BOARD'S REPORT Dear Members, On behalf of the Board of Directors, it is our pleasure to present the Thirty Second Annual Report together with the Audited Statement of Accounts of SIBAR AUTOPARTS LIMITED for the year ended 31st March, 2015. Review of business operations, and the State of Company's Affairs Your Directors wish to present the details of Business operations done during the year under review : During the year under review your Company has recorded total revenue of Rs. 1626.67 lacs as against Rs. 1227.35 lacs in the previous year registering a growth of 32.53%. The Profit Before Tax (PBT) and Profit After Tax (PAT) for the financial year ended 31st March, 2015 was at f 41.43 lacs and f 25.12 lacs as against Rs. 92.21 lacs and Rs. 90.45 lacs of the previous financial year respectively. The decline in profits during the financial year under review is due to increase in operating costs as a percentage of total revenue from 54.45% to 64.89%, depreciation and interest cost . Further there was decrease in Extra-Ordinay Income by f 40.15 lacs during the finacial year 2014-15 when compared with the previous year figure of 62.65 lacs The Capital expenditure for the financial year 2014-15 was Rs. 90.40 lacs and the capital expenditure was account of installation of CNC / VMC machines to attain value addition of the existing as well as new products. Your Company planned to enter replacement market by supplying Nicosil aluminium plated cylinders for two wheelers for coming years and it is the only company making this product for the replacement market in India. Your Directors are hopeful of better performance with increased revenue in the next year. Outlook The Indian auto industry is one of the largest in the world and accounts for 22 per cent of the country's manufacturing gross domestic product (GDP). An expanding middle class, a young population, and an increasing interest of the companies in exploring the rural markets have made the two wheelers segment (with 80 percent market share) the leader of the Indian automobile market. The overall passenger vehicle segment has 14 percent market share. India is also a substantial auto exporter, with solid export growth expectations for the near future. Various initiatives by the Government of India and the major automobile players in the Indian market is expected to make India a leader in the Two Wheeler and Four Wheeler market in the world by 2020. Dividend The Board has not recommended dividend for the year 2014-15 due to accumulated losses. Transfer of Amounts to Investor Education and Protection Fund The Company did not have any funds lying unpaid or unclaimed for a period of seven years. Therefore there were no funds which were required to be transferred to Investor Education and Protection Fund (IEPF). Material changes and commitment, if any affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate and the date of the report No material changes and commitments affecting the financial position of the Company occurred between the end of the financial year to which this financial statements relate on the date of this report. Capital/ Finance Preferential Allotment of Shares During the year under review, your Company has submitted an application with the Securities and Exchange Board of India ("SEBI") in the month of December, 2013, for allotment of shares on preferential basis against the conversion of unsecured loan of Rs. 4.00 Crores brought in by family members of Promoters. Your Company got approval vide Order of SEBI dated 23rd May, 2014 for conversion of the said interest free unsecured loans into Equity shares on Preferential basis. Accordingly Your Company allotted Equity Shares to the following persons against interest free unsecured loans.As on 31st March, 2015, the issued, subscribed and paid up share capital of your Company stood at Rs. 9,53,51,000/-, comprising 95,35,100 Equity shares of Rs.10/- each. Fixed Deposits : The Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014, as such, no amountof principal or interest was outstanding as of the Balance Sheet date. Particulars of Loans, Guarantees or Investments : There was no loans, guarantees or investments made by the Company under Section 186 of the Companies Act, 2013 during the year under review and hence the said provision is not applicable. Internal Control Systems and their adequacy The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. Internal Audit During the year under review the Company has appointed M/s MMGS & ASSOCIATES, Chartered Accountants, Tirupati as Internal Auditor. The scope and authority of the Internal Auditor is as per the terms of reference approved by the Audit Committee. To maintain its objectivity and independence, the Internal Auditor reports to the Chairman of the Audit Committee of the Board & to the Vice-Chairman & Managing Director. The Internal Auditor monitors and evaluates the efficacy and adequacy of internalcontrol system in the Company, its compliance with operating systems, accounting procedures and policies of the Company. Based on the report of Internal Auditor, process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit observations and recommendations along with corrective actions thereon are presented to the Audit Committee of the Board. Directors The current policy is to have an appropriate mix of executive, non-executive and independent directors to maintain the independence of the Board, and separate its functions of governance and management. As on March 31, 2015, the Board consists of seven members, two of whom are executive or whole-time directors, two nonexecutive directors and three independent directors. Mr. K. Rajendra Prasad, (holding Director Identification Number 0143653) retires by rotation and being eligible, offers himself for re- appointment. The Board recommends the re-appointment of Mr. K. Rajendra Prasad. Mr. B.P. Jetty (holding Director Identification Number 02661069), was appointed as the Additional Director (Non-Executive Independent Director) of the Company with effect from 30th March 2015 and holds office upto the date of forthcoming Annual General Meeting, and subject to the approval of the shareholders at the forthcoming Annual General Meeting, it is proposed to appoint Mr. B.P. Jetty as Non-Executive Independent Director with effect from 30th March 2015 for a period of 5 years up to 29th March 2020. Mr. K. Subbaiah (holding Director Identification Number 02586177), Non-Executive Director of the Company, was appointed as Non- Executive Independent Director, with effect from 27th July, 2015 for a period of 5 years upto 26th July, 2020 subject to the approval of the shareholders at the forthcoming Annual General Meeting. The Board now recommends the appointment of Mr. B.P. Jetty and Mr. K. Subbaiah as independent directors under Section 149 of the Companies Act, 2013 in the ensuing Annual General Meeting to hold office for 5 (five) consecutive years from the respective date of their appointments. Mrs. P. Sugunamma, was appointed as the Additional Director and Non-executive Women Director to hold office until the date of the forthcoming Annual General Meeting, being eligible, offers herself for re-appointment. The Board Directors recommend the appointment of Mrs. P. Sugunamma. Declaration by Independent Directors The Company has received necessary declaration from each Independent Director under Section 149(7) of the Companies Act, 2013, that he meets the criteria of independence laid down in Section 149(6) of the Companies Act, 2013. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and the Listing Agreement, the Board has carried out an evaluation of its own performance, the performance of each Director as well as the evaluation of the working of its Audit, Nomination & Remuneration Committees. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committeeframed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. Meetings and Committees Currently, the Board has three committees: the Audit Committee, Nomination and Remuneration Committee (NRC) and Stakeholders Relationship Committee (SRC). During the year five Board Meetings, four Audit Committee Meetings, 2 NRC Meetings and 4 SRC Meetings were convened and held. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. A detailed note on the Board and its committees is provided under the Corporate governance report section in this Annual Report. Directors' Responsibility Statement Pursuant to the requirement clause (c) of sub-section (3) of Section 134 of the Companies Act, 2013, your Directors confirm that: (a) In the preparation of the annual accounts, the applicable accounting standards had 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; (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 and (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. Significant & Material Orders Passed by the Regulators During the year under review there were no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and the Company's operations in future. Related party transactions All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered materially significant which may have potential conflict with interest of the company at large. Your Directors draw attention of the members to Note 28 to the financial statement which sets out related party disclosures. Particulars of Employees and related disclosures The information required pursuant to Section 197 read with rule 5 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the reports and accounts are being sent to the members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the members at the Registered Office of the Company during the business hours on working days of the Company up to the date of ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the Company in advance. Subsidiaries, Joint Ventures and Associate Companies The Company does not have any Subsidiary, Joint venture or Associate Company. Details of conservation of energy, technology absorption, foreign exchange earnings and outgo The information relating to Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo is given in Annexure "I" Vigil Mechanism / Whistle Blower Policy The Company has established a vigil mechanism/framed a whistle blower policy. The policy enables the employees and other stake holders to report to the management instances of unethical behaviour, actual or suspected fraud or violation of the Company's code of conduct or ethics policy. This policy is reviewed annually by the Audit Committee to check the effectiveness of the policy. Prevention of Insider Trading The Company has adopted a Code of Conduct for Prevention of Insider Trading with a view to regulate trading insecurities by the Directors and designated employees of the Company. The Code requires pre-clearance for dealing in the Company's shares and prohibits the purchase or sale of Company shares by the Directors and the designated employees while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading Window is closed. The Board is responsible for implementation of the Code. All Board of Directors and the designated employees have confirmed compliance with the Code. Statutory Auditors, their Report and Notes to Financial Statements In the last AGM held on 29th September, 2014 , M/s. SPC & Associates (Firm Registration No.005685S), Chartered Accountants have been appointed as the Statutory Auditors of the Company for a period of Five years. Ratification of appointment of Statutory Auditors is being sought from the members of the Company at the ensuing AGM. Further, the report of the Statutory Auditors along with notes to Schedules is enclosed to this report. The observations made in the Auditors' Report are self-explanatory and therefore do not call for any further comments. The Auditors' Report does not contain any qualification, reservation or adverse remark. Cost Audit The Cost Audit is not applicable to the Company. Secretarial Audit In terms of Section 204 of the Act and Rules made there under, M/s. ALB & Co, Practicing Company Secretary, have been appointed as Secretarial Auditors of the Company. The report of the Secretarial Auditors is enclosed as Annexure "II" to this report. The report is self-explanatory and do not call for any further comments except with regard to non-complaince of provisions of section 203(1) of the Companies Act, 2013 for appointment of wholetime Company Secretary. In this connection, it is submitted that the financial position of the Company is a constriant to appoint wholetime Company Secretary. However, the company is utilising services of practicising Company Secretary to comply with statuatory complainces. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. Extract of Annual Return Pursuant to section 92(3) of the Companies Act, 2013 ('the Act') and rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return in form MGT-9 is annexed herewith as Annexure "III"'. Risk Management Policy In terms of the requirement of the Act, the Company has developed and implemented the Risk Management Policy and the Audit Committee of the Board reviews the same periodically. Details of policy developed and implemented by the company on its corporate social responsibility initiatives The Company has not developed and implemented any Corporate Social Responsibility initiatives as the said provisions are not applicable. Corporate Governance Report The Corporate Governance Report, which form an integral part of this Report, is set out as separate Annexure. Acknowledgement The Directors place on record their appreciation for employees at all levels, who have contributed to the growth and performance of your Company. The Directors also thank the clients, vendors, bankers, shareholders and advisers of the Company for their continued support. The Directors also thank the Central and State Governments, and other statutory authorities for their continued support. For and on behalf of the Board SIBAR AUTOPARTS LTD PEMMASANI VEERANARAYANA (Vice Chairman & Managing Director) PEMMASANI MADHUPRATAP (Technical Director & CFO) Place: Tirupati Date : 27th July 2015 |