To the Members
The Board of Directors has pleasure in presenting 34 Annual Report of the Company forthe year ended 31 March 2021.
(Rs in million)
|Particulars ||Financial Year ended 31 March 2021 ||Financial Year ended 31 March 2020 |
|Revenue from Operations ||14105.20 ||16168.70 |
|Add: Other Income ||196.04 ||234.02 |
|Total Income ||14301.24 ||16402.72 |
|Less: Total Expenses ||12350.61 ||13339.15 |
|Profit before tax (PBT) ||1950.63 ||3063.57 |
|Less: Tax expenses ||518.84 ||602.58 |
|Net Profit after tax (PAT) ||1431.79 ||2460.99 |
|Add: Other Comprehensive Income ||(3.11) ||(6.86) |
|Total Comprehensive Income ||1428.68 ||2454.13 |
During FY 2020-21 the Company's revenue was down by 13% Y-o-Y as operations of theCompany were impacted during the first quarter due to lockdown imposed by the Governmentin view of COVID-19 pandemic however the Company has shown strong growth for rest of theyear despite challenging economic environment. Total expenses decreased by 7% during thesame period. The PBT is 14% for FY 2020-21 as against 19% in FY 2019-20. Decrease in PBTcan be attributed to increase in raw material price absorption of fixed overheadspartially offset with better leverage of variable overheads.
The said Financial Statements for FY 2020-21 have been prepared in accordance withIndian Accounting Standards (Ind-AS).
The Company continues to remain debt free and generated adequate cash flow to meet itsworking capital needs. Trade receivables increased by 798.63 million in line with theincreased revenue during the last quarter of FY 2020-21 compared to last quarter of FY2019-20. Cash and cash equivalents as at March 31 2021 were 1704.04 million as comparedto 4146.51 million as at March 31 2020. The reduction was primarily due to payment ofdividend which was partially offset with positive cash generation. For more details onfinancial position please refer Management Discussion and Analysis.
The business of the Company has not undergone any change in the financial year underreview.
Post Balance sheet event
There is no other reportable event comprising material changes and commitments betweenthe date of financial year end and the date of this report affecting the financialposition of the Company.
The Board of Directors of the Company did not propose to transfer any amount toreserves during the financial year under review.
The Board of Directors based on Dividend Distribution Policy of the Companyrecommends dividend of Rs. 1.50/- per equity share of Rs. 10/- each fully-paid up (15%)for the year ended 31 March 2021. The dividend payable is subject to approval of membersat ensuing Annual General Meeting ('AGM') of the Company. Dividend if declared at AGMwill be paid within 30 days from conclusion of AGM subject to deduction of TDS whereverapplicable. Dividend Distribution Policy is available on the website of the Company andcan be accessed at https://www.timken.com/en-in/investors/policies/
Corporate Governance philosophy of the Company is based on core value of ethics andintegrity. Your Company strongly believes that it can become a strong leader only by wayof maintaining good and high level of Corporate Governance structure. Good CorporateGovernance practices followed by the Company inter-alia include strong andindependent Board transparency and accountability robust policies and regulatorycompliance framework strong internal controls and monitoring of such controlsempowerment of employees/various stakeholders and timely disclosures. Pursuant toRegulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015(Listing Regulations') Corporate Governance Report along with ComplianceCertificate from Practicing Company Secretary is attached as Annexure - I.
Directors and Key Managerial Personnel
During the year under review appointment of Mrs. N S Rama (DIN: 06720033) as anIndependent Director and Mr. Douglas Smith (DIN: 02454618) as Director of the Company wasapproved by the members at 33 AGM of the Company. Mr. Avishrant Keshava (DIN: 07292484)was re-appointed as a Business Controller India CFO & Whole-time Director of theCompany for a further period of 5 years w.e.f. 30 September 2020.
