Your Directors have pleasure in presenting the 52nd Annual Report of the Company andthe Audited Statement of accounts for the financial year ended March 31 2020.
(Rs. in lakhs)
|Period ||Year 2019-20 ||Year 2018-19 |
|Operating Income ||54368 ||61480 |
|Non-Operating Income ||2358 ||4491 |
|Total Income ||56726 ||65971 |
|Finance Cost ||147 ||225 |
|Depreciation ||1635 ||1579 |
|Total Expenses ||54416 ||58818 |
|Exceptional Item ||- ||- |
|Profit Before Tax ||2310 ||7153 |
|Tax ||510 ||2547 |
|Profit After Tax ||1800 ||4606 |
|Other Comprehensive Income ||25 ||-54 |
|Total Comprehensive Income ||1825 ||4552 |
|Earning Per Share (Basic and Diluted) ||20.83 ||53.32 |
During the year under review FY 2019-20 your Company's Operating income is RS. 54368lakhs as against RS. 61480 lakhs in the previous year FY 2018-19 and the Profit Before Tax(PBT) for the FY 2019-20 is RS. 2310 lakhs as against RS. 7153 lakhs in the previous yearFY 2018-19. Profit after Tax (PAT) for the FY 2019-20 is RS. 1825 lakhs as against RS.4552 lakhs in the previous year FY 2018-19. With respect to volumes your Company has done19302 Nos of tillers against the previous year of 22547 Nos of tillers and on tractors7147 Nos against previous year of 8198 Nos of tractors.
Despite challenging market conditions your Company's Compact Tractor market sharestood at 10% and power tiller market share at 46%.
The Year under review was impacted due to various factors such as Monsoon failure incertain areas non- availability of funds with various State Govts issues w.r.t subsidyallocation in key states and implementation of direct billing of products from Company tosubsidy customers. COVID-19 pandemic had also impacted the performance of the Company inQ4.
COVID 19 IMPACT
The impact of COVID-19 on the economy is no doubt devastating. No sector has escapedits impact. Agriculture being a priority sector COVID impact will be less compared toother sector. During the lock down the Company had adopted the work from Home policy.After relaxation Company has started its manufacturing activity as per Government normsby adopting social distancing and proper sanitization. This impact will reverberate acrossthe larger economy and will linger longer than a few months.
However it is anticipated that performance of RS. 1 of FY21 may be affected by COVID-19situation. The main challenges will be the disruptions of supply chain.
SEGMENT-WISE OR PRODUCT-WISE PERFORMANCE
Your Company deals with single segment only i.e. "Manufacturing of AgriculturalMachineries".
Your Directors had declared interim dividend of RS. 15/- (150%) per share for thefinancial year 2019-20 and the same was paid on 31/03/2020 to shareholders who were on theregister of members as on 25th March 2020 being the record date fixed for this purpose.The total outflow was RS. 1562 lakhs including the dividend distribution tax RS. 266lakhs. The Board did not recommend a final dividend and the interim dividend of RS. 15/-per equity share declared by the Board in March 2020 was considered as the final dividendfor the financial year 2019-20. Thus the total dividend for the financial year 2019-20remains RS. 15/- per equity share.
TRANSFER TO RESERVES
"The Board of Directors of your company has decided not to transfer any amount tothe Reserves for the year under review."
The Company continues to sustain its commitment to the highest levels of quality. Theyear under reference the Company successfully completed the annual ISO surveillance auditand retained the ISO certification for ISO 9001:2015 ISO14001:2015 & ISO 45001:2018
SIGNIFICANT CHANGE IN KEY FINANCIAL RATIOS:
|Ratio ||2019-20 ||2018-19 ||Explanation |
|Debtors Turnover Ratio ||5.65 ||6.38 ||Due to reduction in sales |
|Inventory Turnover Ratio ||5.32 ||4.97 ||Due to reduction in sales |
|Interest Coverage Ratio ||27.87 ||39.87 ||Due to Decrease in EBDITA |
|Current Ratio ||4.08 ||4.31 ||Due to Decrease in Current Assets ( GST) |
|Gross Profit margin ||36% ||29% ||Decrease in COGS and Net Sales |
|Net Profit margin ||3.31% ||7.49% ||Due to reduction in sales and earning |
CHANGE IN RETURN ON NETWORTH:
The changes in return on net worth is mainly due to lower profit for the year underreference.
