To the Members
The Board of Directors has pleasure in presenting the Thirty-first Annual Report of theCompany for the year ended 31 March 2018.
|Particulars ||Financial Year ended 31 March 2018 ||Financial Year ended 31 March 2017 |
|Total Income ||12726 ||11272 |
|Less: Total Expenses ||(11329) ||(9890) |
|Profit before tax ||1397 ||1382 |
|Less: Tax expenses ||(477) ||(410) |
|Net Profit after tax (PAT) ||920 ||972 |
|Add: Other Comprehensive income ||7 ||(11) |
|Total comprehensive income ||927 ||961 |
The attached financial statements for the year ended 31 March 2018 have been preparedin accordance with Indian Accounting Standards (Ind-AS) consequent to thenotification of the Companies (Indian Accounting Standards) Rules 2015 issued by theMinistry of Corporate Affairs.
During the financial year under review total income grew by appx.13% primarily due toincrease in domestic sales by appx. 16% and export sales by appx. 5%. Expenditure on theother hand registered an increase of appx. 14% due to volume increase and inflationarypressure. There is no reportable exceptional item for the financial year 2017-18.
The Company continues to remain debt free and generated adequate cash flow to meet itsworking capital needs. Pending investment of such funds in growth opportunities it wastemporarily parked in debt based schemes offered by various mutual funds. Working capitalwas managed well. Value of inventory in absolute terms went up by appx. 31% mainly due toincreased volume of operation. The average number of inventory days registered a marginalincrease from 114 days as on 31 March 2017 to 120 days as on 31 March 2018. The averagenumber of days outstanding for domestic receivables registered decrease from 61 days as on31 March 2017 to 54 days as on 31 March 2018 and that of export increased from 78 daysas on 31 March 2017 to 81 days as on 31 March 2018.
Expansion Projects in Jamshedpur (Railway Bearing and TS capacity) became operationalfrom August 2017.
The business of the Company has not undergone any change in the financial year underreview.
Merger of ABC Bearings Limited with the Company
The Board of Directors of the Company at its meeting held on 4 July 2017 approved aScheme of Amalgamation and Arrangement between ABC Bearings Limited and Timken IndiaLimited and their respective shareholders and creditors. Subsequently pursuant to anOrder of the National Company Law Tribunal ('NCLT') Bengaluru Bench meetings of theshareholders and creditors were held on 1 February 2018. At the said meetings theproposed Scheme was approved by the shareholders and creditors and thereafter the Companyhas received approval of NCLT Bengaluru Bench.
Post Balance Sheet event
Except what has been stated in this report there is no other reportable eventcomprising material changes and commitment between the date of the financial year end andthe date of this report affecting financial position of the Company.
Your Directors are pleased to recommend a dividend of Re. 1 per equity share of Rs.10/- each fully-paid (10%) for the year ended 31 March 2018 out of the profits of theCompany for the year 2017-18 as against a dividend of Re 1/- per equity share of Rs. 10/-each fully-paid (10%) for the previous financial year 2016-17 disbursed on 28 August2017 which was declared at the 30 Annual General Meeting (AGM) of the Companyheld on 9 August 2017. The dividend recommended by your Directors is subject to approvalof the shareholders at the forthcoming AGM and if approved will be paid to thoseshareholders or beneficial owners for dematerialized shares whose names will appear on theRegister of Members of the Company or the list of beneficial owners to be provided by thedepositories as at the close of business on 3 August 2018.
In terms of the relevant provisions of the Companies Act 2013 (the Act') theunclaimed amount pertaining to interim dividend paid by the Company on 28 November 2011would be due for transfer to Investor Education and Protection Fund Account in January2019.
Five Board Meetings were held during the financial year 2017-18. For details pleaserefer Annexure - I.
In addition to the above one meeting of the Independent Directors was also held on 5February 2018 without participation of Non-Independent Directors and Senior ManagerialPersonnel.