Mrs. N S Rama's (DIN: 06720033) current term as an Independent Director will come to anend on 24 October 2021. Based on recommendation of the Nomination and RemunerationCommittee it is proposed to re-appoint Mrs. Rama as an Independent Director of theCompany for a further period of 2 years w.e.f. 25 October 2021 at the forthcoming AGM. Inthe opinion of the Board Mrs. Rama posseses requisite expertise integrity and experienceand her association will be beneficial to the Company. In this connection the Company hasreceived following documents from Mrs. Rama:
a. Consent in Form DIR-2 b. Intimation in Form DIR-8 and c. Declaration of Independence
The Company is also in receipt of a Notice from a shareholder proposing the candidatureof Mrs. Rama for re-appointment as an Independent Director of the Company at forthcomingAGM.
Mr. Douglas Smith (DIN: 02454618) Non-Executive Director retires by rotation and beingeligible offers himself for re-appointment.
A resolution seeking members' approval for his re-appointment has been included in 34AGM Notice.
Pursuant to Section 203 of the Companies Act 2013 (the Act') Mr. Sanjay Koul asManaging Director Mr. Avishrant Keshava as Chief Financial Officer and Mr. MandarVasmatkar as Company Secretary serve as whole-time Key Managerial Personnel (KMP').During the year under review there has been no change in KMP.
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 havebeen followed and no material departures have been made;
(b) they have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give a true and fair viewof the state of affairs of the Company at the end of the financial year and of the profitand loss of the Company for that period;
(c) they have 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) they have prepared the annual accounts on a going concern basis;
(e) they have laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; and
(f) they have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
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 Listing Regulations. All the IndependentDirectors have confirmed that their name has been included in the databank of IndependentDirectors maintained by Indian Institute of Corporate Affairs (IICA).
Meetings of the Board and its Committees
The Board and Audit Committee have met four times during FY 2020-21. The gap betweentwo consecutive Board Meetings and two consecutive Audit Commitee Meetings was withintimeline prescribed under the Act and Listing Regulations. The Board of Directors of theCompany has accepted all recommendations put forward to it by the Audit Committee. TheNomination and Remuneration Committee and Stakeholders Relationship Committee met oncewhile the Risk Management Committee met twice during FY 2020-21. Approval from theCorporate Social Responsibility Committee was obtained through resolution by way ofcirculation. Details relating to composition of the Board and its Committees along withits meetings held during FY 2020-21 are given in Corporate Governance Report which isattached as Annexure - I.
Independent Directors Meeting
One meeting of the Independent Directors was held on 22 February 2021 which wasattended by all the Independent Directors without participation of Non-IndependentDirectors and members of management.
Nomination and Remuneration Policy
Based on recommendation of the Nomination and Remuneration Committee the Board haslaid down a Policy for remuneration of Directors KMPs and other employees. The salientfeatures of the Policy are as follows:
It lays down role of the Nomination and Remuneration Committee in line withSection 178 of the Act and Listing Regulations.
It specifies aspects that need to be considered for appointment of a Director.
It lays down terms and conditions that need to be considered for appointment ofDirectors KMPs and Senior Management Personnel including tenure of appointment removaland retirement.
It also lays down parameters for payment of remuneration to Executive DirectorsNon- Executive/ Independent Directors KMPs and Senior Management Personnel.
During the year under review no change was made in the Nomination and RemunerationPolicy. This Policy is disclosed on the Company's website athttps://www.timken.com/en-in/investors/policies/.
Ratio of Remuneration
Pursuant to Section 197 of the Act read with Rule 5(1) of the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 as amended from time to timeapplicable details are given in specified format which is attached as Annexure - II.
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 this Report and theFinancial Statements are being sent to the shareholders of the Company excluding theaforesaid information. Any shareholder interested in obtaining such information may writeto the Company Secretary at the Registered Office of the Company. The said information isalso available for inspection at the Registered Office during working hours up to the dateof AGM.
