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Z F Steering Gear (India) Ltd.

BSE: 505163 Sector: Auto
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NSE 05:30 | 01 Jan Z F Steering Gear (India) Ltd
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P/E 33.00
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OPEN 530.00
CLOSE 516.25
52-Week high 575.00
52-Week low 275.00
P/E 33.00
Mkt Cap.(Rs cr) 480
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
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Z F Steering Gear (India) Ltd. (ZFSTEERING) - Director Report

Company director report

Directors’ Report

To the Members

The Directors have pleasure in presenting the 38th Annual Report and the Company'sAudited Financial Statements (Standalone and

Consolidated) for the financial year (F.Y.) ended March 31 2018.

Financial Results

The Company has adopted Indian Accounting Standards (Ind AS) with effect fromApril 1 2017 pursuant to the Government of India

Notification Ministry of Corporate Affairs’ dated February 16 2015 notifying theCompanies (Indian Accounting Standards) Rules

2015. Accordingly the Financial Statements for the F.Y. ended March 31 2018 of theCompany and its associate company have been prepared in compliance with Ind AS.Consequently the financial statements for the previous year (F.Y. 2016-17) have also beenreinstated as per Ind AS to facilitate comparison.

(Rs. In million)

Particulars Standalone Consolidated (after taking into account 26% share in JV Company named ‘Robert Bosch Automotive Steering Pvt. Ltd.’)
2017-18 2016-17 2017-18 2016-17
Sales (net) and other Income 4359.28 4104.09 4359.28 4104.09
Profit/ (Loss) before depreciation and tax 946.77 910.37 946.77 910.37
Depreciation and amortization expenses 333.03 278.51 333.03 278.51
Share of Net Profit/ (Loss) of Joint Venture - - (38.37) (184.00)
Profit/ (Loss) before Tax (PBT) 613.74 631.86 575.37 447.86
Tax Expense 143.07 134.70 143.07 134.70
Profit/ (Loss) for the year 470.67 497.16 432.30 313.16
Other comprehensive income 17.24 (7.40) 17.30 (7.76)
Total comprehensive income for the year 487.91 489.76 449.60 305.40
Balance Brought Forward from Previous year 918.14 428.38 175.75 (129.65)
Dividend & Dividend Tax thereon (F.Y. 2016-17) (87.36) - (87.36) -
Transfer to General Reserve Nil Nil Nil Nil
Closing Balance under Profit and Loss Statement c/f 1318.69 918.14 537.99 175.75
Earnings Per Share Basic/ Diluted 51.87 54.79 47.65 34.51


Your Directors are pleased to recommend a dividend of Rs.8/- per share for thefinancial year ended March 31 2018.

Management Discussion and Analysis

International Monetary Fund (IMF) has recently indicated that with a growth rate of 6.6per cent for the financial year 2017-18 which may rise to 7.5 per cent in F.Y. 2018-19the prospects for Indian economy are bright. A revival of the economy post-demonetizationand enforcement of Goods and Services Tax are putting the Country back on track giving aleg up to the industry and manufacturing activities. The Indian economy is now 2.5trillion dollar economy - seventh largest in the world.

Industry structure and developments

The overall Commercial Vehicles segment registered a growth of 15.9 per cent inApril-March 2018 as compared to 4 per cent growth in F.Y. 2016-17. Medium & HeavyCommercial Vehicles (M&HCVs) grew by 11.0 per cent and Light Commercial Vehicles grewby 19.5 per cent during April-March 2018 over the same period of last year.

Tractor manufacturers have notched up their highest-ever sales in F.Y. 2017-18. At 7.11lakh units sales are significantly higher than the 5.83 lakh units recorded in F.Y.2016-17 on back of subsidy and other support facilities extended for tractor purchase byseveral States good crop output owing to good monsoon and the availability of retailfinance.

Financial Performance and state of the Company’s affairs Auto Components(Numbers)

Type 2017-18 2016-17 Growth

Power Steering 268818 253363 6.1% Mechanical Steering 117644 111742 5.3%

Sales in value terms were up by 6.8% for F.Y. 2017-18 compared to F.Y.2016-17.