DETAILS OF DIRECTORS AND KMP APPOINTMENT/ REAPPOINTMENT:
In accordance with the provisions of the Companies Act 2013 Mr. V.T. Ravindra and Mr.V.S. Arun Directors will retire at the ensuing AGM and they are eligible forreappointment. No Director has resigned during the year 2019-20.
Mr. Antony Cherukara was appointed as CEO w.e.f 25th April 2019. Mr. P M Keshavaretired as CFO on 31st August 2019. Mr. Mahadevan GV was appointed as CFO on 9th August2019 and resigned on 15th June 2020.
KEY MANAGERIAL PERSONNEL (KMP)
The following persons are Key Managerial Personnel (KMP) of the Company under section203 of the Companies Act 2013 during the year 2019-20
1. Mr. V.P. Mahendra - Vice Chairman & Managing Director
2. Mr. Antony Cherukara Chief Executive Officer
3. Mr. Mahadevan GV- Chief Financial Officer*
4. Mr. Chinmaya Khatua - Company Secretary
*Mr. Mahadevan GV resigned as CFO on 15th June 2020
The Company strives to ensure good in Corporate Governance and levels of transparencywith all the provisions of SEBI (Listing Obligation and Disclosure Requirement)Regulation 2015. A certificate from the Auditors to this effect forms part of CorporateGovernance Report.
Compliance reports in respect of all laws applicable to the Company have been reviewedby the Board of Directors.
DIRECTOR'S RESPONSIBILITY STATEMENT:
Pursuant to Section 134(3) (c) of the Companies Act 2013 your Directors to the bestof their knowledge and belief and according to the information and explanations obtainedby them make the following statement:
(a) That in the preparation of the annual accounts the applicable accounting standardshad been followed along with proper explanation relating to material departures;
(b) That the directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the company at the end of thefinancial year and of the profit and loss of the company for that period;
(c) That proper and sufficient care has been taken 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) That the annual accounts have been prepared on a going concern basis;
(e) That the internal financial controls to be followed by the company have been laiddown and that such internal financial controls are adequate and were operatingeffectively.
(f) That proper systems to ensure compliance with the provisions of all applicable lawshave been devised and that such systems were adequate and operating effectively.
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 including the audit of internal financial controls over financialreporting by the Internal Auditors and the reviews performed by management and therelevant board committees including the audit committee the Board is of the opinion thatthe Company's internal financial controls were adequate and effective during FY 2020.
M/s. K.S. Rao & Co Chartered Accountants (Firm Regn No. 003109S) were appointed asAuditors of the Company for five financial years w.e.f FY 2016-17 at the 48th AnnualGeneral Meeting of the Company.
Your Directors had on the recommendation of the Audit Committee appointed M/s. RaoMurthy & Associates Cost Accountants to audit the cost records of the Company for thefinancial year 2020-21 on a remuneration of RS. 250000/-(Exclusive of applicable taxes)plus out of pocket expenses. As required under the Companies Act 2013 the remunerationpayable to the cost auditor is required to be placed before the Members in a generalmeeting for their approval. Accordingly a Resolution seeking Member's approval for theremuneration payable to M/s. Rao Murthy & Associates. Cost Auditors is included inthe Notice of the Annual General Meeting.
The Company has made and maintained cost records as specified by the Central Governmentunder sub-section (1) of section 148 of the Companies Act 2013.
M/s. Brahmayya & Co Chartered Accountant were appointed as Internal Auditors undersection 138 of the Companies Act 2013 for the financial year 2019-20.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and read withRules made there under the Board had appointed Thirupal Gorige & Associates LLPPractising Company Secretaries to undertake the Secretarial Audit of the Company for thefinancial year 2019-20. The Secretarial Audit Report is enclosed herewith as Annexure-4.
PARTICULARS OF EMPLOYEES:
As required by provisions of section 197 of the Companies Act 2013 read with Rule 5(2)and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules2014. The salary details of designated employees are given in Annexure-1.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
Information under Section 134 Companies Act 2013 read with rule 8 (3) of the Companies(Accounts) Rules 2014 is enclosed as Annexure-2.
Your Company has not accepted any deposits within the meaning of Chapter- V of theCompanies Act 2013 and rules made thereunder.
Industrial relations have been cordial at the Bengaluru Mysore Malur and Hosur plantsduring the year.
There were 758 Nos. of permanent employees on roll as on 31st March 2020.
