The Directors of your Company take pleasure in presenting the 33rd Annual Report on thebusiness and operations of the Company together with Financial Statements for theFinancial Year ended March 31 2021.
FINANCIAL RESULTS & APPROPRIATION
The summarised financial results for the year ended March 31 2021 and for previousyear ended March 31 2020 are as follows:
| || |
|Particulars ||Financial Year ||Financial Year ||Financial Year ||Financial Year |
| ||2020-21 ||2019-20 ||2020-21 ||2019-20 |
| ||(In million) ||(In million) ||(In million) ||(In million) |
| || ||Restated || || |
|Revenue from operations ||25617.78 ||24981.50 ||113027.53 ||111218.68 |
|Total Income ||26731.93 ||25716.95 ||114298.51 ||112207.54 |
|Profit before financial cost depreciation exceptional items and extraordinary expenses (EBITDA) ||3476.23 ||3163.98 ||5595.19 ||9105.17 |
|Less: Depreciation and amortisation ||1543.62 ||1437.64 ||8950.93 ||7318.64 |
|Less: Finance cost ||561.10 ||450.75 ||1626.29 ||1391.67 |
|Add: Share of Net Profit of Investment accounted for using the equity Method ||0.00 ||0.00 ||356.28 ||(91.65) |
|PROFIT/(LOSS) BEFORE TAX ||1371.51 ||1275.59 ||(4982.03) ||394.86 |
|Less: Current tax expense ||247.55 ||194.22 ||614.64 ||490.75 |
|Less: Short/(excess) provision for tax relating to prior periods ||(37.47) ||(26.01) ||(180.25) ||(146.49) |
|Less: Deferred tax ||239.81 ||68.70 ||869.99 ||25.54 |
|NET PROFIT/(LOSS) FOR THE YEAR ||921.62 ||1038.68 ||(6286.41) ||25.06 |
|Less: Profit attributable to Non-controlling interest ||0.00 ||0.00 ||32.66 ||23.15 |
|Profit attributable to owners of the Company ||921.62 ||1038.68 ||(6319.07) ||1.91 |
|Add: Profit brought forward from last year ||3093.23 ||2957.34 ||12064.13 ||13147.02 |
|Add/(Less): Re-measurements of defined benefit plans net of tax ||18.15 ||(17.01) ||52.04 ||205.91 |
|Less: Impact of change in accounting policy ||0.00 ||(19.83) ||0.00 ||66.22 |
|Add: Transfer from Debenture Redemption ||0.00 ||200.00 ||0.00 ||325.00 |
|Reserve (DRR) || || || || |
|Appropriation: Dividend on Equity Shares ||0.00 ||943.68 ||0.00 ||943.68 |
|Tax on Dividend ||0.00 ||122.27 ||0.00 ||193.99 |
|Balance carried forward in Balance Sheet ||4033.00 ||3093.23 ||5797.10 ||12064.14 |
OPERATIONS AND PERFORMANCE
On consolidated basis for the Financial Year 2020- 21 your Company achieved totalrevenue of Rs 114298.51 million resulting in a growth of about 1.86% over its revenue ofRs 112207.54 million of the previous Financial Year ended March 31 2020. Net Loss forthe year was at Rs 6286.41 million as against Net Profit of Rs 25.06 million of previousyear.
On Standalone basis for the Financial Year 2020-21 your Company achieved total revenueof Rs 26731.93 million resulting in a growth of about 4% over its total revenue of Rs25716.95 million of the previous Financial Year ended March 31 2020. The profit aftertax for the year ended March 31 2021 at Rs 921.62 million as against Net Profit of Rs1038.68 million of previous year. .
The Industry outlook and operational performance of the Company has beencomprehensively covered in the Management Discussion and Analysis Report. The ManagementDiscussion and Analysis Report for the year under review as stipulated under theSecurities and Exchange Board of India (Listing Obligations and Disclosure Requirements)Regulations 2015 (the "Listing Regulations") is presented in a separatesection forming part of the Annual Report.
COVID-19 impact has been comprehensively covered in the Management Discussion andAnalysis Report.
CHANGE IN THE NATURE OF BUSINESS
The Company is engaged in the business of manufacturing automotive components. Therehas been no change in the business of the Company during the Financial Year ended March31 2021.
DIVIDEND AND TRANSFER TO RESERVE
With a view to conserve resources for expansion of business your Directors havethought it prudent not to recommend any dividend for the Financial Year under review.Further no transfer to the General Reserve before declaration of Dividend has beenconsidered.