Renewable Energy-Solar Energy

Your Company's 5 MW Solar Power Project at Gujarat Solar Park Charnka VillageDistrict Patan (Kutch) Gujarat generated 7.84 million Units of Electricity withsales-revenue of Rs.87.71 million in the F.Y. 2017-18. The entire electricity is purchasedby Gujarat Urja Vikas Nigam Limited (GUVNL) a Government of Gujarat Company. During theyear the Company successfully completed its rooftop solar project at its Vadu Budrukplant. This should generate approximately 6 to 7 lakh units per annum which will becaptively consumed in the said plant.

Wind Energy

Seven Wind Turbine Machines owned and operated by the Company located in districts ofSatara and Ahmednagar having aggregate capacity of 6.7 MW generated a total of 7.92million units in the F.Y. 2017-18. All the units generated were used as captiveconsumption which accounted for approximately 52.9% of the energy-consumption of theCompany's factory at Village Vadu Budruk.

Investment in the Joint Venture Company & other Investments

Rs. 98.8 million were invested as additional investment in the equity capital of theJoint Venture Company during the F.Y. 2017-18. The Company has so far invested Rs. 1293.5million in the Joint Venture Company. The Company also has other financial investments. Inaccordance with Ind AS provisions financial instruments except the investment in theJoint-

Venture and the Bonds have been recognised at fair value. For additional disclosureson financial investments and fair value please refer to Note 6(a) of the standalonefinancial statement.

Other Income includes dividend income interest income and realised gains of Rs. 34.98million and unrealised gains of Rs. 47.24 million as at March 31 2018 from the financialinvestments held by the Company.

Finance cost

Finance cost of the Company was Rs. 32.2 million against Rs. 24.9 million in view ofhigher working capital requirements.

Credit Rating

ICRA the Credit Rating Agency has reaffirmed the A+ and A1+ rating for long and shortterm borrowings of the Company.


Profit for the year was Rs. 470.67 million as compared to Rs.

497.16 million for the F.Y. 2016-17. Earnings Per Share (EPS) as per the Standaloneresults is Rs. 51.87 for the year ended March 31 2018.

After adjusting the Company’s 26% share of loss of the Joint-Venture Company theEPS works out to Rs. 47.65 as per the Consolidated Financial Results.

Segment wise

Profits (after-tax) after adjusting for investments income for the Auto-componentssegment are Rs. 305 million (7.1% of the segment revenue) vis-a-vis Rs. 81.87 million(56.9% of the segment revenue) for the Renewable Energy segment.

Outlook Opportunities and Threat

India tops the list of the fastest growing economies in the world for the coming decadeand is projected to grow at 7.9 per cent annually ahead of China and the US according toa Harvard University report.

The automobile industry is supported by various factors such as availability of skilledlabour at low cost robust R&D centres and low cost steel production. The industryalso provides great opportunities for investment and direct and indirect employment toskilled and unskilled labour.

The auto industry is set to witness major changes in the form of electric vehicles(EVs) shared mobility accelerated transition from Bharat Stage (BS) IV to BS VIemission stringent vehicle standards and safety norms.

Society of Indian Automobile Manufacturers (SIAM) has forecasted that CommercialVehicles should continue their growth momentum in double-digits at 10 to12 per cent withM&HCVs up by 9 to 11 per cent and light commercial vehicles growing at 10 to 12 percent. More infrastructure development will spike up this business. In view of the twomajor changes in the proposed vehicle scrap policy for mandatory disposal of more than 20years old commercial vehicles (previously 15 years) and the proposed implementation datebeing deferred to April 1 2020 according to the rating agencies it is unlikely to haveany significant impact on the automobile industry in terms of increased demand. The ruraleconomy is also looking brighter and the sales of farm equipment and tractors is seeing agood growth. Tractor sales may further improve by 11-13% in F.Y. 2018-19 over the highbase this fiscal with assumptions of a normal monsoon and increased government support.

As per a recent report by ‘CARE Ratings’ headline inflation lending ratesfiscal prudence current account deficit (CAD) and exchange rates however are the areasof concern for the Indian economy. These national challenges will have its effect on theautomobile industry as well.

Subsidiaries Associates and Joint Ventures Consolidated Financial Statements

The Company does not have any subsidiary. However the Company has a Joint Venture with‘Robert Bosch Automotive Steering GmbH’ Germany in the name of ‘RobertBosch Automotive Steering Private Limited.

