed on the Company's website:www.timken.com/en-in.
Pursuant to the Act and Listing Regulations following reports form part of thisreport:
1. Management Discussion and Analysis - Annexure - VIII
2. Corporate Governance Report and Certificate by a Practicing Company Secretaryregarding compliance of conditions of Corporate Governance - Annexure - IX
3. Declaration signed by CEO regarding Compliance with Code of Conduct - Annexure - X
4. Disclosure with respect to demat suspense/unclaimed account - Nil
5. Business Responsibility Report - Annexure - XI
6. Dividend Distribution Policy - Annexure XII
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
|Sl. No Particulars ||Remarks |
|(A) Conservation of energy: ||Following are some steps taken for energy conservation at Jamshedpur and Bharuch plant: |
|1. Steps taken / impact on conservation of energy: || |
| ||i) Reduction in use of compressed air by modification of pipeline and proper management of valve operation on Sundays and Holidays. |
| ||ii) Reduction in idle time for running of motors to save power. |
| ||iii) Heat retardant paint/thermal insulation coating applied to furnaces in heat treat to lower the skin temperature and thereby avoiding heat and energy losses. |
| ||iv) LED lights installed in all new projects/extensions for reduction in power consumption. |
| ||v) Chiller management to control plant AC temperature based on ambient temperature. |
| ||vi) Relay out of office area for reduction in energy consumption for ACs Following steps are taken by the Company in Jamshedpur to utilize alternate sources of energy: |
|2. Steps taken by the company for utilizing alternate sources of energy including waste generated ||i) A bio gas plant for treating food waste of capacity 250 kg/day installed near employee canteen having a potential of avoiding 8-9 LPG cylinders per month. |
| ||ii) Roof top Solar Panels installed with a potential of 1.27 MWP. |
| ||Further the Company operates Wind Farm at Devbhoomi Dwarka district in Gujarat. |
| ||Energy generated by windmills is passed on to the Distribution Company through grid and Company gets credit for such energy generated and supplied to grid. Below are details of capital spending for FY 2019-20 for energy conservation: |
|3. Capital investment on energy conservation equipment ||i) Solar Plant Solar Plant is on build operate and maintain model. Hence there is no upfront capex involved. However there was capex spend of INR 10.88 Lacs for Invertor room and accessories. |
| ||ii) LED Lights - INR 13.50 Lacs. |
|(B) Technology absorption: || |
|1. Efforts in brief made towards technology absorption. ||Technology update is released from The Timken Company which is transferred to shop floor management at Jamshedpur and Bharuch. Any improvement in technology / process is part of this continuous update and this is being regularly monitored by The Timken Company personnel. It has helped in development of Indian sources for input materials. |
|2. Benefits derived because of the above efforts e.g. product improvement cost reduction product development import substitution etc ||Further Bharuch Plant is manufacturing Timken VR branded products based on designs of The Timken Company using Indian sources. This has helped to reduce cost and time. |
|3. In case of imported technology (imported during the last 3 years reckoned from the beginning of the financial year) following information may be furnished: || |
| ||Manufacture of Bearings |
| ||For Jamshedpur: FY 1991-92 onwards. For ABC Bearings Division the process has started in FY 2018-19 |
|a. Details of technology imported. ||It is a continuous process. Ongoing mainly in the areas of machining heat treatment and finishing to make further improvements in the manufacturing process product quality and production output. |
|b. Year of import. || |
|c. Whether the technology been fully absorbed || |
|d. If not fully absorbed areas where absorption has not taken place and the reasons therefore || |
|4. Expenditure incurred on Research and Development ||The benefits of research facilities available with The Timken Company are extended to the Company on a continuing basis. |
|(C) Foreign exchange earnings and Outgo ||2019-20 (` in million) ||2018-19 (` in million) |
|(i) Foreign Exchange Earnings ||3975 ||3928 |
|(ii) Foreign Exchange Outgo ||3657 ||3815 |
Internal Financial Controls
The Company has in place adequate internal financial controls with reference tofinancial statements. During the year under review such controls were tested and noreportable material weakness in the design or effectiveness was observed.
Directors' Responsibility Statement
In pursuance of Section 134 (5) of the Act the Directors hereby confirm that:
(a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
(b) the Directors had 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 had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) the Directors had prepared the annual accounts on a going concern basis;
(e) the Directors had 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 had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
Financial Performance of any Subsidiary / Associate/ Joint Venture Company
The Company does not have any Subsidiary Associate or Joint Venture Company.
The Company has not accepted Deposit as defined in the Act and Rules framedthereunder during the financial year 2019-20.
Particulars of Loans Guarantees or Investments
The Company has duly complied with the provisions of Section 186 of the Act withreference to current and non-current investments. The Company has not taken anysecured/unsecured loan except bills discounted with banks. The Company has also not givenany loans except to its employees as part of conditions of the service. During thefinancial year 2019-20 the Company has not given any guarantee or extended any securitiesin connection with any loan.
Significant and/or material orders passed by the Regulators
No significant and/or material order was passed by any Regulator any Court in India orany Tribunal impacting going concern status and the Company's operations in future.
Disclosures under Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013
The Company has in place an Anti-Sexual Harassment Policy in line with SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.Internal Complaints Committee has been set-up to redress complaints received regardingsexual harassment. During the year under review one complaint was received. Investigationwas carried out by the Internal Complaints Committee and based on its recommendationnecessary action has been taken.
Disclosure regarding shares issued by the Company
|Sweat Equity Share ||The Company has not issued any Sweat Equity Share and therefore disclosure norms are not applicable to the Company. |
|Shares with differential Rights ||The Company has not issued any Share with differential rights and therefore disclosure norms are not applicable to the Company. |
|Shares under Employees Stock Option Scheme ||The Company does not have any stock option scheme and therefore disclosure norms are not applicable to the Company. |
|Purchase by Company or giving of loans by it for purchase of its shares ||The Company has not purchased or given any loan to purchase its Equity Share and therefore disclosure norms are not applicable to the Company. |
|Buy Back of Shares ||The Company has not bought back any Equity Share and therefore disclosure norms are not applicable to the Company. |
Disclosures on Secretarial Standards
During the year under review norms of the applicable Secretarial Standards issued bythe Institute of Company Secretaries of India were complied.
The Directors acknowledge that performance of the Company during the financial year2019-20 could be made possible only with the collective contribution and excellentperformance of the Associates both in terms of operational parameters and also at themarket place. The Directors express their appreciation for support received fromAssociates of the Company Shareholders Vendors Customers and other Stakeholders.
| ||For and on behalf of the Board of Directors |
| ||Sd/- |
| ||Sanjay Koul |
|Place : Bengaluru ||Chairman & Managing Director |
|Date : 8 June 2020 ||DIN: 05159352 |