During the year under review the credit rating of the Company was reaffirmed by ICRAat ICRA AA- ' for long-term loan while removing it from Ratings watch with negativeimplications negative outlook was assigned and ICRA A1+' for short-term loan andcommercial paper programme.
SHARES AND SHARE CAPITAL
INCREASE IN THE AUTHORISED SHARE CAPITAL
In accordance with the Scheme of Amalgamation of Varroc Lighting Systems (India)Private Limited ("VLSIPL") with Varroc Engineering Limited and their respectiveShareholders upon the Scheme becoming effective from December 7 2020 the AuthorisedShare Capital of the Company stands increased from Rs 500000000 to Rs 504500000 andAccordingly the Clause V(1)(a) of the Memorandum of Association has been substituted asunder:
The Authorised Share Capital of the Company is Rs 504500000/- (Rupees Fifty CroresForty-Five Lakhs only) comprising of:
(a) Rs 250000000 (Rupees Twenty-Five Crores only) divided into 250000000 EquityShares of Rs 1/- each;
(b) Rs 4500000 (Rupees Forty-Five Lakhs only) divided into 450000 Equity Shares ofRs 10/- each; and
(c) Rs 250000000 (Rupees Twenty-Five Crores only) divided into 250000000Preference Shares of Rs 1/- each
Further the Board of Directors at their meeting held on June 4 2021 approved and hasresolved to seek approval from the shareholders at the ensuing Annual General Meeting forre-classification of Authorised Share Capital of Rs 4500000 by sub-dividing 450000equity shares having face value of Rs 10/- each into 4500000 equity shares having facevalue of Rs 1/- each and consequent amendment to Memorandum of Association of the Company.
INCREASE IN ISSUED AND PAID-UP SHARE CAPITAL
The Company has issued and allotted of 17974870 Equity Shares of face value Rs 1/-each to eligible Qualified Institutional Buyers (QIBs) at an issue price of Rs 389/- perEquity Share (including a premium of Rs 388/- per Equity Share) aggregating to Rs6992.22 million. Pursuant to the said allotment the Equity Share Capital of the Companyincreased from Rs 134811530 consisting of 134811530 Equity Shares to Rs 152786400consisting of 152786400 Equity Shares.
The Company has not issued any shares with differential rights and hence no informationas per provisions of Section 43(a)(ii) of the Companies Act 2013 ("Act") readwith Rule 4(4) of the Companies (Share Capital and Debenture) Rules 2014 is required tobe furnished.
The Company has not issued any sweat Equity Shares during the year under review andhence no information as per provisions of Section 54(1)(d) of the Act read with Rule 8(13)of the Companies (Share Capital and Debenture) Rules 2014 is required to be furnished.
The Company has not issued any Equity Shares under any Employees Stock Option Schemeduring the year under review and hence no information as per provisions of Section62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture)Rules 2014 is required to be furnished.
During the year under review there were no instances of non-exercising of votingrights in respect of shares purchased directly by employees under a scheme pursuant toSection 67(3) of the Act read with Rule 16(4) of the Companies (Share Capital andDebentures) Rules 2014.
MINIMUM PUBLIC SHAREHOLDING COMPLIANCE
In terms of the requirement of continuous listing as stipulated under Rule 19(2)(b) andRule 19A of the Securities Contracts (Regulation) Rules 1957 and Regulation 38 of theListing Regulations the Company was required to increase its Public Shareholding to atleast 25% within three years from listing of its Equity Shares on Stock Exchanges i.e.from July 5 2021.
In order to comply with Minimum Public Shareholding (MPS) requirements on March 252021 the Company has issued and allotted 17974870 Equity Shares of Rs 1/-each at theissue price of Rs 389/- per Equity Share (including a premium of Rs 388/- per EquityShare) aggregating to Rs 6992.22 million to eligible Qualified Institutional Buyersthrough Qualified Institutional Placement (QIP) in accordance with SEBI (Issue of Capitaland Disclosure Requirements) Regulations 2018 as amended and Sections 42 and 62 of theCompanies Act 2013 and the rules made thereunder as amended. These Equity Shares arelisted and admitted to dealings on the BSE and NSE from March 30 2021.