The said Joint Venture has been established as per the Joint Venture Agreement datedMarch 31 2007. Robert Bosch Automotive Steering Private Limited (the Joint VentureCompany) is also an associate company of your Company as your Company holds 26% ofthe total paid up equity share capital of the said Joint Venture Company. Thisnecessitates presentation of Consolidated Financial Statement of the Company with itsJoint Venture/ Associate Company in addition to the Company’s standalone FinancialStatement as per the provisions of the Companies Act 2013 (the Act). The AnnualAudited Consolidated Financial Statement together with the Report of the Auditors thereonforms part of this Annual Report.

Joint Venture (JV)/ Associate Company

'Robert Bosch Automotive Steering Private Limited'

The Joint Venture Company was incorporated in the year 2007 based on the abovereferred Joint Venture Agreement for manufacture of products as defined in the saidAgreement which includes Steering Gears for Commercial Vehicles Electric SteeringSystems for Passenger Cars and other products. The Joint Venture Company started itsproduction-activities since the year 2012 after establishing state of the art facilitiesat Village Phulgaon Alandi Markal District Pune in respect of Electric Power SteeringSystems for passenger cars as main supplier to Tata Motors and Ford India.The JointVenture Company is trying to add new customers.

The turnover of the Joint Venture Company during the financial year under Reportincreased from Rs. 2657 million to Rs. 3445 million and the losses for the year endedMarch 31 2018 reduced from Rs. 708 million for the year ended March 31 2017 to Rs. 148million.

Your Company undertook an obligation to continue to support the said Joint VentureCompany and invested the additional funds in the acquisition of equity shares during theyear under report. It is expected that your Company may be required to invest additionalresources to support the said Joint Venture. The Executive Management of the Joint VentureCompany submitted certain information to the Board of Directors of that Company regardingthe present product-lines products and new business opportunities. The Company is takingup the matter with the Board of Directors of that Company and the Joint Venture Partnerappropriately.

A statement pursuant to Section 129(3) of the Act read with Rule 5 of the Companies(Accounts) Rules 2014 containing the salient features of the financial statement of theJoint Venture Company is appended with the financial statement.

Expansion and Capital Expenditure Auto Components

As informed earlier with a view to establish a second manufacturing unit for autocomponents the Company has acquired on lease an industrial plot at Pithampur DistrictDhar Madhya Pradesh. The factory building is under construction and orders for keymachineries have been issued/ being issued. The plant is expected to be operation by endof the current financial year. This will add to the manufacturing capacity of the Companyby 3 lakh numbers and also bring proximity with some of the major customers of theCompany. Total investment at this factory at Pithampur is expected to be Rs. 1800 million.

Wind Energy

The Company is planning to install and commission in the current year additional 2.1MW windmill in Maharashtra state which can be used for captive power consumption.

Internal Control System and its Adequacy

The Company has an Internal Control System commensurate with the size scale andcomplexity of its operations. The scope of the Internal Audit is decided by the AuditCommittee and the Board. There is an internal audit department which checks all thevouchers financial reports registers etc. To maintain its objectivity and independencethe Board has also appointed an external Auditor which reports to the Audit Committee ofthe Board on periodic basis.

The Internal Auditor monitors and evaluates the efficacy and adequacy of internalcontrol systems in the Company its compliance with operating systems accountingprocedures and policies for various functions in the organisation of the Company. Based onthe report of Internal Auditor process owners undertake corrective action whereverrequired in their respective areas and thereby strengthen the controls further. Auditobservations and actions taken thereof are presented to the Audit Committee.

The Company’s Audit Committee regularly reviews the financial management reportsand data and interacts with the External and Internal Auditors for ascertaining theadequacy of internal controls.

Human Resources/ Industrial Relations

The industrial relations generally remained cordial during the year. A group ofEngineers who were deployed on the shop floor did not report for work en mass fromDecember 2 2017 till January 16 2018. During that period although the normal productionactivities continued the production output underwent a downturn.

As at end of March 31 2018 the Company had 732 permanent employees on its roll.

Cautionary statement

The above ‘Management Discussion and Analysis Report’ is a forward lookingStatement based on the Company’s projections estimates and perceptions. Thesestatements reflect the

Company’s current views with respect to the future events and are subject to risksand uncertainties. Actual results may vary materially from those projected here.

Conservation of Energy Research and Development Technology Absorption and InnovationForeign ExchangeEarnings and Outgo:

The details as required under the Companies (Accounts) Rules 2014 are given inAnnexure -I to this Report.

