DIRECTORS' REPORT Dear Members, The Directors of your Company have pleasure in presenting 50th Annual Report, together with the audited accounts and performance for the year ended March 31, 2016: Performance During FY 2015-16 the overall growth of the commercial vehicle industry was 12.2% as against de-growth of 1.3% in the previous year. The M&HCV segment grew by 28.2% in FY2015-16 compared to the 17.4% growth last year. The Company maintained its leadership position in the conventional segment and successfully strengthened its position in non-conventional product. During the year under review the Company achieved consolidated revenue of Rs. 1256 crore as against Rs. 1,095 crore in last year. The consolidated EBITDA was Rs. 165 crore compared to Rs. 95 crore in the previous year. The Company achieved consolidated PAT of Rs.72 crore as against Rs. 29 crore in the previous year. Improvement in internal efficiency and productivity, coupled with the industry up-cycle, has taken the Company closer to achieve the internal target in terms of 'Project Lakshya' discussed in the Management Discussion & Analysis (MDA) section. For details members are requested to please see MDA section. During the year, the Company has set up manufacturing units for air suspension & lift axles in Pune and Pillaipakkam near Chennai. The Company is also setting up an integrated R&D Centre in Pune. Continuous improvement in the Company's performance is also reflected in higher rating from ICRA, the leading credit rating agency. ICRA upgraded the Company's long term rating from A+ to AA- and its short term rating improved from A1 to A1+. In order to improve liquidity of the Company's equity shares in stock markets with higher floating stock in absolute numbers, each Equity Share of face value of Rs. 10 each was sub-divided (stock split) into 2 Equity Shares of face value of Rs. 5 each. During the period under review and till the date of last reporting no such material changes/ commitments have taken place as to affect the financial position of the Company. Dividend Your directors recommend final dividend of Rs. 2.75 per Equity Share. Payment of dividend is subject to approval of the members of the Company at the ensuing Annual General Meeting. Fixed Deposit During the period under review, the Company did not accept any deposits from the public in terms of Section 73 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014. Energy Conservation, Technology Absorption & Foreign exchange The particulars as prescribed under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of Companies (Accounts) Rules, 2014 form an integral part of this report and attached as Annexure - A. Risk Management Policy The risk management policy of the Company aims to identify and evaluate risks and to take appropriate steps to control, minimize, manage and mitigate such risks. The Company has established a three layer framework for risk identification, evaluation, control, minimization and mitigation. The Company's risk management policy is available at its website at www.jaispring.com As per Regulation 21(5) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the requirement of Risk Management Committee is applicable to top 100 listed companies only, as on March 31, 2016 this condition is not applicable to the Company. Vigil Mechanism The Board of Directors has established a vigil mechanism to report unethical behavior, actual or suspected fraud. The mechanism also provides adequate safeguards against victimization of persons, who avail of the vigil mechanism. The code also provides to the victimized person direct access to the Chairperson of the Audit Committee. The vigil mechanism is posted on the website of the Company at www.jaispring.com Corporate Social Responsibility (CSR) The Company focuses mainly on environment conservation and sustainability, promotion of education, promotion of sports and community outreach under its CSR policy. The CSR activities are carried out in areas and locations as per recommendation of the CSR Committee. The CSR Committee normally gives preference to the areas in the vicinity of the Company's plants, offices and sites. Annual report on CSR pursuant to Section 135 of the Companies Act, 2013 read with rule 9 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 form an integral part of this report and is attached as Annexure - B. The CSR policy is placed on the website of the Company at www.jaispirng.com Board of Directors, their Appointment & Remuneration The Board provides strategic direction to the Company. The total strength of Board of Directors is 10 consisting of Independent, Executive and Non-executive Directors. The composition of the Board is in conformity with the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. During FY 2015-16 four meetings of Board of Directors were held. The details of the Board, attendance of directors at Board Meetings and remuneration paid to them have been mentioned in the Corporate Governance section which forms an integral part of this report. During the year under review Dr. Pierre Jean Everaert and Mr. Karthik Balachandran Athreya, Alternate Director to Dr Everaert, have ceased to be the directors due to sale of stake by Clearwater Capital Partners (Cyprus) Ltd. in the Company. The Board places on record its deep appreciation for the valuable services rendered by Dr. Pierre Jean Everaert and Mr. Karthik Balachandran Athreya during their tenure as Directors. In accordance with Section 152 and other applicable provisions of the Companies Act, 2013, Mr. B. S. Jauhar and Mr. H. S. Gujral retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. All the Independent Directors have been appointed for a period of five years. The Independent Directors are not liable to retire by rotation. During FY 2015-16 none of the Independent Director was re-appointed. All the Independent Directors have given declarations as to their being not disqualified to be appointed as an independent director and independence pursuant to the provisions of section 149 of Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015. All the Executive Directors are appointed for a fixed term, normally, of three years on the recommendation of the Nomination & Remuneration Committee of the Board subject to approval by members of the Company. The term of office of the H.S. Gujral as Executive Director shall come to an end on May 29, 2016. The Nomination and Remuneration Committee and the Board of Directors have recommended re-appointment of Mr. H. S. Gujral as Executive Director for a further period of three years with effect from May 30, 2016. The resolution for re-appointment of Mr. H. S. Gujral and payment of remuneration to him shall be placed before the members for their approval at the coming Annual General Meeting of the Company. His re-appointment is appropriate and in the best interest of the Company. The Executive Directors are paid monthly remuneration as per the