Consequently the Company is now compliant with the MPS requirements. The breakup ofPromoter and Public Shareholding of the Company post aforesaid allotment of shares isprovided below:
|Category ||No. of Equity Shares ||% of total paid-up share capital |
|Promoter and Promoter Group ||114589800 ||75.00 |
|Public ||38196600 ||25.00 |
|Non-promoter ||- ||- |
|Non-public || || |
|Total ||152786400 ||100.00 |
Pursuant to Regulation 32 of the Listing
Regulations there has been no deviation/ variation in the utilisation of proceeds asmentioned in the objects stated in the Placement Document dated March 25 2021 in respectof the Qualified Institutional Placement of the Company.
DEPOSITS FROM PUBLIC
The Company has not accepted any deposits from public and as such no amount on accountof principal or interest on deposits from public was outstanding as on the date of theBalance Sheet.
ACQUISITIONS OF SHARES
Varroc-Elba Electronics S.R.L
In December 2020 VarrocCorp Holding B.V. Netherlands ("VCHBV") WhollyOwned Subsidiary of the Company acquired the balance 30% stake in Varroc-Elba ElectronicsS.R.L. ("Varroc Elba") held by the other JV Partner ELBA SA Romania. By virtueof the said acquisition of shares Varroc Elba became a Wholly Owned Subsidiary' ofVCHBV and in turn a step-down Subsidiary' of the Company. Upon acquisition ofshares the name of Varroc Elba has been changed to Varroc Lighting Systems ElectronicsRomania SA.
VARROC LIGHTING SYSTEMS (INDIA) PVT. LTD. WITH VARROC ENGINEERING LTD.
The Hon'ble National Company Law Tribunal Mumbai Bench vide its Order dated November2 2020 has approved the Scheme of Amalgamation of Varroc Lighting Systems (India) Pvt.Ltd. (a Wholly Owned Subsidiary) ("VLSIPL") with the Company under Sections 230to 232 and other applicable provisions if any of the Act. The Certified copy of theOrder of the Hon'ble NCLT was filed by VLSIPL and the Company with the Registrar ofCompanies Pune and the Registrar of Companies Mumbai on December 5 2020 and December 72020 respectively making the Scheme effective.
As set out in the Scheme of Amalgamation approved by the Hon'ble NCLT all the assetsand liabilities including obligations of VLSIPL have been transferred and have becomeassets and liabilities of the Company with effect from the Appointed Date i.e. April 12020.
TEAM CONCEPTS PVT. LTD. WITH VARROC POLYMERS PVT. LTD.
The Hon'ble National Company Law Tribunal Mumbai Bench vide its Order dated April 232021 has approved the Scheme of Amalgamation of Team Concepts Pvt. Ltd. (a Wholly OwnedSubsidiary) ("TCPL") with Company's Subsidiary Varroc Polymers Pvt. Ltd.("VPPL") under Sections 230 to 232 and other applicable provisions if any ofthe Act. The Certified copy of the Order of the Hon'ble NCLT is awaited and being filed byVPPL with the Registrar of Companies Mumbai for making the Scheme effective.
Further the proceedings are pending before Hon'ble National Company Law TribunalBengaluru Bench.
SUBSIDIARIES JOINT VENTURE AND ASSOCIATE COMPANIES
The Company has 21 subsidiaries including step-down subsidiaries and 3 Joint VenturesCompanies as on March 31 2021. During the year the Board of Directors have reviewed theaffairs of material subsidiaries.
Further the report on the performance and financial position of each of the Subsidiaryand Joint Venture companies and salient features of their Financial Statements areprovided in the prescribed Form AOC-1 and it forms part of the Financial Statements of theCompany. Details of subsidiaries of the Company and their performance are covered inManagement Discussion and Analysis section forming part of this Report.
Further pursuant to the provisions of Section 136 of the Act the Standalone andConsolidated Financial Statements of the Company and separate Audited Financial Statementsin respect of Subsidiaries are available on the website of the Companyhttps://varroc.com/investors/financial-results.
The details of changes in Company's subsidiaries Joint Venture or associate Companiesfor the FY2021 are as following:
Companies which have become Subsidiaries:
Varroc Lighting Systems Electronics Romania SRL (previously known as Varroc-ElbaElectronics SRL)
Companies which have ceased to be Subsidiaries of the Company: Varroc LightingSystems (India) Pvt. Ltd. (pursuant to the amalgamation with the Company)
Companies which have become a Joint Venture of the Company: Nil
Companies which have ceased to be a Joint Venture of the Company: Varroc-ElbaElectronics S.R.L
Entities which have ceased to be an Associate of the Company: Nil
Entities which have become an Associate of the Company: Nil
In accordance with Section 129(3) of the Act the Consolidated Financial Statements ofthe Company including its Subsidiaries Associate and Joint Venture Companies form part ofthe Annual Report.