Directors and Key Managerial Personnel

Mr. Jinendra Munot who was re-appointed by the Members as

Joint Managing Director of the Company for five years with effect from April 1 2013.At the end of his term on March 31 2018 Mr. Jinendra Munot ceased to be Joint ManagingDirector and Director of the Company. The Board places on record its special appreciationfor the contribution made and leadership provided by Mr. Jinendra Munot during his longassociation with the Company.

At the ensuing Annual General Meeting Mrs. Eitika Munot retires by rotation and beingeligible offers herself for reappointment. The resolution for her re-appointment alongwith her brief Profile as required under the Regulation 36(3) of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 (the Listing Regulations)forms part of the Notice of the 38th Annual General Meeting.

The Company has received declarations from all the

Independent Directors of the Company confirming that they meet the criteria ofindependence as prescribed both under the Act and under the Regulation 16(b) of theListing Regulations. The Company has devised a Policy for performance evaluation ofIndependent Directors Board as a whole Committees of the Board and other individualExecutive/ Non-Executive Directors. The Policy includes criteria for performanceevaluation. The criteria are based upon age experience quality of participation inBoard/ Committee proceedings attendance at meetings contribution by strategic inputs andothers. The criteria along with additional requirements prescribed by Section 149 of theAct are used for selection of Independent Directors. The Company carried out theperformance evaluation during the year under report.

During the period there was no change in the Key Managerial Personnel of the Companyexcept the cessation of Mr.Jinendra Munot as Joint Managing Director of the Company w.e.f.closing hours of March 31 2018.

Directors’ Responsibility Statement

Your Directors state that: i. in the preparation of the annual financial statement forthe financial year ended March 31 2018 the applicable

Accounting Standards read with requirements set out under Schedule III to the Act havebeen followed and there are no material departures from the same. ii. the Directors haveselected such Accounting Policies and applied them consistently and made judgments andestimates that are reasonable and prudent so as to give a true and fair view of the stateof affairs of the Company as at March 31 2018 and of the profit of the Company for theyear ended on that date. iii. the Directors have taken proper and sufficient care for themaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities. iv. the Directors have prepared the annual financial statement on a‘going concern’ basis. v. the Directors have laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and are operating effectively and vi. the Directors have devised proper systemsto ensure compliance with the provisions of all applicable laws and that such systems areadequate and operating effectively.

Corporate Governance Report

Pursuant to Regulation 34(3) read with Schedule V of the Listing Regulations adetailed report on Corporate Governance is given in Annexure - II along with theAuditors’ Certificate on its compliance which forms part of this report.

Particulars of Loans given Investments made Guarantees given and Securities provided

The Company has not given any loan or guarantee or provided any security in connectionwith any loan covered under the provisions of Section 186 of the Act.

During the year as stated above the Company invested a sum of Rs. 98.8 million in theequity shares of the Joint Venture Company. The Company liquidated some of its investmentsand also made some fresh investments. The details of the investments including as ofApril 1 2017 changes during the year and held as on March 31 2018 are disclosed in theNote no.6(a) to the financial statement.

Contracts and Arrangements with Related Parties

All contracts/ arrangements/ transactions entered into by the Company with relatedparties during the financial year were on an arm’s length basis and were in theordinary course of business. During the year the Company had not entered into anycontract/ arrangement/ transaction with related parties which could be consideredmaterial in accordance with the policy of the Company on materiality of related partytransactions. Considering the provisions of Section 134 of the Act as all transactionswith related parties referred to sub-section (1) of Section 188 of the Act and exemptionis available only from the procedural compliance for transactions which are in ordinarycourse of business and based on arm’s length prices the disclosure in the prescribedForm AOC – 2 including part 2 thereof is attached as Annexure III to this Report.

Corporate Social Responsibility (CSR)

Pursuant to Section 135 of the Act and as per the Companies (Corporate SocialResponsibility) Rules 2014 read with various clarifications issued by the Ministry ofCorporate Affairs the Company has framed a CSR Policy which is available on theCompany’s website The Company has undertaken activities as per theCSR Policy. The Annual Report on CSR activities is annexed herewith marked as Annexure IV.

Risk Management

The Audit Committee has been entrusted with the responsibility to assist the Board in(a) Overseeing and approving the Company’s enterprise wide risk management frameworkand (b) Overseeing that all the risks that the organization faces such as strategicfinancial credit market liquidity security property legal information technologyRegulatory and other risks have been identified and assessed and there is an adequate riskmanagement infrastructure in place capable of addressing those risks.