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 performanceevaluation criteria. Each Director has provided feedback in writing to Chairman about theBoard as a whole various Committees and individual Directors. Further IndependentDirectors in their separate meeting held on 22 February 2021 has evaluated performance ofNon- Independent Directors Chairman and the Board as a whole.
The Board of Directors of the Company has constituted Risk Management Committee which inter-aliais responsible for assessment of risks establishment of framework for monitoring risksand developing strategy for mitigation of various risks.
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 compliance and information technology.The Company undertakes efforts once in a year to evaluate risk profile of the Company. TheCompany has put in place adequate mechanism to identify and mitigate various risks and theBoard is apprised on the same. The Management has taken appropriate measures from time totime to reduce adverse impact of Covid-19 on business which has yielded positive results.The Board is satisfied with risk controls put in place by the Company.
The Company believes that being ethical does not just mean doing the right thing by howwe treat others do our jobs or make decisions but it also means speaking up when webecome aware that something is not right. The Company encourages everyone to act if theyhave an ethical question or are in a situation that they think threatens core value ofethics and integrity of the Company. The Company has adopted a Whistle Blower Policy interms of which the Directors associates of the Company have access to TimkenHelpline a toll free phone number that any associate can call and choose not todisclose his identity if he has any concern or question which he is not willing todiscuss face to face with his Supervisor Manager member of the Human Resource Team orSenior Management. Other Stakeholders including customers vendors contractors can alsoraise their concern through Timken Helpline. The Company investigates all reportspromptly thoroughly and fairly and takes appropriate actions whenever necessary.
The Company follows Open-door Policy and adequately safeguards against victimization ofreporting person. The Company does not tolerate acts of retaliation against anyone whomakes report in good faith. This Vigil Mechanism enables the Company to better uphold itsvalues and fulfill its commitments towards shareholders customers suppliers and thecommunity. The Whistle Blower Policy of the Company is disclosed on the Company's websiteat https://www.timken.com/en-in/investors/policies/.
Corporate Social Responsibility
The Corporate Social Responsibility ('CSR') Committee of the Board is responsible forevaluation and implementation of CSR Projects. Based on recommendation of the CSRCommittee the Board has approved and spent Rs. 44730430/- on CSR activities during FY2020-21 in line with CSR Policy of the Company. CSR Policy is available on Company'swebsite at https://www.timken.com/en-in/investors/policies/
Salient features of the CSR Policy are as follows:
It lays down CSR Philosophy Vision and Commitment of the Company.
It specifies guidelines for implementation of CSR Projects through CSR Partnersincluding eligibility criteria for CSR Partners.
It also lays down roles and responsibilities of the CSR Committee.
Annual Report on CSR Activities is attached to this Report as Annexure - III.
Pursuant to Section 139 of the Act M/s Deloitte Haskins & Sells LLP CharteredAccountants (Registration No. 117366W/W100018) have been appointed as the StatutoryAuditors of the Company for a period of 5 years from conclusion of 30 AGM till 35 AGM. TheIndependent Auditor's Report for FY 2020-21do not contain any qualification or adverseremark. During the year under review there were no frauds reported by the Auditors to theAudit Committee/ Board under Section 143(12) of the Act.
Pursuant to Section 204 of the Act Mr. Nagarjunn Y G (ACS: 52406 & CP No: 19301)Company Secretary in Practice was appointed by the Board of Directors as a SecretarialAuditor to carry out Secretarial Audit of the Company for FY 2020-21. Mr. Nagarjunn Y Ghas submitted the Secretarial Audit Report which is attached as Annexure - IV.There are no qualifications or adverse remark made by the Secretarial Auditor. The Companyhas complied with norms of applicable Secretarial Standards issued by the Institute ofCompany Secretaries of India (ICSI).
