The Directors have pleasure in presenting their 29th Annual Report andAudited Financial Statements for year ended 31st March 2020.
FINANCIAL SUMMARY AND HIGHLIGHTS:
A summary of the Company's financial results for the Financial Year 2019-2020 is asunder:
|Financial Particulars || |
For the year ended March 31
| ||2020 ||2019 |
|Revenue from operations ||519815807 ||805383819 |
|Other Incomes ||7009648 ||4832239 |
|Total revenues ||526825455 ||810216058 |
|Cost of Material consumed ||341253964 ||534812097 |
|Changes in Inventory ||(22594263) ||(53865585) |
|Employee Benefit expense ||78469670 ||86499726 |
|Finance Costs ||29778776 ||33648536 |
|Depreciation and amortization expense ||36467618 ||32188788 |
|Other expenses ||63806790 ||87616019 |
|Total Expenses ||527182554 ||720899581 |
|Profit before tax ||(357100) ||89316476 |
|Tax expense ||(462012) ||25335648 |
|Profit for the year ||104912 ||63980828 |
Overall business trends in 2019 were on downturn due to a reduction in domestic demandand global turmoil. Companies are trying to have their stand for sustainability in suchtangible crisis which has created the disruption in the market your company is trying tomaintain its continuity in the business as a coping mechanism.
Last quarter of financial year 2019-20 revealed the positive indication in terms ofdemands from domestic market. With the outbreak of COVID-19 in March 2020 possibility ofimprovement in Q1 in 2020-21 looks challenging.
Your company is optimistic about growth plan and expending the wings to reach thecustomers and provide cost effective Engineering & Bearing solutions. In continuationof last year focus is to expand the distribution network and addition of new OEMcustomers with expanding or product portfolio.
The export business focus is to add new dimensions in your company's export business byexpanding geographical reach.
The market is very unpredictable but company is trying to understand the new graduallyevolving dynamics of the market.
In current crisis most of the employees were working from home which proved to besupport system for maintaining the continuity in business in such limited resources. TheCompany is on experimental mode to try new avenues with help of technology in this digitalera.
IMPACT AND IMPLICATIONS OF COVID-19 ON THE AUTOMOTIVE INDUSTRY
The COVID-19 pandemic has pushed humanity and the global economy into a crisis not seensince The Great Depression. In their effort to curb this pandemic the Indian governmentlike many others has enforced a national lockdown for 21 days. While the lockdown mayhave helped limit the spread of the virus it has severely affected the economydisrupting entire value-chains of most major industries in India. The automotive industryis no different.
The auto sector had already undergone considerable slowdown over the last 12-18 monthsdue to structural changes beginning with the Goods and Services Tax shift to SharedMobility Axle-load reforms the Bharat Stage-IV (BS-IV) to Bharat Stage-VI (BS-VI)transition Liquidity Crunch and so on. The COVID-19 lockdown has had a multiplier effectthe industry has almost been at a complete stand still since 24th March. A prolongedtruncation of consumer demand due to the lockdown is seen significantly affecting automanufacturers (OEMs) revenues and cash flows.
In response most of the companies are starving research and development (R&D)funding to sustain core operations and potentially setting back the progress made onalternate fuel and mobility technologies by 2-4 quarters. Eventually some companies mayeven choose to take a strategic call to exit unprofitable markets and vehicle segments.COVID-19
The World Health Organization declared a global pandemic of the Novel Corona virusdisease (COVID-19) on February 11 2020. To prevent the rapid rise of infectionsgovernments almost all countries severely restricted travel mandated extreme socialdistancing' measures and reduced demand supply chains to only those that areessential'. Office complexes such as our campuses our client offices and supplieroffices have been asked to operate with minimal or no staff for extended periods of time.
The crisis has affected and continues to impact our key stakeholders employeesclients vendor and the communities that we operate in. In responding to this crisis ourprimary objective is to ensure the safety of our employees to deliver our clientcommitments and put in place mechanisms to protect the financial well-being of theCompany and protect its long-term prospects.
TRANSFER TO RESERVES:
In view of the losses incurred no amount has been transferred to reserves during theyear under review.
Your Company has not accepted or renewed any deposits under Chapter V of the CompaniesAct 2013 read with Companies (Acceptance of Deposit) Rules 2014 during the FinancialYear 2019-2020.