Mr. Naresh Chandra (DIN: 0027696) decided to demit the office of Chairman and Directorof the Company w.e.f. November 10 2020 due to personal reasons after having been at thehelm of the Varroc Group since its inception for more than three decades. On behalf ofthe Company the Board of Directors acknowledged Mr. Naresh Chandra's outstanding wealthof experience expertise and insights in steering the Varroc Group spanning over 30 yearsfirst as a Founding Director & Shareholder and then as the Chairman of the Board ofDirectors of the Company. Further the Board has placed on record its deep appreciationand gratitude for his immense contribution and valuable guidance during his associationwith the Company.
The Board of Directors approved the appointment of Mr. Tarang Jain (DIN: 0027505) asChairman and Managing Director of the Company w.e.f. November 10 2020.
RETIREMENT OF DIRECTORS BY ROTATION
As per provisions of the Act and the Articles of Association of the Company Mr. ArjunJain (DIN: 07228175) Whole Time Director of the Company being the longest in the officeamongst the Directors liable to retire by rotation retires from the Board by rotation atthe ensuing Annual General Meeting and is eligible for re-appointment. The requisitedetails of re-appointment of Mr. Arjun Jain are mentioned in the Explanatory Statementunder Section 102 of the Act.
CONTINUATION OF DIRECTORSHIP OF MR. MARC SZULEWICZ INDEPENDENT DIRECTOR
In terms of Regulation 17(1A) of the Listing Regulations the Members of the Companyat the 32nd AGM of the Company accorded their consent by way of a Special Resolution forcontinuing the directorship of Mr. Marc Szulewicz Independent Director of the Companywho attained the age of 75 years during FY2021.
KEY MANAGERIAL PERSONNEL
In terms of the provisions of Section 203 of the Act as on March 31 2021 the Companyhas the following Key Managerial Personnel:
(a) Mr. Tarang Jain Chairman and Managing Director
(b) Mr. Arjun Jain Whole Time Director
(c) Mr. Rohit Prakash Whole Time Director
(d) Mr. T. R. Srinivasan Group Chief Financial Officer
(e) Mr. Ajay Sharma Group General Counsel and Company Secretary
STATEMENT OF DECLARATION BY INDEPENDENT DIRECTORS
The Board of Directors have received declarations from all the Independent Directors ofthe Company confirming that they meet with criteria of independence as prescribed bothunder sub-section (6) of Section 149 of the Act and under Regulation 16(1)(b) read withRegulation 25 of the Listing Regulations.
During the year the Independent Directors of the Company had no pecuniary relationshipor transactions with the Company other than sitting fees commission and reimbursement ofexpenses incurred by them for the purpose of attending meetings of the Board of Directorsand Committee(s) of the Company. The details of remuneration of the Independent Directorsare mentioned in the Corporate Governance Report.
MATERIAL CHANGES BETWEEN THE END OF FINANCIAL YEAR AND THE DATE OF THIS REPORT
There has been no material change and commitment affecting the financial position ofthe Company which occurred between the end of the Financial Year to which these FinancialStatements relate and the date of this report.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met 8 (Eight) times during the Financial Year 2020-21 and thedetails of same are given in the Corporate Governance Report forming part of this AnnualReport. The intervening gap between consecutive meetings was not more than one hundred andtwenty (120) days as prescribed by the Act and the Listing Regulations.
The Audit Committee of the Board is comprises of four Directors viz. Mr. GautamKhandelwal (Chairman of the Committee) Mrs. Vijaya Sampath and Mr. Vinish KathuriaIndependent Directors and Mr. Tarang Jain Chairman and Managing Director.
FORMAL ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD ITS COMMITTEES AND DIRECTORS
The Nomination and Remuneration Policy of the Company inter alia specifiesthat the Board will conduct performance evaluation of the Board as a whole and itsCommittees and the individual Directors. Performance evaluation of Directors shall be doneby the entire Board (excluding the Director being evaluated) based on recommendations ofthe meeting of Independent Directors. The Nomination & Remuneration Committee isresponsible for implementation of the methodology followed by the Company in this regard.
The performance of the Board was evaluated by the Board Members after seeking inputsfrom all the Directors on the basis of criteria such as the Board composition andstructure effectiveness of board processes information and functioning etc. Theperformance of the Committee(s) was evaluated by the Board after seeking inputs from thecommittee members on the basis of criteria such as the composition of committeeseffectiveness of committee meetings etc.