The Company manages monitors and reports on the major risks and uncertainties thosecan impact its ability to achieve its strategic objectives. The Company has introducedseveral improvements in internal control management to drive a common integrated view ofrisks optimal risk mitigation responses and efficient management of internal control andassurance activities.

Auditors and Auditors’ Report Statutory Auditors

M/s. MGM and Company Chartered Accountants Statutory

Auditors of the Company hold office till the conclusion of the ensuing Annual GeneralMeeting and are eligible for reappointment. They have confirmed (i) their eligibility tothe effect that their re-appointment if made would be within the prescribed limitsprescribed under the Act (ii) that they are not for re-appointment.

The Auditors’ Report does not contain any qualification reservation or adverseremark.

Secretarial Auditor

The Board had appointed Mr. I. U. Thakur (PCS Registration No. 1402) PracticingCompany Secretary to conduct Secretarial Audit for the financial year 2017-18. TheSecretarial

Audit Report for the same is annexed herewith as Annexure V.

The Secretarial Audit Report does not contain any qualification reservation or adverseremark.


Meetings of the Board

Four meetings of the Board of Directors were held during the financial year. Detailedinformation is given in the Report on Corporate Governance forming part of this AnnualReport.

Committees of the Board Audit Committee

The Audit Committee comprises Independent Directors namely Mr. S. A. Gundecha(Chairman) Mr. M. L. Rathi and Mr.Jitendra A. Pandit as other members. All therecommendations made by the Audit Committee were accepted by the Board.

The details of all committees and its terms of reference are set out in the CorporateGovernance Report.

Remuneration Policy

The Board has on the recommendation of the Nomination & Remuneration Committeeapproved a policy for selection appointment and remuneration of directors and seniormanagement. The detailed Remuneration Policy is placed on the Company’s

Vigil Mechanism/ Whistle Blower Policy

The Vigil Mechanism of the Company also incorporates a whistle blower policy in termsof the Listing Regulations. Protected disclosures can be made by a whistle blower throughan e-mail/ telephone/ letter to the Chairman of the Audit Committee. The Policy on VigilMechanism and Whistle Blower may be accessed on the website of the Company at

Extract of the Annual Return

Extract of the Annual Return of the Company in Form MGT 9 is annexed herewith asAnnexure VI to this Report.

Particulars of Employees and related disclosures

Considering the provisions of Section 197(12) of the Act read with the relevant rulesand having referred to provisions of the First Proviso to Section 136(1) of the Act theAnnual Report is being sent to the Members of the Company excluding details ofparticulars of employees and related disclosures. The said information/ details areavailable for inspection at the Registered Office of the Company during working hours onany working day. Any Member interested in obtaining this information may write to theCompany Secretary and this information would be provided on request.

Disclosure – Policy on Prevention of Sexual Harassment at Workplace

The Company has in place a policy on Prevention of Sexual Harassment at Workplace inline with the requirements of ‘The Sexual Harassment of Women at Workplace(Prevention Prohibition & Redressal) Act 2013’ and the Rules framed thereunder.An Internal Complaints Committee (ICC) has been set up to redress complaints receivedregarding sexual harassment. All employees (permanent temporary trainee etc.) arecovered under this Policy. During the year no complaint with allegation of sexualharassment was received by the Company.


1. The Company held no deposits at the beginning of the year nor accepted any depositsduring the year under report.

2. All equity shares issued by the Company rank pari- passu in respect of right toreceive dividend voting rights or otherwise.

3. During the year under report no shares were issued as sweat equity to any of theemployees or others.

4. As the Company does not have any subsidiary no remuneration was received by anyWhole-time Director of the Company from a subsidiary.

5. During the year under report no strictures or material orders were passed by anyRegulator or a Court or a Tribunal which may impact on the going concern status of theCompany or its operations in future.

6. There are no material changes or commitment except for the capital goods beingprocured for the factory at Pithampur affecting the financial position of the Companyfrom March 31 2018 till date of this Report.

7. There has been no instance of fraud reported by the Statutory Auditors under Section143(12) of the Act and Rules framed thereunder either to the Company or to the CentralGovernment.


The Board of Directors takes this opportunity to thank its Customers MembersSuppliers Bankers Business Partners/ Associates and the Government Authorities for thesupport and co-operation received by the Company. The Board also acknowledges theunderstanding and support of all employees of the Company.

For and on behalf of the Board of Directors
Dinesh Munot
Pune Chairman & Managing Director
May 30 2018 (DIN: 00049801)