LOAN FROM DIRECTORS:
During the Financial Year 2019-20 the Company has accepted loans from the directors ofthe Company for which the Company has received the declaration that the said loan is notfrom the borrowed funds.
DISCLOSURE OF ORDERS PASSED BY REGULATORS OR COURTS OR TRIBUNAL:
There were no significant and material orders passed by any Regulators or Courts orTribunals during the financial year ended March 31 2020 impacting the going concernstatus and Company's operations in future.
STATE OF COMPANY'S AFFAIRS AND BUSINESS REVIEW:
The details of the Company's affairs including its operations are more specificallygiven in the Management Discussion and Analysis Report which forms part of this AnnualReport.
CHANGE IN THE NATURE OF BUSINESS:
The Company manufactures Rollers and bearings for industrial applications. There hasbeen no change in the main nature of business activities of the Company during thefinancial year under review.
During the year under review the Company has not recommended and declared dividend bythe Board of Directors.
The paid-up Equity Share Capital as at March 31 2020 stood at Rs. 10.79 crore. Duringthe year under review No change of share capital of the Company. None of the Directors ofthe Company hold instruments convertible into Equity Shares of the Company.
DEMATERIALIZATION OF SHARES:
The shares of your Company are being traded in electronic form and the Company hasestablished connectivity with both the depositories i.e. National Securities DepositoryLimited (NSDL) and Central Depository Services (India) Limited (CDSL). Pursuant todematerialization of shares the company has entered into an agreement with NSDL &CDSL.
As on March 31 2020 100% of the share capital of the company is dematerialized.
MATERIAL CHANGES AND COMMITMENT IF ANY AFFECTING THE FINANCIAL POSITION OF THECOMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THE FINANCIAL STATEMENTSRELATES AND THE DATE OF THE REPORT:
There has been no material change/commitment affecting the financial position of theCompany during the period from the end of the financial year on 31st March 2020 to thedate of this Report.
DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP):
Pursuant to provisions of Sections 2(51) and 203 of Companies Act 2013 read with Rule8 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014following persons are acting as directors and Key Managerial Personnel of the Company:
|1. Managing Director ||Mr. Dilipkumar Changela |
|2. Whole time director ||Mr. Hiralal Changela |
|3. Whole time director ||Mr. Vrajlal Changela |
|4. Chief Financial Officer ||Mr. Vishal Changela |
|5. Chief Executive Officer ||Mr. Divyesh Changela |
|6. Company Secretary ||Mr. Ketankumar Savaliya |
As stipulated under the Regulation 36(3) of the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 (Listing Regulations) and SS-2 issued by ICSIthe brief resume of the Directors proposed to be appointed/re-appointed is given in thenotice convening the 29th Annual General Meeting.
MEETINGS OF THE BOARD:
Six meetings of the Board of Directors were held during the financial year 2019-20 andthe gap between two consecutive board meetings was within the limits prescribed under theCompanies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015. The details of the number of meetings held and attended by eachDirector are provided in the Corporate Governance Report which forms part of this AnnualReport.
DIRECTOR'S RESPONSIBILITY STATEMENT:
Your Directors wish to inform Members that the Audited Accounts containing FinancialStatements for the Financial Year 2019-20 are in conformity with the requirements of theCompanies Act 2013. Your company's financial statements reflect fairly the form andsubstance of transactions carried out during the year and reasonably present the financialcondition and results of operations.
In terms of provisions of Section 134(3) (c) of the Companies Act 2013 your Directorsfurther herby confirms as under:
A. In the preparation of the annual accounts the applicable accounting standard havebeen followed along with proper explanation relating to material departures; if any
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 fairview of the state of affairs of the Company at the end of the financial year 31stMarch 2020 and of the profit 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.
G. Company has adopted policies and procedures for ensuring the orderly and efficientconduct of its business including adherence to company`s policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation;
DECLARATION OF INDEPENDENCE:
The Company has received Declarations of Independence as stipulated under Section149(7) of the Companies Act 2013 from Independent Directors confirming that he/she is notdisqualified from appointing/continuing as Independent Director. The Independent Directorshave complied with the Code for Independent Directors prescribed in Schedule IV to theCompanies Act 2013.
The Company has in place an Audit Committee in terms of the requirements of theCompanies Act 2013 read with the rules made there under and Regulation 18 of the SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015. The details of allthe Committees of the Board along with their terms of reference composition and meetingsheld during the year are provided in the Report on Corporate Governance which forms partof this Annual Report.