The above criteria are based on the Guidance Note on Board Evaluation issued by theSecurities and Exchange Board of India. In a separate meeting of Independent Directorsheld on 04.06.2021 the performance of Non-Independent Directors the Board as a whole andthe Chairman of the Company was evaluated taking into account the views of ExecutiveDirectors and Non-Executive Directors.
The Board and the Nomination and Remuneration Committee reviewed the performance of theindividual Directors on the basis of criteria such as the contribution of the individualDirector to the Board and Committee meetings like preparedness on the issues to bediscussed meaningful and constructive contribution inputs in meetings etc.
In the Board meeting that followed the meeting of the Independent Directors and meetingof Nomination and Remuneration Committee the performance of the Board its Committees andIndividual Directors was also discussed. Performance evaluation of Independent Directorswas done by the entire Board excluding the Independent Director being evaluated.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
In adherence to the provisions of Section 134(3)(e) and 178(1) & (3) of the Actthe Board of Directors upon recommendation of the Nomination and Remuneration Committeehave approved a policy on Director's appointment and remuneration including criteria fordetermining qualifications positive attributes independence of a Director and othermatters. The said Policy is uploaded on the Company's website athttps://varroc.com/investors/ corporate-governance/
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act the Board of Directors based on therepresentation received from the Management to the best of their knowledge and abilityconfirm that:
(a) in the preparation of the Annual Accounts for the year ended March 31 2021 theapplicable accounting standards have been followed along with proper explanation relatingto material departures;
(b) the Directors have 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 as at March 31 2021 and of the profit ofthe Company for the year ended on that date;
(c) the Directors 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) the Directors have prepared the Annual Accounts on a going concern basis;
(e) the Directors have laid down Internal Financial Controls to be followed by theCompany and such Internal Financial Controls are adequate and operating effectively; and
(f) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems are adequate and operating effectively.
AUDITORS & AUDITORS REPORT
a) Statutory Auditor
In accordance with Section 139 of the Act M/s. S R B C & CO LLP CharteredAccountants (Firm Registration No. 324982E/E300003) were appointed as Statutory Auditorsby the Shareholders of the Company at the 30th Annual General Meeting held on September 52018 to hold office for a period of 5 years from the conclusion of that AGM till theconclusion of the 35th AGM of the Company to be held in calendar year 2023.
The Ministry of Corporate Affairs vide its Notification dated May 7 2018 hasdispensed with the requirement of annual ratification of Auditor's appointment by theShareholders. Hence the approval of the Members for the ratification of Auditor'sappointment is not being sought at the ensuing AGM.
There are no further qualifications reservation or adverse remark on the FinancialStatements for the year ended March 31 2021. The Notes on the Financial Statementreferred to in the Auditors' Report are self-explanatory and do not call for any furthercomments. The Auditor's Report is enclosed with the Financial Statements.
The total fees for all the services paid by the Company and its Subsidiaries on aconsolidated basis to the Statutory Auditor and all entities in the network firm/networkentity of which the Statutory Auditor is a part is given below:
|Particular ||As at March 31 2021 |
| ||(Rs in million) |
|Fees for audit and related services (includes QIP fees) ||118.27 |
|Other fees ||5.66 |
|Reimbursement of expenses ||0.91 |
|Total ||124.84 |
b) Cost Auditor
As per the provisions of Section 148 of the Act and the Companies (Cost Records andAudit) Rules 2014 ("the Rules") the Company is maintaining Cost Records withrespect to certain products of the Company.
Based on the recommendation of the Audit Committee the Board at its meeting held onJune 04 2021 has appointed M/s S. R. Bhargave & Co. (Partnership Firm based in Pune Registration No. M 000218) Cost Accountants as Cost Auditor of the Companyfor the Financial Year 2021-22 at a remuneration of Rs 600000 (Rupees Six Lakhs only).The said fee is exclusive of applicable taxes and reimbursement of out-of-pocket expenseswhich shall be payable at actuals.
A proposal for ratification of the Cost Audit fee for the audit of Cost Records for theFinancial Year 2021-22 has been proposed at the forthcoming Annual General Meeting. TheCost Audit Report for the Financial Year 2019-20 was filed within the stipulated period.