Directors and Key Managerial Personnel
The Board at its Meeting held on 5 February 2018 appointed Mr. Bushen Lal Raina (DIN:00182160) as an Additional Director and Independent Director of the Company w.e.f. 5February 2018 to hold office till the date of ensuing AGM. In this connection theCompany is in receipt of a Notice from a shareholder proposing the candidature of Mr.Raina for appointment as an Independent Director of the Company at forthcoming AGM to holdoffice for a period of five years i.e. upto 4 February 2023.
In this connection the Company has also received the following documents from Mr.Raina:
a. Consent to act as Director in form DIR-2
b. Intimation in form DIR-8 and
c. Declaration of Independence
In terms of relevant provisions of law the term of office of Mr. P S Dasgupta (DIN:00012552) as an Independent Director will come to an end on 31 March 2019. Based onrecommendation of the Nomination and Remuneration Committee and outcome of performanceevaluation it is proposed to re-appoint him at the forthcoming AGM as an IndependentDirector of the Company for a further period of 5 years w.e.f. 1 April 2019. In thisconnection the Company is in receipt of a Notice from a shareholder proposing thecandidature of Mr. Dasgupta for re-appointment as an Independent Director of the Companyat forthcoming AGM to hold office for a further period of five years i.e. upto 31 March2024.
In this connection the Company has also received the following documents from Mr.Dasgupta:
a. Consent to act as Director in form DIR-2
b. Intimation in form DIR-8 and
c. Declaration of Independence
Mr. Ajay K Das (DIN: 02697466) Director of the Company is liable to retire by rotationand being eligible offers himself for re- appointment at the 31 AGM.
During the year under review Mr. Jai S Pathak (DIN: 00026416) resigned from theDirectorship of the Company w.e.f. 10 November 2017. The Board of Directors wishes toplace on record its deep appreciation for the valuable contribution made by Mr. Pathakduring his tenure as a Director of the Company.
There has not been any change in the Key Managerial Personnel during the year underreview.
Annual Declarations from Independent Directors
The Company has received necessary declaration from all Independent Directors of theCompany confirming that each of them has met with the criteria of independence laid downin Section 149(6) of the Act and applicable provisions of Securities and Exchange Board ofIndia (Listing Obligations and Disclosure Requirements) Regulations 2015 ('ListingRegulations').
Audit Committee Meetings
Five Meetings of the Audit Committee were held during the financial year 2017-18. Fordetails please refer Annexure - I.
Recommendations of the Audit Committee to the Board of Directors
During the financial year 2017-18 the Board of Directors of the Company accepted allthe recommendations put forward to it by the Audit Committee of the Board.
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 wishes hemay remain completely anonymous. In terms of the said Policy Associates of the Companyhave also got direct access to the Chairman of the Audit Committee to report matters ofexceptional nature.
The Company follows the open door policy and adequate safeguards have been providedagainst victimization of the reporting Directors/Associates.
The Whistle Blower Policy of the Company is disclosed on the Company's website -www.timken.com/en-in.
Nomination and Remuneration Committee
One Meeting of the Nomination and Remuneration Committee was held during the financialyear 2017-18. For details please refer Annexure - I.
Nomination and Remuneration Policy
Based on the recommendation of the Nomination and Remuneration Committee the Board haslaid down a Policy for remuneration of directors key managerial personnel and otheremployees and also the 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 to Annexure - I.
Formal Annual Evaluation of the Board of Directors its Committees and individualDirectors
The Nomination and Remuneration Committee of the Board had recommended criteria forevaluation of performance of the Independent Directors Board of Directors as a wholevarious Committees of the Board and individual Directors which were approved and adoptedby the Board of Directors of the Company.
Accordingly the Board of Directors at its meeting held on 5 February 2018 carried outperformance evaluation of all Directors Board of Directors as a whole and Committeesthereof. The methodology of evaluation was discussed and each Director was requested torecord his/her evaluation of the other Directors Board as a whole and Committees thereofand submit the evaluation papers to the Company Secretary & Chief- Compliance for safecustody.
Ratio of Remuneration
Pursuant to Section 197(12) of the Act read with Rule 5(1) of Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 as amended from time to timeapplicable details are given in the attached statement 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 the Accountsare being sent to all the shareholders of the Company excluding the aforesaid information.Any shareholder interested in obtaining such information may write to the CompanySecretary at the Registered Office of the Company. The said information is also availablefor inspection at the Registered Office during working hours up to the date of the AGM.