The Board of Directors on recommendation of the Audit Committee has appointed M/sShome and Banerjee (Firm Registration No. 000001) as Cost Auditors for FY 2021-22. Interms of Section 148 of the Act read along with Rules made thereunder remunerationpayable to Cost Auditors is required to be ratified by members of the Company.Accordingly appropriate resolution for ratification of remuneration payable to CostAuditors for FY 2021-22 has been inserted in the Notice convening 34 AGM. The Boardrequests members to approve/ratify remuneration of Rs. 440000/-plus applicable taxes andout of pocket expenses payable to Cost Auditors for FY 2021-22.
In terms of Section 148 of the Act the Company is required to maintain cost recordsand have its records audited by Cost Accountant. The Company has maintained the costrecords for FY 2020-21 as required under Section 148 of the Act. The Cost Audit Report ofthe Company for FY 2019-20 was filed on 23 November 2020 (within the stipulated duedate).
M/s KPMG Assurance and Consulting Services LLP (formerly known as KPMG) acted asInternal Auditors for FY 2020-21. They conducted periodical audits and submitted theirreports to the Audit Committee. Their reports have been reviewed by the Audit Committee.
Internal Financial Controls
The Company has a system of internal controls commensurate with the nature of itsbusiness and the size and complexity of its operations. The Company has adequatelydocumented policies procedures and authorization matrix aligned with the level ofresponsibility which is designed to provide reasonable assurance on recording oftransactions effectiveness and efficiency of operations providing reliable financialinformation and safeguarding of assets. The Company has developed and implemented aframework for ensuring internal controls over financial reporting. The Company has carriedout evaluation of design and effectiveness of these controls and noted no significantmaterial weaknesses or deficiencies which can impact financial reporting.
Related Party Transactions
The Company is committed to uphold the highest ethical and legal conduct in fulfillingits responsibilities and recognizes that related party transactions can present a risk ofactual or apparent conflicts of interest. The Company has adopted Related PartyTransactions Policy and all its transactions in normal course of business are entered inaccordance with the said Policy. Related Party Transactions Policy is available on thewebsite of the Company at https://www.timken.com/en-in/investors/policies/. All relatedparty transactions entered into by the Company during FY 2020-21 are disclosed inFinancial Statements for the year ended 31 March 2021. In terms of Section 134 of the Actread with Rule 8 of the Companies (Accounts) Rules 2014 a summary of material 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 - V.
Listing with Stock Exchanges
The Company confirms that it has paid Annual Listing Fees for FY 2021-22 to NationalStock Exchange of India Limited and BSE Limited where the Company's shares are listed.
A copy of Annual Return as on 31 March 2020 filed during FY 2020-21 pursuant toSection 92 of the Act is placed on the Company's website at www.timken.com/en-in. DraftAnnual Return as on 31 March 2021 is available on website of the Company atwww.timken.com/en-in
Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo
|Sl. No ||Particulars ||Remarks |
|(A) ||Conservation of energy: || |
| ||1. Steps taken / impact on conservation of energy ||Both Jamshedpur and Bharuch plant of the Company are in compliance with ISO 50001 (Energy Management Systems). |
| || ||Following are some steps taken for energy conservation by the Company at Jamshedpur and Bharuch plant: |
| || ||i) implementation of energy management system (EnMS ) |
| || ||ii) Reduction in idle time for running of motors through M/C interlocking to save power |
| || ||iii) Reduction in use of compressed air by modification of pipeline & proper management of valve operation |
| || ||iv) Installation of motion sensors for auto switching off for AC and lights in Conference rooms cabins and washrooms |
| || ||v) Improved energy conservation through carb efficiency improvement through CTHT reduction. |
| ||2. Steps taken by the company for utilizing alternate sources of energy ||The Company had installed roof top solar panels in Jamshedpur plant with a potential of 1267 kWP. Further the Company operates Wind Farm in the State of Gujarat. |
| || ||Energy generated by windmills is passed on to the Distribution Company through grid and the Company gets credit for such energy generated and supplied to grid. |
| ||3. Capital investment on energy conservation equipments ||` 22.85 Lakhs |