C) Secretarial Auditor
In terms of the provisions of Section 204 of the Act and the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 the Board of Directors had appointedM/s Uma Lodha & Co. (C.P. No. 2593) Company Secretary in Practice Mumbai asSecretarial Auditor to undertake the Secretarial Audit for the Financial Year 2021-22.
The Secretarial Audit Report of the Company and Varroc Polymers Private Limited("VPPL") a material Subsidiary of the Company for the Financial Year 2020-21is annexed herewith and forms an integral part of this report. There has been noqualification reservation or adverse remark or disclaimer in their Report. During theFinancial Year 2020-21 the Auditors have not reported any matter under section 143(12) ofthe Companies Act 2013 therefore no detail is required to be disclosed under section134(3) (ca) of the Companies Act 2013.
Annual Secretarial Compliance Report
As per Regulation 24A of the Listing Regulations the Company has undertaken an auditfor the Financial Year 2020-21 for all applicable compliances as per SEBI Regulations andCirculars/Guidelines issued thereunder.
The Annual Secretarial Compliance Report has been submitted to the Stock Exchanges.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS
During the year under review there have not been any instances of fraud andAccordingly the Statutory Auditors have not reported any frauds either to the AuditCommittee or to the Board under Section 143(12) of the Act.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENT
Particulars of loans given Investments made guarantees given and securities providedalong with the purpose for which the loan or guarantee or security is proposed to beutilised by recipient are provided in notes to Standalone Financial Statements.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts/ arrangements/ transactions entered by the Company during Financial Yearwith related parties were on arm's length basis and were in the Ordinary course of thebusiness. During the year the Company had not entered into any contract/ arrangement/transaction with Related Parties which could be considered material for whichShareholders' approval is required in accordance with the policy of the Company onmateriality of Related Party Transactions. Thus provisions of Section 188(1) of the Actare not applicable to the Company.
Pursuant to the provision of applicable Listing Regulations all Related PartyTransactions are placed before the Audit Committee for approval including the transactionunder Section 188 of the Act and Regulation 23 of Listing Regulations i.e. thetransactions which are unforeseen and within the limit of Rs 10 million. Prior omnibusapproval of the Audit Committee has been obtained for transactions which are foreseen andrepetitive in nature. The transactions entered into pursuant to omnibus approval arepresented to the Audit Committee by way of a statement giving details of all Related PartyTransactions on a quarterly basis.
The Policy on Related Party Transactions as approved by the Board is uploaded on theCompany's website. Your Directors draw attention of the members to Note No. 47 toStandalone Financial Statement which sets out Related Party Disclosures.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy Technology Absorption foreignexchange earnings and outgo as required under Section 134 (3)(m) of the Act read withRule 8(3) of the Companies (Accounts) Rules 2014 are provided in Annexure Ito this report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosure of remuneration and other details as required under Section 197(12) of theAct read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are annexed herewith as Annexure - II.
A statement containing particulars of employees as required under Section 197(12) ofthe Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 is provided as separate annexure forming part of thisReport. In terms of Section 136 of the Act the Annual Report and Financial Statements arebeing sent to the Members excluding the aforesaid annexure. The said annexure is availablefor inspection at the Registered and Corporate Office of the Company during business hoursand will be made available to Shareholder(s) on request.
The said statement is also available on your Company's website the weblink to which ishttps:// varroc.com/investors/financial-results/
Your Company has taken adequate steps to ensure compliance with the provisions ofCorporate Governance as prescribed under the Listing Regulations. A separate section onCorporate Governance forming a part of this Report and the requisite certificate fromUma Lodha & Co. practicing Company Secretaries confirming compliance with theconditions of Corporate Governance is attached to the report on Corporate Governance.
The Chairman and Managing Director and Group Chief Financial Officer have certified tothe Board with regard to Financial Statements and other matters as required underRegulation 17(8) read with Schedule II to the Listing Regulations.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In accordance with the requirements of Section 135 of the Act your Company hasconstituted a Corporate Social Responsibility (CSR) Committee. The CSR Committee comprisesof Mr. Tarang Jain (Chairman and Managing Director) Mr. Gautam Khandelwal (IndependentDirector) and Mr. Arjun Jain Whole Time Director.
The brief terms of reference of the Corporate Social Responsibility (CSR) Committee isprovided in the Corporate Governance Report. Your Company has also formulated a CorporateSocial Responsibility Policy (CSR Policy) which is available on the website of the Companyat https://varroc.com/investors/ corporate-governance/. During the year under review theCompany was required to spend Rs 25.52 million towards CSR activities against which theCompany has spent Rs 27.81 million.