Risk Management Policy
In terms of relevant provisions of law the Board of Directors of the Company hasadopted a Risk Management Policy of the Company. The Policy has identified certaincategories of risks that in the opinion of the Board the Company may face as riskspertaining to the areas such as strategic operational and financial market andcompliance and information technology.
Descriptions for each of the risks identified in the Risk Matrix are documented andrecorded in a structured format in each area where the risk is identified covering; natureof risk severity of risk chance of occurrence of risk chance of detection and controlmechanism 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). The risksare thereafter prioritized based on the RPN analysed and strategy developed accordingly.
After going through the above exercise the Company's Risk Matrix has been finalizedand was reviewed at the year-end by the India Leadership Team and Risk ManagementCommittee members and reviewed at least once in a year by the Board of Directors of theCompany. During the year under review risk profile of the Company did not undergo anychange.
Corporate Social Responsibility
During the year the Company spent Rs 2.69 crores on the CSR activities. CSR Policy(its implementation and development) and annual report on CSR activities is attachedmarked as Annexure - IV. For CSR Committee composition please refer to Annexure - I.
M/s Deloitte Haskins & Sells LLP Chartered Accountants (Registration No.117366W/W10008) were appointed as the Statutory Auditors of the Company at 30 AGM held on9 August 2017 for a period of 5 years subject to ratification by members at everysubsequent AGM held after 30 AGM. Due to recent changes in the provisions of the Act theratification of appointment of statutory auditors is no longer required at every AGM.Since in the resolution adopted at 30 AGM for the appointment of M/s Deloitte Haskins& Sells LLP it was mentioned that ratification of such appointment would beconsidered at each subsequent AGM till 34 AGM this matter is included in the Noticeconvening 31 AGM. Thereafter this matter will not be included in the Notice in line withthe Companies (Amendment) Act 2017.
M/s R Vijayakumar & Co. Practicing Company Secretary (FCS: 6418 & COP: 8667)Bangalore was appointed by the Board of Directors as the Secretarial Auditor to carry outSecretarial Audit for financial year 2017-18 in terms of Section 204 of the Act and M/s RVijayakumar & Co. has since submitted their report a copy of which is annexed tothis report marked as Annexure - V.
Based on the recommendation of the Audit Committee the Board of Directors hasre-appointed M/s. Shome & Banerjee Cost Accountants (F000001) Kolkata to audit thecost accounts for the financial year 2018-19 and pursuant to Rule 14 of the Companies(Audit and Auditors) Rules 2014 the remuneration payable to them requires ratificationby the shareholders. The proposal for ratification of remuneration payable to the CostAuditors has been included in the Notice convening the 31 AGM. The Cost Audit for 2017-18is currently in progress and the Cost Auditors shall submit their report to the Companywithin 180 days from the closure of financial year 31 March 2018 and the Company shallsubmit the said report to the Central Government within 30 days from the date of receiptfrom the Cost Auditors. The Cost Audit Report for the year 2016-17 was filed on 28September 2017 (within the stipulated due date).
Qualifications in Audit Reports
The reports issued by the Statutory Auditors the Secretarial Auditor and the CostAuditors during the year do not contain any qualification reservation or adverse remarkor disclaimer. During the year under review there were no frauds reported by the Auditorsto the Audit Committee or the Board under Section 143(12) of the Act.
Related Party Transactions
All transactions with related parties were entered into in the ordinary course ofbusiness and were on arm's length basis. However in terms of provisions of Section134(3)(h) of the Act read with Rule 8(2) of the Companies (Accounts) Rules 2014 asummary of material related party transactions in the ordinary course of business and onarm's length basis is given in Form AOC-2 attached to this Report marked as Annexure -VI. The Policy for material related party transactions can be seen atwww.timken.com/en-in. In terms of applicable provisions
Listing with Stock Exchanges
The Company confirms that it has paid the Annual Listing Fees for the financial year2018-19 to National Stock Exchange of India Limited and BSE Limited where the Company'sShares are listed.