There is no such instance during the year under review where the Board had not acceptedany recommendation of Audit of the Audit Committee.
NOMINATION AND REMUNERATION COMMITTEE:
The Company has in place a Nomination and Remuneration Committee in accordance with therequirements of the Companies Act 2013 read with the rules made thereunder and Regulation19 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations 2015.Composition of Nomination and Remuneration Committee is given in Corporate GovernanceReport.
The Committee has formulated a policy on Directors' appointment and remunerationincluding recommendation of remuneration of the key managerial personnel and otheremployees composition and the criteria for determining qualifications positiveattributes and independence of a Director.
SHAREHOLDER'/INVESTORS RELATIONSHIP COMMITTEE:
The Company has in place a Shareholder/Investors Relationship Committee in accordancewith the requirements of the Companies Act 2013 read with the rules made thereunder andRegulation 20 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations2015. Composition of Shareholder'/Investors Relationship Committee is given in CorporateGovernance Report.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:
The Company has in place a Corporate Social Responsibility Committee in accordance withthe requirements of the Companies Act 2013 read with the rules made there under and SEBI(Listing Obligations & Disclosure Requirements) Regulations 2015. Composition ofCorporate Social Responsibility Committee is given in Corporate Governance Report.
In compliance with Section 178(3) of the Companies Act 2013 and on the recommendationof Nomination and Remuneration Committee the Board framed a Nomination and Remunerationpolicy which is generally in line with the existing industry practice and applicablelaws. The main object of the said policy is to select and appoint Directors KeyManagerial Personnel and Senior Management and to ensure that the level and composition ofremuneration is reasonable and sufficient to attract motivate and retain the talentwithin the organization.
Details of remuneration paid to Directors and KMP`s forms part of Corporate GovernanceReport which is annexed to this Annual Report.
As per requirement of section 134(3)(p) of the Companies Act 2013 read with Rule 8 (4)of Companies (Accounts) Rules 2014 and other applicable rules and regulations the Boardhas a formal mechanism for evaluating its performance annually based on the criteria laiddown by Nomination and Remuneration Committee which included attendance contribution atthe meetings and otherwise independent judgment adherence to Code of Conduct andBusiness ethics monitoring of regulatory compliance risk assessment and review ofInternal Control Systems etc.
The Board carried out annual performance evaluation of the Board of Directors itsCommittees and Individual Directors. The performance of the Board was shared with Boardmembers and suggestions were evaluated in detail. Further the reports on performanceevaluation of the Individual Directors were reviewed by the Chairman of the Board andbased on the evaluation necessary changes in processes and policies were suggested forhaving an effective Board.
ENHANCING SHAREHOLDERS' VALUE:
Your Company believes in the importance of its Members who are among its most importantstakeholders. Accordingly your Company's operations are committed to the goal ofachieving high levels of performance and cost effectiveness growth building enhancingthe productive asset and resource base and nurturing overall corporate reputation. YourCompany is also committed to creating value for its stakeholders by ensuring that itscorporate actions have positive impact on the socio-economic and environmental growth anddevelopment.
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 Companies Act2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is furnished in AnnexureI to this Report.
ENVIRONMENT HEALTH AND SAFETY:
The Company is conscious of the importance of environmentally clean and safeoperations. The Company's policy requires conduct of operations in such a manner so as toensure safety of all concerned compliances of environmental regulations and preservationof natural resources.
HUMAN RESOURCE MANAGEMENT:
At Vishal we focus on the workplace of tomorrow that promotes a collaborativetransparent and participative organization culture encourage innovation and rewardsindividual contribution. The focus of human resources management at Vishal is to ensurethat we enable each and every employee to navigate the next not just for clients butalso for themselves. We have re-imagined our employee value proposition to make it moremeaningful to our employees.
PARTICULARS OF EMPLOYEES:
The statement under Section 134(3) (q) and Section 197 (12) of Companies Act 2013 readwith Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel)Rules 2014 forms part of this Report as Annexure V'.
In accordance with the provisions of Companies Act 2013 M/s. SVK & AssociatesChartered Accountants (Firm Registration No. 118564W) was appointed as Statutory Auditorfor a period of 5 continuous years from the conclusion of 24th Annual General Meeting tillthe conclusion of 29th Annual General Meeting of the Company.
The Auditors have confirmed that they have subjected themselves to the peer reviewprocess of Institute of Chartered Accountants of India (ICAI) and hold valid certificateissued by the Peer Review Board of the ICAI.