The Annual Report on CSR activities as required to be given under Section 135 of theCompanies Act 2013 and Rule 8 of the Companies (Corporate Social Responsibility Policy)Rules 2014 has been provided in an Annexure III to this Report.
WHISTLE-BLOWER POLICY/VIGIL MECHANISM
The Company has adopted a Whistle-Blower Policy to provide a formal mechanism to theemployees to report their concerns about unethical behaviour actual or suspected fraud orviolation of the Company's Code of Conduct or Ethics Policy. The Policy provides foradequate safeguards against victimisation of employees who avail of the mechanism and alsoprovides for direct access to the Audit Committee. It is affirmed that no personnel of theCompany have been denied access to the Audit Committee. The Whistle-Blower Policy has beenuploaded on the website of the Company at www.varroc.com.
The Company has constituted a Risk Management Committee which has been entrusted withthe responsibility to assist the Board in (a) approving the Company's Risk ManagementFramework and (b) Overseeing all the risks that the organisation faces such as strategicfinancial liquidity security regulatory legal reputational and other risks that havebeen identified and assessed to ensure that there is a sound Risk Management Policy inplace to address such concerns/risks. The Risk Management process covers riskidentification assessment analysis and mitigation. Incorporating sustainability in theprocess also helps to align potential exposures with the risk appetite and highlight risksassociated with chosen strategies.
The Audit Committee has additional oversight in the area of financial risks andcontrols. Major risks identified by the business and functions are systematicallyaddressed through mitigating actions on continuing basis. The Company has adopted a RiskManagement Policy in accordance with the provisions of the Act and Regulation 21 of theListing Regulations.
The Company has with the professional help carried out ERM exercise detailing riskidentification assessment and ranking in consultation with Senior Management of theCompany. The process is ongoing and require continuous exercise across all locations andfunctions of the Company. As a part of risk mitigation measure the Company hasimplemented Compliance Management Tool across all business units and functions to monitorcompliance of all applicable laws in India. The Audit Committee will do the periodicreview of implementation assessment and mitigation measures under ERM. The Chief InternalAuditor has been appointed as Chief Risk Officer to monitor ongoing basis risk and tosuggest mitigation measures.
INTERNAL CONTROL SYSTEM
Adequate internal control systems commensurate with the nature of the Company'sbusiness and size and complexity of its operations have been developed with the help ofindependent expert agency and the same are operating satisfactorily. Internal controlsystems consisting of policies and procedures are designed to ensure accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation timely feedback on achievement of operational and strategic goals compliancewith policies procedure applicable laws and regulations and that all assets andresources are acquired economically used efficiently and adequately protected.
Based on the framework of Internal Financial Controls and compliance systemsestablished and maintained by the Company the work performed by the Internal Statutoryand Secretarial Auditors and external consultants including the audit of InternalFinancial Controls over financial reporting by the Statutory Auditors and the reviewsperformed by the management and the relevant Board Committees including the AuditCommittee the Board is of the opinion that the Company's Internal Financial Controls wereadequate and effective during FY2021.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNAL
There are no significant material orders passed by the Regulators/Courts which impactthe going concern status of the Company and its future operations.
DISCLOSURE REQUIREMENT AND OTHER STATUTORY INFORMATION
DIVIDEND DISTRIBUTION POLICY
As per Regulation 43A of the Listing Regulations your Company has formulated a DividendDistribution Policy which is available on the website of the Company at weblinkhttps://varroc.com/ investors/corporate-governance/ under the tab Policies.
COMPLIANCE WITH SECRETARIAL STANDARDS
Your Directors confirm that the Secretarial Standards issued by the Institute ofCompany Secretaries of India have been complied with.
BUSINESS RESPONSIBILITY REPORT
The Business Responsibility Report' of your
Company for the Financial Year 2020-21 as required under Listing Regulations isannexed as Annexure IV to this report.
POLICIES AND CODE ADOPTED BY THE COMPANY
The Board of Directors has from time to time framed and approved policies as requiredby the Listing Regulations as well as under the Act. These policies will be reviewed bythe Board at periodic intervals. Some of the key policies that have been adopted are asfollows:
(i) Policy for Board Diversity Appointment Remuneration Training and Evaluation ofDirectors and Employees
(ii) Material Subsidiary Policy
(iii) Policy for determination of materiality threshold for Disclosure of Events
(iv) Code for Disclosure of Unpublished Price Sensitive Information
(v) Code of Conduct for Insider Trading
(vi) Policy on Preservation of Information and Archival of documents
(vii) Policy on Related Party Transactions
(viii) Code of Conduct for Directors and Senior Management Personnel
(ix) Enterprise Risk Management Policy
(x) Whistle-Blower Policy
(xi) Dividend Distribution Policy.