|(B) ||Technology absorption: || |
| ||1. Efforts in brief made towards technology absorption ||The Timken Company ultimate Parent Company of your Company conducts research and development activities and focuses on development of new products and technologies. The Timken Company passes on newly developed products and technologies to all its group companies in the world from time to time. |
| ||2. Benefits derived because of the above efforts e.g. product improvement cost reduction product development import substitution ||Your Company has received technology from The Timken Company from time to time starting from FY 1991 -92 mainly in the area of machining heat treatment and finishing to make further improvements in the manufacturing process product quality and production output and related activities for manufacturing of bearings and components. This has helped the Company not only to develop new part numbers but also to manufacture products at lower cost and time. Technology transfer is continuous process and the Company has been utilizing technology transferred by The Timken Company to fullest extent possible. |
| ||3. In case of imported technology (imported during the last 3 years reckoned from the beginning of the financial year): || |
| ||a. Details of technology imported || |
| ||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 thereof || |
| ||4. Expenditure incurred on Research and Development || |
|(C) Foreign exchange earnings and outgo ||FY 2020-21 (Rs in million) ||FY 2019-20 (Rs in million) |
|(i) Foreign Exchange Earnings ||3171 ||3975 |
|(ii) Foreign Exchange Outgo ||3140 ||3657 |
Investor Education and Protection Fund
Pursuant to Section 124 the Act and Rules made thereunder:
(i) the Company has transferred following unclaimed dividend amounts to InvestorEducation and Protection Fund (IEPF') during FY 2020-21:
|Particulars ||Amount (in `) |
|Dividend paid by erstwhile ABC Bearings Limited (Amalgamated with the Company) for FY 2012-13 ||383925/- |
|Dividend paid by the Company for FY 2012-13 ||2524724/- |
|Interim dividend paid by the Company for FY 2013-14 ||7549308/- |
|Dividend paid by the Company for FY 2019-20 against shares already transferred to IEPF ||31535807/- |
(ii) During FY 2020-21 the Company also transferred 155940 equity shares to IEPF.
(iii) Unpaid dividend for FY 2013-14 relating to ABC Bearings Limited (amalgamated) andunpaid dividend for FY 2014-15 (Interim Dividend) relating to the Company are due fortransfer to IEPF in the month of August 2021 and December 2021 respectively.
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.
Particulars of Loans Guarantees or Investments
Particulars about investments made by the Company during the year are disclosed in theFinancial Statements. During the year under review the Company did not give any loansexcept to its employees as part of the conditions of the service. Also the Company didnot give any guarantee or extended any securities in 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.
Pursuant to the Act and Listing Regulations following reports form part of thisreport:
1. Management Discussion and Analysis - Annexure - VI
2. Declaration regarding Compliance with Code of Conduct - Annexure - VII
3. Business Responsibility Report - Annexure - VIII
Disclosures under Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013
The Company does not tolerate discrimination sexual harassment or any other harassmentwhether engaged in by management or associates or other individual with whom associatescome into contact during work. The Company has adopted Anti-Sexual Harassment Policy inline with Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013. The Company has constituted Internal Complaints Committee to redress complaintsreceived regarding sexual harassment as required by aforesaid Act. During the year underreview the Company has not received any sexual harassment complaint.
|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. |
|Demat Suspense and Unclaimed Account ||Not applicable. |
|Settlement with Banks/Financial Institutions ||Not applicable. |
|Proceedings pending under Insolvency and Bankruptcy Code 2016 ||Not applicable. |
We wish to place on record sincere thanks for all our stakeholders including customersvendors investors bankers for all their support during this challenging year. We thankand appreciate our employees for their ongoing dedication and support because of which weare well positioned during these challenging times to enter into new decade ofpossibilities.
| ||For and on behalf of the Board of Directors |
| ||Sd/- |
| ||Sanjay Koul |
|Place : Bengaluru ||Chairman & Managing Director |
|Date : 18 June 2021 ||DIN: 05159352 |