SAFETY HEALTH AND ENVIRONMENT:
V.S.T. TILLERS TRACTORS LIMTED is a safe work place and the Safety & Health of ouremployees as per the requirement of the Factories Act are ensured. Our motto is "ZeroAccident". Our commitment is to protect the environment as per the policy. TheCompany has been taking adequate safety measures for prevention of COVID 19 at all ourlocations.
Your Company's operations are supported by a full fledged Data Centre. Your company hasa well planned Business Continuity Plan Set-up for all critical applications with nearreal-time data replication.
The delivery centers meet the Information Security Management System and CIA(Confidentiality Integrity and Availability) Standards. To cater to the ever-changingcustomer needs the IT infrastructure is being constantly upgraded with new / enhancedfeatures to facilitate smooth functioning of operations and deliver customer satisfaction.We are using industry best standard mailing solutions with compliance and availability ofmails which controls various spam mails.
The Company has implemented new ERP system (SAP) during the year 2019-20 to furtherstrengthen the internal control system of the Company. Along witRs. 24*7 availability ofcritical application and standard business analytical tools.
Seven meetings of the Board of Directors were held during the year. For furtherdetails please refer report on Corporate Governance of this Annual Report.
Disclosure of relationships between directors
Mr. V.K. Surendra V.P. Mahendra Mr. V.V. Pravindra Mr. V.T. Ravindra and Mr. V SArun are promoters. Apart from the promoter directors none of the other Directors arerelated to each other.
DECLARATION OF INDEPENDENT DIRECTORS.
The Company has received declarations from Independent directors as mentioned insub-section (6) of section 149 of the Companies Act 2013 Schedule- IV of the Act andrelevant provision of SEBI (LODR) Regulations 2015. The online proficiency self-assessmenttest conducted by Indian Institute of Corporate Affairs is yet to be undertaken by theIndependent Directors and same will be completed within the prescribed time frame.
The Company has constituted Audit Committee CSR Committee Nomination &Remuneration Committee Stakeholders Relationship Committee and Risk Management Committee.The details of the Committees are mentioned in Corporate Governance Report.
VIGIL MECHANISM CUM-WHISTLE BLOWER POLICY
The purpose of this policy is to provide a framework to promote responsible and securewhistle blowing. It is to protect employees wishing to raise a concern about seriousirregularities within the Company.
The Company has vigil mechanism cum whistle blower policy to deal with instance offraud and mismanagement if any. The details of the vigil mechanism are explained in theCorporate Governance Report and also posted on the website http://www.vsttractors.com/investors/policies of the Company. The Company has not received anycomplaint during the year 2019-20.
AUDITORS QUALIFICATION RESERVATION OR ADVERSE REMARK OR DISCLAIMER
There was no qualification reservation or adverse remark or disclaimer from Statutory& Secretarial Auditors.
There was no fraud reported by the auditors under section 143(12) of the Companies Act2013.
LOANS GUARANTEE & INVESTMENT
The Company has made investment during the year 2019-20. The investments details formspart of the notes to the financial statements provided in this Annual Report. The companyhas not given any Loan or Guarantee during the year 2019-20.
RELATED PARTY TRANSACTIONS
All related party transactions that are entered into during the financial year were onan arm's length basis. There are no materially significant related party transactions madeby the company with Promoters Directors Key Managerial Personnel or other designatedpersons which may have a potential conflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee and also beforethe Board for approval. Prior omnibus approval of the Audit Committee was obtained for thetransactions which are of a foreseen and repetitive nature. The transactions entered intopursuant to the omnibus approval so granted are audited and a statement giving details ofall related party transactions is placed before the Audit Committee and the Board ofDirectors for their information and approval. The policy on dealing with Related PartyTransactions as approved by the Board can be accessed athttp://www.vsttractors.com/investors/policies.
The Related Party Transaction details including the transaction(s) of the Company witha person/entity belonging to the promoter/promoter group which hold(s) more than 10%shareholding in the Company as required pursuant to para A of Schedule V of the SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 forms part of thenotes to the financial statements provided in this Annual Report. Please refer the detailsin Annexure -6 for AOC-2 Form.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION
There are no material changes and commitments affecting the financial position of thecompany which have occurred between end of the financial year of the company to which thefinancial statements relate and the date of the report;
The Company has risk management policy. The risk pertaining to business of the Companyis discussed at the Risk Management Committee Audit Committee and at the Board Meetingson regular basis.