The Auditors have also furnished a declaration confirming their independence as well astheir arm's length relationship with the Company as well as declaring that they have nottaken up any prohibited non-audit assignments for the Company.
The Auditor's Report on the Standalone Financial Statement of the Company for theFinancial Year 2019-20 does not contain any qualification reservation or adverse remark.
The Directors of your Company confirm that no instances of frauds or mismanagement werereported by the Statutory Auditor under Section 143 (12) of the Companies Act 2013.
The Audit Committee reviews the independence and objectivity of the Auditors and theeffectiveness of the Audit process.
M/s. SVK & Associates Chartered Accountants (Firm Registration No. 118564W) re-appointed as Statutory Auditor of the company to hold office for second term from theconclusion of 29th Annual General Meeting till the conclusion of 34th Annual GeneralMeeting of the Company.
SECRETARIAL AUDIT REPORT:
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 the Company hasappointed M/s. K. P. Ghelani & Associates Practicing Company Secretaries to conductSecretarial Audit of the Company. The Report of the Secretarial Audit in Form MR-3 for thefinancial year ended March 31 2020 is annexed to this report. There are noqualifications reservations or adverse remarks made by the Secretarial Auditor in hisreport.
The observation of the Secretarial Auditor is self-explanatory.
MAINTENANCE COST RECORDS AND COST AUDIT:
Maintenance of cost records and requirement of cost audit as prescribed under theprovisions of section 148(1) of the Companies Act 2013 are applicable for the businessactivities carried out by the Company. Your company has not applied to cost audit duringthe financial year FY 2019-20.
The Company has complied with the applicable Secretarial Standards during the FinancialYear 2019-20.
An Internal Audit was conducted during the year by the Internal Auditor M/s. P.Ghanshyam & Co. Chartered Accountants appointed as Internal Auditor for the year2020-21.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS:
Details of loans guarantees and investments covered under Section 186 of the CompaniesAct 2013 are stated in the notes to accounts of Financial Statements forming part ofthis Annual Report.
RELATED PARTY TRANSACTIONS (RPTS):
The contracts or arrangements with related parties which fall under the scope ofSection 134 (3)(h) and section 188 (1) of the Companies Act 2013 read with rule 8(2) ofthe Companies
(Accounts) Rules 2014 are given in Annexure' in Form AOC -2 and the same formspart of this Annual Report.
All Related Party Transactions are presented to the Audit Committee and the Board.Omnibus approval is obtained for the transactions which are foreseen and repetitive innature. A statement of all related party transactions is presented before the AuditCommittee on a quarterly basis specifying the nature value and terms and conditions ofthe transactions. Further the details of the transactions with Related Party are providedin the Company's financial statements in accordance with the Accounting Standards.
EXPLANATION OR COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSE REMARKS ORDISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS ANDMANAGEMENT`S REPLY FOR THE SAME:
There are no qualifications reservations or adverse remarks made by the StatutoryAuditors in their report on the Financial Statements of the Company for year ended March31 2020. The notes to the accounts are self-explanatory to comments/observations made bythe Auditors in their report and do not require further explanation.
There are no qualifications reservations or adverse remarks in the Secretarial AuditReport of the Company during the period of review.
CODE FOR PREVENTION OF INSIDER TRADING:
On December 31 2018 Securities and Exchange Board of India amended the Prohibition ofInsider Trading Regulations 2015 prescribing various new requirements with effect fromApril 1 2019. In line with the amendments your Company has adopted an amended Code ofConduct to regulate monitor and report trading by Designated Persons and their ImmediateRelatives under the Securities and Exchange Board of India (Prohibition of InsiderTrading) Regulations 2015.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
The Company has an internal control system commensurate with the size scale andcomplexity of its operations and well-documented procedures for various processes whichare periodically reviewed for changes warranted due to business needs. Internal Audit isconducted at regular time interval in the Company. The scope and authority of the InternalAudits defined by Audit committee. This system of internal control facilitates effectivecompliance of Section 138 of the Act and the Listing Regulations.