terms of their appointment. Non-Executive Directors are paid sitting fee for attending meetings of the Board and Committee meetings of the Board. The Nomination & Remuneration Committee reviews and makes recommendations of the remuneration of the Executive Directors. The Policy relating to Remuneration of Directors forms an integral part of this report and is attached as Annexure - C. The same is also available on the website of the Company at www.jaispring.com Related Party Transactions The Company's policy on dealing with Related Party Transactions and materiality of related party transactions is posted at the website of the Company at www.jaispring.com The transactions entered into by the Company with related parties were in the ordinary course of business at arm's length pricing basis. Approval of the Audit Committee, Board and Shareholders as the case may be is also taken before entering into any Related Party Transaction. Members are also requested to refer to notes to financial statements which set out related party disclosures. The form for disclosure of particulars of contracts/arrangements entered into by the Company with related parties referred to in Section 188 of the Companies Act, 2013 forms an integral part of this report and is attached as Annexure - D. extract of Annual Return Extract of annual return as prescribed under Section 134 (3) (a) of the Companies Act, 2013 read with Rule 12 of Companies (Management and Administration) Rules, 2014 forms an integral part of this report and is attached as Annexure - E. Human Resource Relations with employees and associated workforce remained cordial throughout the year. Employee Stock Option Scheme During the year under review, the Compensation Committee had allotted 99,941 shares upon exercise of stock options. The particulars with regard to the Employees Stock Options as on March 31, 2016 as required to be disclosed pursuant to the provisions of the Companies (Share Capital and Debentures) Rules, 2014 and SEBI (Share Based Emplyees Benefits) Regulations, 2014 forms as integral part of this report and is attached as Annexure - F. The Company has applied for registration of its trademark overseas in the Russian Federation, Republic of Bangladesh and Nepal. The Patent Application of the Company for Indian Patent for Air Suspension is still pending before the patent authorities. The Company holds copyright of more than 70 designs of Leaf and Parabolic Springs in its name. Corporate Governance The Company is in compliance with the requirements of Corporate Governance mentioned in SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company has documented Insider Trading Code and Code of Conduct as part of internal policies; the same are placed on the website of the Company at www.jaispring.com A total four meetings of the Board of Directors were held during the FY 2015-16. Corporate governance report of the Company along with certificate of compliance forms an integral part of this report and is attached as Annexure - G. Auditors M/s S. R. Batliboi & Co; LLP Chartered Accountants are the Statutory Auditors and M/s Protiviti Risk & Business Consulting are the internal auditor of the Company. Directors recommend the ratification of re-appointment of M/s S. R. Batliboi & Co; LLP, Chartered Accountants as Statutory Auditors at the coming Annual General Meeting. The Audit Committee has also recommended the ratification of re-appointment of the Statutory Auditors. The report of the statutory auditors read with the notes on accounts being self-explanatory, needs no further clarification. No qualification, reservation or adverse remark has been reported to the Board in the report. Pursuant to Section 148 of the Companies Act, 2013, M/s Goyal Goyal & Associates, Cost Accountants and M/s Vijender Sharma & Co; Cost Accountants are proposed to be re-appointed as Cost Auditors for the FY ended on March 31, 2017. Pursuant to Section 204 of the Companies Act, 2013 read with Rule 9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s K J & Associates, Company Secretaries are appointed as Secretarial Auditors for the FY ended on March 31, 2017. The Secretarial Audit Report for the FY ended on March 31, 2016 forms part of this report and is attached as Annexure - H. Subsidiary entity The Company is a majority partner in Jai Suspension Systems LLP. As required, consolidated financial statements of the Company and Jai Suspension Systems LLP for the FY 2015-16 are included in the Annual Report. Court/Tribunal Orders There was no instance of any significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future. Management Discussion & Analysis Management Discussion & Analysis which forms an integral part of this report provides a detailed analysis on the performance of individual businesses and their outlook. Particulars of Loans, Guarantees or Investments During the year under review, the Company has not granted any loan or guarantee to or made any investment in the parties mentioned in Section 186 of the Companies Act, 2013. Material Changes and Commitment There were no material changes and commitments affecting the financial position of the Company between the end of FY 2015-16 i.e. March 31, 2016 and the date of the Report. Particulars of employees The disclosures required under Section 197 (12) of the Companies Act, 2013 read with Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel), Rules, 2014 form an integral part of this report and is attached as Annexure - I. As per the provisions of Section 136(1) of the Companies Act, 2013, the Report and the Accounts are being sent to all the members of the Company, excluding the information required under Section 197 (12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of Companies (Appointment and Remuneration of Managerial Personnel), 2014. Any member interested in obtaining such information may write to the Company Secretary at the Registered Office. The said information is also available for inspection at the Registered Office during working hours up to the date of Annual General Meeting. Directors' Responsibility Statement In pursuance of Section 134 (3) (c) of Companies Act, 2013, the Directors hereby confirm that: (a) in preparation of the financial statements, the applicable accounting standards have been followed along with proper explanation relating to material departures; (b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period; (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; and (e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Appreciation The Directors place on record their sincere appreciation to all stakeholders including shareholders, vendors, partners, customers, bankers and financial institutions for their continued support. We also place on record our appreciation for the hard work, harmony and contributions made by employees at all levels. For and on behalf of the Board (B. S. Jauhar) Chairman Date: May 20, 2016 Place: New Delhi |