BOARD'S REPORT TO THE MEMBERS NRB BEARINGS LIMITED Your Directors have pleasure in presenting their Fiftieth Annual Report together with Audited Accounts for the year ended 31st March, 2015. 2. Appropriation Dividend Directors recommend dividend of Rs.1.50/-per equity share of Rs.2/- (Rs.1.10 per share for previous year) payable to members/beneficial owners as per the Register of Members as applicable aggregating Rs. 1453.84 lacs. 3. Operations/Outlook During the first 6 months of the financial year, there was moderate improvement in the country's economic climate with GDP growth improving to 5.5%, Services sector continuing its strong growth trend, Agriculture also contributing with reasonable development and only IIP showing an erratic trend with a 1.5% growth. The change in Government in May'2014 raised high expectations that a strong government not constrained by coalition politics will usher in significant reforms that can accelerate growth. Globally, the sharp drop in crude oil prices helped contain inflation, the Indian Rupee, after a year of volatility in 2013-14, stabilized against the USD and improved against the Euro, with only the RBI continuing its conservative approach - reducing repo rates, though not to the expected levels. Despite the positive environment, the revival of the investment cycle has not happened and economic growth remains subdued with industrial production remaining lackluster. The overall volatility has had a negative influence on consumer sentiment and demand. Barring the two wheeler segment and some traction in the high value 4-wheeler segments of passenger cars and commercial vehicles, the automotive sector, one of the largest consumers of the Company's products, saw de-growth in the farm equipment/off highway segment. Your Company aggressively pushed sales in the domestic market and for exports and successfully increased sales in these segments and once again achieved its highest ever sales revenues of Rs.65559 lacs (previous year Rs.59449 lacs) a growth of 10.30% and also achieved its highest ever exports revenues of Rs.15811 lacs (previous year Rs.14250 lacs). Profit after tax has also improved to Rs.5206 lacs (previous year Rs.3818 lacs) helped by the lower charge on depreciation. There is still optimism that the new government at the Centre will accelerate economic activity and RBI will ease interest rates once inflation is contained, thus favourably impacting the overall sentiment in the manufacturing sector. Domestic consumption remains a key growth engine for the Indian economy and with significant additions to the working age population, rising disposable incomes particularly in rural areas and the government revived spending on infrastructure and in the social sector to foster inclusive growth, will help India realize its long term development potential in a sustainable way. Your Company, with a clear and dedicated customer focus, is investing in and building its R&D capabilities, developing product lines with better profit margins and streamlining its production processes to eliminate waste from operations. 4. Finance The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters are continuously monitored. a. Public Deposits The Company has not taken fixed deposits during the year. There are no unclaimed deposits. b. Non convertible debentures During the year the non convertible debentures aggregating Rs.20 crores were redeemed in May 2014. Accordingly all the debentures stand extinguished. c. Particulars loans, guarantees or investments Details of loans, guarantees and investments covered under the provisions of section 186 of the Companies Act, 2013 are given in the notes to the financial statements. 5. Directors The Board of Directors had, on the recommendation of the Nomination & Remuneration Committee appointed Mr. S B (Ravi) Pandit and Ms. Aslesha A Gowariker as Additional Directors of the Company in the category of independent Directors w.e.f. 5th September, 2014. Mr. S B (Ravi) Pandit has informed that he will not be in a position to continue after the the ensuing AGM on account of work pressures. In the case of Ms. A A Gowariker, the notice for the forthcoming Annual General Meeting (AGM) includes her appointment as independent Director under the Companies Act, 2013 for a period of five years w.e.f. 5th September, 2014. All independent Directors have given declarations that they meet the criteria of independence as laid down under section 149(6) of the Companies Act, 2013 and clause 49 of the Listing Agreement. Ms. H S Zaveri retires by rotation pursuant to Article 111 of the Articles of Association and is eligible for reappointment. Mr. Satish Rangani is proposed to be re-appointed as Whole time Director, designated Executive Director & Company Secretary, for a further period of 18 months on the expiry of his present contract on 24th July, 2015 and the same has been included in the notice for the forthcoming AGM. Familiarisation Programme for Independent Directors In order to familiarize the Independent Directors with the business of the Company presentation was made by the CFO covering nature and scope of business, nature of industry in which Company operates, profitability and future plans. Regularly at meetings updates are given to the Board. Board evaluation The Board has carried out an annual performance evaluation of its own performance and the Directors individually. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. The independent Directors have also met separately in March 2015. Remuneration policy The Board has on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, senior management and their remuneration. The remuneration policy is posted on the company's website. Meetings During the year four Board meetings and five Audit committee meetings were convened and held (details in Corporate Governance Report). The intervening gap between the meetings was less than four months. The date for the next meeting is fixed in advance at the previous meeting both for board and committee meetings. 