Extract of Annual Return
Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies (Management andAdministration) Rules 2014 an extract of annual return in Form No. MGT - 9 is attachedas a part of this Report marked as Annexure - VII.
Pursuant to Listing Regulations and other applicable laws the following reports formpart of this report:
1. Management Discussion and Analysis - marked Annexure - VIII
2. Corporate Governance Report and the Certificate by a Practicing Company Secretaryregarding compliance of conditions of Corporate Governance - marked Annexure - IX
3. Declaration signed by CEO regarding Compliance with Code of Conduct - markedAnnexure - X
4. Disclosure with respect to demat suspense/unclaimed account - Nil
5. Business Responsibility Report - marked Annexure - XI
6. Dividend Distribution Policy - marked Annexure - XII
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
|Sl. No Particulars ||Remarks |
|(A) Conservation of energy: ||Plant power factor continued to be maintained at more than 0.97 levels. Plant has obtained certification for ISO 50001 in July 2017. |
|1. Steps taken / impact on conservation of energy || |
| ||Several Energy savings projects have been taken up for conservation of Energy and 50% of them had been successfully completed too. |
|2. Steps taken by the company for utilizing alternate sources of energy including waste generated ||Jamshedpur Plant has initiated steps to implement 1.3 MW Solar Plant and bio gas plant for canteen waste. |
|3. Capital investment on energy conservation equipment ||Rs. 34.58 Lakhs |
|(B) Technology absorption: || |
|1. Efforts in brief made towards technology absorption. ||Under the Collaboration Agreement technology update is released from The Timken Company which is transferred to the shop floor instructions. Any improvement in the |
|2. Benefits derived as a result of the above efforts e.g. product improvement cost reduction product development import substitution etc. ||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 products which has reduced 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 Tapered Roller Bearings |
|a. Details of technology imported. || |
| ||1991-92 onwards. |
|b. Year of import. || |
| ||It is continuous process. |
|c. Whether the technology been fully absorbed || |
|d. If not fully absorbed areas where absorption has not taken place and the reasons therefore. ||Ongoing in the areas of machining heat treatment and finishing to make further improvements in the manufacturing process product quality and production output in Jamshedpur and in Raipur it is in process of developing roller manufacturing for industrial bearing repair through Indian source. |
|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 ||2017-18 (Rs./million) ||2016-17 (Rs./million) |
|(i) Foreign Exchange Earnings ||3467 ||3293 |
|(ii) Foreign Exchange Outgo ||3348 ||2491 |
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.
Details relating to Deposits
The Company has not accepted Deposits as defined in the Act and Rules framed thereunderduring the financial year 2017-18 and no amount is due on account of principal or intereston deposits as on 31 March 2018.
Particulars of Loans Guarantees or Investments
The Company has duly complied with the provision 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 the conditions of the service. During theyear under review the Company has not given any guarantee or
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 the 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 the requirementof Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013. Internal Complaints Committee (ICC) has been set-up to redress complaints receivedregarding sexual harassment. The Company has not received any sexual harassment complaintduring the year 2017-18.
Disclosure regarding shares issued by the Company
|Sweat Equity Share ||The Company has not issued any Sweat Equity Share and therefore these disclosure norms are not applicable to the Company. |
|Shares with differential Rights ||The Company has not issued any Share with differential rights and therefore these disclosure norms are not applicable to the Company. |
|Shares under Employees Stock Option Scheme ||The Company does not have any employee stock option scheme and therefore these 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 these disclosure norms are not applicable to the Company. |
|Buy Back of Shares ||The Company has not bought back any Equity Share and |
| ||therefore these disclosure norms are not applicable to the Company. |
The Directors acknowledge that the performance of the Company during the year 2017-18could be made possible only with the collective contribution and excellent performance ofthe Associates both in terms of operational parameters and also at the market place. TheDirectors express their appreciation for the support received from the Associates of theCompany Shareholders Vendors Customers and other Stakeholders.
| ||For and on behalf of the Board of Directors |
| ||Sanjay Koul |
|Place : Bengaluru ||Chairman & Managing Director |
|Date : 21 May 2018 ||DIN: 05159352 |