The above policies are available on the Company's website on the linkhttps://varroc.com/investors/ corporate-governance/
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
a) TRANSFER OF UNCLAIMED DIVIDEND/ DEBENTURE REDEMPTION/DEBENTURE INTEREST TO IEPF:
As required under Section 124 of the Act no Unclaimed Dividend/ Debenture redemption/Debenture Interest is lying with the Company for a period of seven years. Accordingly noamounts have been transferred to the Investor Education and Protection Fund established bythe Central Government.
b) TRANSFER OF SHARES TO IEPF
As required under Section 124 of the Act no Equity Shares in respect of whichdividend has not been claimed by the members for seven consecutive years or more havebeen transferred by the Company to the Investor Education and Protection Fund Authority(IEPF) during the Financial Year 2020-21.
EXTRACT OF ANNUAL RETURN
As required under Section 92(3) and 134(3) (a) of the Act and Rule 12(1) of theCompanies (Management and Administration) Rules 2014 (as amended) an extract of AnnualReturn in Form MGT - 9 is available on Company's website on the linkhttps://varroc.com/investors/financial-results/
OCCUPATIONAL HEALTH & SAFETY
We have implemented an integrated environmental Heal and Safety Management System atall manufacturing plants globally that is consistent with the ISO 14001 Environmental andOHSAS 18001 Health and Safety Management Systems. This system is certified in compliancewith these standards by a third-party registrar Bureau Veritas. Key to the success ofthis programme is establishing annual objectives and targets and implementing improvementprogrammes to reduce safety risks and environmental aspects of our operations.
To ensure compliance with occupational regulations and controlling occupational hazardsthat put risk to employees' life property and the environment by investing in safe andeco-friendly technologies.
Communication Actively informing stakeholders about the EHS guidelines
Collaboration Working as a team (CFT) to provide and implement EHSpractices
Commitment Promoting the EHS culture with dedication proactively
DISCLOSURE AS REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTIONPROHIBITION AND REDRESSAL) ACT 2013
Your Company is committed towards providing a healthy working environment to all itsemployees and thus does not tolerate any discrimination and/or harassment in any form. TheCompany has in place a robust Policy on Prevention of Sexual Harassment at Workplacewhich is in line with the requirements of the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. All employees (permanent contractualtemporary trainees) along with consultants are covered under this Policy. The Policy isgender neutral.
The employees are sensitised from time to time on matters relating to prevention ofSexual Harassment. Awareness Programmes are conducted at unit levels to sensitise theemployees to uphold the dignity of their colleagues at workplace. Further the Company hasconstituted an Internal Complaints Committee to inter alia prevent Sexual Harassment atthe workplace and redress the complaints received in this regard.
Details of complaints with allegations of Sexual Harassment for Financial Year 2020-21are as follows:
a) Number of complaints pending as on April 1 2020 Nil
b) Number of complaints filed during the Financial Year Nil
c) Number of complaints disposed of during the Financial Year Nil
d) Number of complaints pending as on March 31 2021 Nil
Your Directors confirm that no disclosure or reporting is required in respect of thefollowing items as there were no transactions/events on these items during the year underreview:
1. No application was made or any proceeding is pending under the Insolvency andBankruptcy Code 2016 during the year in respect of your Company.
2. There was no one time settlement of loan obtained from the Banks or FinancialInstitutions.
In commitment to keep in line with the Green Initiative and going beyond it to createnew green initiations an electronic copy of the Notice of 33rd Annual General Meeting ofthe Company shall be sent to all Members whose e-mail addresses are registered with theCompany/Depository Participant(s).
Your Directors place on record their acknowledgement for the co-operation received fromthe Customers Vendors Bankers Associates Collaborators and the Employees of theCompany without which it would not have been possible for the Company to achieve itsperformance and growth.
The Directors also thank the Government of India the Government of various states inIndia the Government of various countries and the concerned Government Departments andagencies for their cooperation.
| ||By Order of the Board of Directors |
| ||For Varroc Engineering Limited |
| ||Tarang Jain |
|Place: Pune ||Chairman and Managing Director |
|Date: June 4 2021 ||(DIN: 00027505) |