6. Subsidiaries As of 31st March, 2015 the Company has three subsidiaries viz. SNL Bearings Ltd (SNL), NRB Bearings (Thailand) Ltd and NRB Bearings Europe GmbH. The consolidated results include the working of these subsidiaries. SNL Bearings, in which your Company holds 73.45% equity, has reported PAT of Rs.454.96 lacs (previous year Rs.338.85 lacs). Despite the challenging environment in the Indian economy, SNL has achieved sales growth. Profit before tax (PBT) has increased by 36% from Rs.496.05 lakhs (Previous year) to Rs.673.47 lakhs on account of higher volumes and improved cost competitiveness. SNL will further capitalize on growth opportunities during the current year and enhance profitability and widen its ability to serve customers with emphasis on improving quality and productivity. NRB Bearings (Thailand) Ltd, a wholly owned subsidiary, has increased its sales by 30% to THB 113.6 million (Rs.22.6 crores). The share of manufacturing revenues out of total revenues has been 51% at THB 58.3 million (Rs.11.6 crores) and trading revenues are 49% at THB 55.3 million (Rs.11.0 crores). The Company has turned EBITDA positive for the year and the loss has been lower at THB 14.9 million (Rs.2.98 crores). New business is being finalized with global European and Japanese customers and manufacture of new products as well as enhanced production of needle rollers, planned during FY 2015-16 will help in improving the financial results during the coming years.. NRB Bearings Europe GmbH, a wholly owned subsidiary was set up during the year in view of increasing exports to Europe. The Company provides marketing and customer support services. The income during the year is EURO 163,227 (Rs.110 lacs) and the resultant profit after tax is EURO 5,257 (Rs.3.58 lacs). 7. Conservation of energy, technology absorption, foreign exchange earnings and outgo Information pursuant to Section 134(3)(m) of the Companies Act, 2013 and Rule no.8 of Companies (Accounts) Rules 2014 has been given in the Annexure 1 forming part of this report. 8. Industrial Relations/Vigil Mechanism and Whistle Blower Policy During the year the Company maintained cordial relations with the workmen's unions at all plants. In April 2015 nine workmen opted for VRS at Chikalthana and the total compensation payable is Rs.75.62 lacs. Our people approach is reflected in the team work and the implementation of the number of initiatives involving employees and their families to share and promote organizational values. Regular training programmes are conducted for imparting understanding of bearing and engineering principles, modern manufacturing practices and on attitudinal and behavioural aspects. The Company has a Vigil Mechanism and Whistle Blower Policy. Details of the same have been given in Annexure 2 forming part of this report and are posted on the website of the Company. 9. Business Risk Management Pursuant to the requirement of clause 49 of the Listing Agreement, the Company has constituted a Risk Committee, the details of the committee and its terms of reference are set out in the corporate governance report forming part of the Board's Report. 10. Safety, Health and Environment The Company is committed to establish and maintain safe working environment that promotes good health and high performance of the employees, and simultaneously takes measures to protect the environment. We also ensure that safety behavior is well demonstrated by our employees while working on the shop floor by using personal protective equipments as required. Company has been accredited with internationally acclaimed certification viz. ISO14001:2004 to identify and control environmental impact and constantly improve the environmental performance; OHSAS: 18001:2007 occupational health and safety management systems; and ISO/TS: 16949:2009 for Quality Management Systems. The commitment towards the environment preservation extends beyond regulatory compliances as per MPCB norms and ambient, air and noise levels waste monitoring through ETP/STP treatment is being done. Initiatives are taken across the Company to conserve natural resources, reduction & recycling of wastes; and adherence to emission norms. There have been numerous initiatives by the NRB towards safety and environment awareness among employees: 1. Awareness on environment preservation and protection through regular monitoring of environment parameters and employees engagement activities like tree plantation and drawing competitions. 2. "Safety first and always first" is the highest priority of the Company. The Safety policy inter alia ensures safety of public, employees, plant, equipment and business associates, ensuring compliance with all statutory rules and regulations as an on-going process. Special initiatives have been taken up such as mock drills, up-gradation of Fire protection systems, safety training to employees, reporting of near-miss incidents and first aid awareness. We strive to achieve "Zero-Accident Tolerance". 3. Setting up of Solar Lights in factory premises and air ventilators on factory roof to save electricity, improve air quality and protect usage of natural resources electricity. 4. Significant reductions have been achieved across all locations in minimizing the requirement of electricity, use of less petrochemicals, grease, turpentine, etc. Turpentine has been replaced with stansol to prevent vapour spreading for improved health of employees. 5. Water conservation through re-use of waste water and rain water harvesting at plants - capacity to harvest up to 50 lac ltrs rain water every year to increase ground water levels. 6. Vermiculture for making Vermicompost as nutrient-rich organic fertilizer and soil conditioner 7. Strict policy for non-consumption of tobacco and intoxicating materials to protect the mental and physical health of employees. Regular awareness programs like "Vyasan Mukti" & "Yoga Classes" conducted to educate employees to get rid of evils of intoxication and stressful work life and embrace good health and work-life balance. 11. Corporate social responsibility NRB has always believed in and worked towards "inclusive growth'- improving the quality of life of the people we touch and in the communities where we operate. During the year, your Company has encouraged and supported young engineers and budding technology/automotive enthusiasts through the following sponsorships: 1 Team IIT Bombay Racing team "BAHA" in 2013-14 & 2014-15 as one of the largest educational motorsport event hosted by the Institution of Mechanical Engineers in Europe with over 100 participating nations. 