To maintain its objectivity and independence the Internal Auditor reports to theChairman of the Audit Committee of the Board. The Internal Auditor monitors and evaluatesthe efficiency and adequacy of the internal control system with reference to the FinancialStatement. Audit committee evaluates the efficiency and adequacy of internal controlsystems in the Company its compliance with operating systems accounting procedures andpolicies. Based on the report of internal auditor process owners undertake correctiveactions in their respective areas and thereby strengthen the controls. Significant auditobservations and corrective actions thereon are presented to the Audit Committee. Duringthe year under review no reportable material weakness in the operation was observed.Regular audit and review processes ensure that such systems are reinforced on an ongoingbasis.
The Ministry of Micro Small and Medium Enterprises vide their Notification dated 2ndNovember 2018 has instructed all the Companies registered under the Companies Act 2013with a turnover of more than Rupees Five Hundred crore to get themselves on boarded on theTrade Receivables Discounting system platform (TReDS) set up by the Reserve Bank ofIndia. The Company is not covered under the above Criteria as mentioned in MSME.
The Company has a Whistle Blower Policy and has established the necessary vigilmechanism for directors and employees in confirmation with Section 177(9) of the Act andRegulation 22 of Listing Regulations to report concerns about unethical behavior. Thedetails of the policy have been disclosed in the Corporate Governance Report which is apart of this report.
During the year no person has been declined access to the Audit Committee whereverdesired and the mechanism provides for addressing the complaints to Audit Committee anddirect access to the Chairperson of the Audit Committee in exceptional circumstances.
SUBSIDIARIES ASSOCIATE AND JOINT VENTURE COMPANIES:
The Company does not have any subsidiary Associates or Joint Venture Companies andhence preparation of Consolidated Financial Statements and Statement containing salientfeatures of subsidiary in AOC-1 as per the provisions of Section 129 of the Companies Act2013 is not applicable to the Company.
INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013:
The Company is committed to provide healthy environment to all employees and thus doesnot tolerate any discrimination or harassment in any form. In line with the requirementsof The Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 the Company has adopted the Anti-Harassment and Grievance Redressal Policy.
All employees (permanent contractual temporary and trainees) are covered under thispolicy. During the year Company has not received any complaint of sexual harassment.
EXTRACT OF ANNUAL RETURN:
As per the provisions of Section 92(3) of the Companies Act 2013 an extract of theAnnual Return in Form MGT-9 is attached as Annexure to this Report.
As per the Regulation 15 of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 (SEBI Regulations) based on the paid-up equity share capital and networth of the Company the corporate governance provisions mentioned in SEBI Regulationsare not applicable to the Company. However the Company for stakeholders' information andas a good secretarial practice is providing certain information on voluntary basis inCorporate Governance report which forms an integral part of this report.
CORPORATE GOVERNANCE DETAILS AS REQUIRED UNDER SCHEDULE V OF THE COMPANIES ACT 2013
The disclosures to be mentioned in pursuance of Section II of Part II of Schedule V ofthe Act have been mentioned in the Corporate Governance Report.
MANAGEMENT DISCUSSION AND ANALYSIS:
The Management Discussion and Analysis Report as required by Schedule V of the SEBI(Listing Obligation sand Disclosure Requirements) Regulations 2015 are already dealtwith in various sections of this Report. The Management Discussion and Analysis Report isseparately annexed and forms part of this report.
ANNEXURES FORMING PART OF THIS ANNUAL REPORT:
|Annexure ||Particulars |
|No. || |
|I ||Statement of Disclosure of Remuneration Pursuant to Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 |
|II ||Form no. AOC-2 Related party transactions |
|III ||Particulars of Conservation of Energy Technology Absorption and Foreign Exchange Earnings and Outgo |
Your Directors wish to place on records their sincere appreciation to all the Employeesof the Company for the efforts efficient work management loyal services commitment anddedication that developed the culture of professionalism. Your Directors also thank andexpress gratitude to the Company's Customers Vendors and Institutions. Your Directorsalso wish to express deep sense of gratitude to all our Bankers Central and StateGovernments and their departments and the local authorities for the continued support.
Your Directors register their sincere appreciation to the Shareholders of the Companyfor unstinted support and confidence reposed in the management of the Company.
Your Directors regret the loss of life due to COVID-19 pandemic and are deeply gratefuland have immense respect for every person who risked their life and safety to fight thispandemic.
Your Directors appreciate and value the contribution made by every member of the VishalBearings family.
| ||For and on behalf of the Board |
| ||For Vishal Bearings Limited |
| ||Dilipkumar Changela |
| ||Managing Director |
| ||DIN: 00247302 |
|Date: 25.11.2020 || |
|Place: Shapar Rajkot || |