There are no risks which in the opinion of the Board threaten the existence of theCompany. However some of the risks which may pose challenges are set out in theManagement Discussion and Analysis which forms a part of this report.
COMPOSITION OF RISK MANAGEMENT COMMITTEE
Mr. M.K. Bannerjee Chairman Mr. V. K. Surendra Member Mr. K.M. Pai Member Mr.V.P. Mahendra Member. Mr. V S Arun Member (appointed on 17th March 2020)
The Risk Management Policy as approved by the Board is uploaded on the Company'swebsite http://www.vsttractors.
com/investors/policies During the year under review the committee met on 27/09/201918/12/2019 & 17/03/2020 attended by all the members.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has formed CSR policy and Committee details as required by the Act areavailable in Company website i.e. http://www.vsttractors.com/ investors/policies. TheCompany has spent RS. 4.58 Crores out of the previous years unspent amount in CSRactivities during the financial year 2019-20.
EVALUATION OF BOARD PERFORMANCE.
The Board works with the nomination and remuneration committee to lay down theevaluation criteria for the performance of executive/non-executive/independent directorsthrough a peer-evaluation excluding the director being evaluated. The evaluation of BoardCommittees and Individual Directors was conducted on June 2019. Further evaluation was notconducted due to COVID -19 situation and same will be completed during this financialyear.
There is no change in nature of the business during the year. Details of subsidiaryAssociate or joint Venture Company.
The company has no subsidiary company.
SIGNIFICANT AND MATERIAL ORDERS
There are no significant material orders passed by the Regulators / Courts which wouldimpact the going concern status of the Company and its future operations.
The ratio of the remuneration of each Director and KMP to the median remuneration ofthe employees of the company for the financial year as follows:
|Name ||Designation ||Remuneration 2019-20 (in Rs.) ||Remuneration 2018-19 (in Rs.) ||Increase / Decrease in Remuneration (in Rs.) ||Increase / Decrease in Remuneration (%) ||Ratio/Times per Median of employee remuneration |
|1 Mr. V.P Mahendra ||Vice Chairman & Managing Director ||8850000 ||10433291.00 ||(1583291) ||-15% ||21.06 |
|2 Mr. V.T. Ravindra ||Executive Director ||6300000 ||5823643.00 ||476357 ||8% ||15.00 |
|3 * Mr. Antony Cherukara ||CEO ||11312000 ||- ||- ||- ||26.92 |
|4 *Mr. P M Keshava ||CFO ||1587941 ||5323555.00 ||(3735614) ||-70% ||3.78 |
|5 **Mr. Mahadevan GV ||CFO ||3754952 ||- ||- ||- ||8.93 |
|6 Mr. Chinmaya Khatua ||Company Secretary ||1928450 ||1925808.00 ||2642 ||0.13% ||4.59 |
|7 Mr. V K Surendra ||Chairman ||800000 ||510000 ||290000 ||56% ||1.90 |
|8 Mr. R. Subramanian ||Director ||550000 ||580000 ||(30000) ||-5% ||1.30 |
|9 Mr. M.K. Bannerjee ||Director ||1150000 ||850000 ||300000 ||35% ||2.73 |
|10 Mr. K M Pai ||Director ||1050000 ||1410000 ||(360000) ||-25% ||2.49 |
|11 Ms. Siva Kameswari Vissa ||Director ||400000 ||480000 ||(80000) ||-16% ||0.95 |
|12 Mr. B. Jagannath ||Director ||250000 ||100000 ||150000 ||150% ||0.59 |
|13 Mr. V V Pravindra ||Director ||350000 ||180000 ||170000 ||94% ||0.83 |
|14 Mr. V S Arun ||Director ||200000 ||150000 ||50000 ||33% ||0.47 |
* Mr. Antony Cherukara was appointed as CEO w.e.f. 25th April 2019 *Mr. P M Keshavaretired as CFO w.e.f. 31st August 2019
**Mr. Mahadevan GV was appointed as CFO w.e.f. 9th August 2019 and resigned on 15thJune 2020. Non-Executive directors get sitting fees only and same has been shown forcomparison.
The Company's PAT has decreased from RS. 4552 lakhs to RS. 1825 lakhs. The marginalincrease in KMP remuneration is in line with the current market scenario and withCompany's policy. However salaries of Vice Chairman & Managing Director and ExecutiveDirector were approved by the shareholders.
The Company has given about 6.5% average increase in salaries to the employees keepingin view the overall industry standard and interest of the employees. The unionizedemployees of the Company are eligible for salary increment as per the terms and conditionsof their wage settlement. There is no exceptional circumstances of increase in themanagerial remuneration.
The Company has 758 Nos permanent employees on roll as on 31st March 2020. The Companyfixes salary of the employees on the basis of Remuneration Policy of the Company. Theaverage increase in median remuneration of employees during the year 2019-20 is 7%.
Payment of Commission to Managing Director and Whole time Director - The ManagingDirector and whole time director are being paid commission on net profit of the Company asapproved by the shareholders.
|Name ||Designation ||Commission |
|V.P. Mahendra ||Vice Chairman & Managing Director ||One percent on the net profit of the Company subject to a maximum of one and half times of annual basic salary drawn |
|V T Ravindra ||Executive Director ||One percent on the net profit of the Company subject to a maximum of one and half times of annual basic salary drawn |
Mr Antony Cherukara CEO received remuneration in excess of the highest paid directorduring the year considering his salary for the full year the details are given in PageNo.31.
VARIATION IN MARKET CAPITALISATION :
|Date ||Paid up Capital (in Rs.) ||Closing Market Price per share ||EPS ||PE Ratio ||Market Capitalisation (Rs. in crore) |
|31.03.2019 ||86395280 ||1314.20 ||53.32 ||24.70 ||1135 |
|31.03.2020 ||86395280 ||672.05 ||20.83 ||32.26 ||580 |
|Increase/Decrease ||NIL ||-642.15 ||-32.49 ||7.56 ||555 |
|% Increase/Decrease ||NIL ||-48.86 ||-60.93 ||30.60 ||49 |
|No of issue of shares during the year ||- ||- ||- ||- ||- |
Internal Complaint Committee under Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.
The Company has formed Internal Complaint Committee under Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013 and no complaint was receivedduring the year 2019-20.
No disclosure or reporting is required with respect to the following items as therewere no transactions during the year under review:
The issue of equity shares with differential rights as to dividendvoting orotherwise.
The issue of shares to the employees of the company under any scheme (sweatequity or stock options). There is no change in the Share Capital Structure during theyear under review.
The company does not have any scheme or provision of money for the purchase ofits own shares by employees or by trustees for the benefits of employees.
Extract of Annual Return
Annual Return of the Company is available in Company website i.e. www.vsttractors.comextract of Annual Return is annexed herewith as Annexure 5 to this report.
The Secretarial Standards issued by the Institute of Company Secretaries of India(ICSI) have been duly complied by the Company.
Investor Education And Protection Fund
Company has transferred RS. 564444/- unpaid and unclaimed dividend to InvestorEducation and Protection Fund and 3812 Nos of shares to IEPF Authority as per IEPF Rules.As per said rule any benefits such as dividend shall be transferred to IEPF with respectto shares transferred to IEPF and accordingly dividend of the corresponding sharestransferred to IEPF has also been transferred to IEPF. The details of such Dividends andshares are available in Company website at www. vsttractors.com. Mr. Chinmaya Khatua hasbeen appointed as nodal officer under IEPF Rule.
The details of unclaimed dividends as on 31/03/2020 is given below:
|S.No ||Financial Year ||Unclaimed Dividend Amount (in Rs.) ||No of corresponding Shares ||Due date of Transfer to IEPF |
|1 ||2012-13 ||764703.00 ||85502.00 ||14/09/2020 |
|2 ||2013-14 ||1139340.00 ||75956.00 ||14/09/2021 |
|3 ||2014-15 ||1038510.00 ||69234.00 ||11/09/2022 |
|4 ||2015-16 ||1016295.00 ||67753.00 ||28/04/2023 |
|5 ||2016-17 ||1124835.00 ||74989.00 ||11/09/2024 |
|6 ||2017-18 ||2374550.00 ||47491.00 ||11/09/2025 |
|7 ||2018-19 ||772665.00 ||51511.00 ||12/09/2026 |
Details of Nodal officer:
Name- Mr. Chinmaya Khatua Company Secretary Email- email@example.com Phone No-080-67141111
The above details are available in Company website: www.vsttractors.com
The Directors wish to convey their gratitude for the faith reposed in your Company byemployees dealers vendors Bankers and the customers at large.
| ||for V.S.T. TILLERS TRACTORS LTD. |
|Place: Bengaluru ||V. K.Surendra |
|Date : 11th August 2020 ||Chairman |