2 On a regular basis we conduct Blood Donation camps across locations to help the society to donate blood in case of any emergency. 3 NRB Hyderabad & Chikalthana plants have taken a special step by starting a "Summer Water Camp" to help the needy and poor people to provide water in the scorching heat. 4 NRB believes in "Go Green" policy. NRB takes initiatives in planting trees and plants in and around the NRB factories. In line with the activities specified in schedule VII relating to the provisions of sections 135 of the Companies Act, 2013 NRB has decided to focus on : Promotion of education Promoting gender equality and empowering woman Employment enhancing vocational skills In terms of the above the Company has been contributing for primary education, secondary education (study of sciences, maths and engineering) and to engineering colleges for studies in mathematics and engineering. Company has supported a Pune based NGO - Gyan Prakash Foundation (GPF). GPF is a registered non-profit organization with a focus on quality education for children in rural India. NRB is supporting GPF efforts towards making a notable impact in the rural education landscape through their BRIDGE programme which is an intervention that bridges the gaps in readiness of children entering school- from Anganwadis or directly without any pre-school experience- to create positive impact on learning outcomes and dropout rates. The Company has contributed to the Ashoka University which is devoted to transforming indian higher education based on the principles of multidisciplinary education delivered by exceptional faculty members and ivy-league quality education at an affordable price. The liberal education helps develop intellect, nurtures critical thinking and provides specialisation with a broader foundation of knowledge. It provides an attractive proposition to students who want an ivy league/oxbridge level education without leaving India at an estimated cost of 1/5th that of a top-ranked university in the west. The average of the last 3 years profits works out to Rs.5,954 lacs and @ 2% the amount to be spent by the Company on CSR activities works out to Rs.119 lacs during FY 2014-15. The Company has actually spent Rs.122 lacs during FY 2014-15 on the identified activities. 12. Corporate governance Pursuant to clause 49 of the listing agreements with the stock exchanges, a Management Discussion and Analysis, Corporate Governance Report and Auditors' Certificate regarding compliance of conditions of Corporate Governance are made part of the Annual Report. The Code of Conduct for Directors and Senior Management personnel of the Company, as approved by the Board, has been affirmed on an annual basis by all the Directors and the Senior Management personnel of the Company. The relevant certification on the various matters specified under paragraph V of clause 49 has been done by the Managing Director and the VP: CFO of the Company. Members desirous of receiving the full Report and Accounts of the subsidiaries will be provided the same on receipt of a written request from them or on submission of their e-mail IDs for forwarding documents through electronic mode. This will help save considerable cost in connection with printing and mailing of the Report and Accounts. This measure would be in line with the MCAs Green initiative for paperless communications. The same shall also be kept for inspection by any Members at the registered office of the Company and of the respective subsidiary Company concerned and shall also be posted on the web site of the Company viz.www.nrbbearings.com 13. Directors' responsibility statement In accordance with Section 134 of the Companies Act, 2013, the Directors state that: i. in the preparation of annual accounts, all applicable accounting standards have been followed and no material departures have been made from the same; ii. accounting policies selected were consistently applied. Reasonable and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Company as on 31st March, 2015 and of the profit of the Company for the accounting year ended on that day; iii. proper and sufficient care for maintenance of adequate accounting records has been taken in accordance with the provisions of the Act so as to safeguard the assets of the Company and to prevent and detect fraud and other irregularities; iv. the Annual Accounts have been prepared on a going concern basis. v. the internal financial controls to be followed by the Company have been laid down and are adequate and were operating effectively. vi. proper systems have been devised to ensure compliance with the provisions of all applicable laws and all such systems were adequate and operating effectively. 14. Related Party transactions (RPT) All RPT that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant RPT by the Company with promoters, Directors, key managerial personnel or other designated persons which may have a potential conflict with the interest of the Company at large. All RPT are placed before the audit committee as also the board for approval. Prior approval of the audit committee is obtained on a quarterly basis for transactions which are foreseen and repetitive in nature. The compliance of the transfer pricing norms in relation to such transactions is certified by the tax advisors. The policy on RPTs as approved by the board is uploaded on the Company's website. 15. Auditors Statutory Auditors M/s Deloitte Haskins & Sells, Chartered Accountants retire at the ensuing Annual General Meeting and offer themselves for re-appointment. In terms of Clause 41(1)(h) of the Listing Agreement, the statutory auditors are subjected to the Peer Review process of the ICAI and hold a valid certificate issued by the Peer review Board of ICAI. A certificate from the auditors has been received to the effect that their appointment, if made, would be within the limits prescribed under section 139 of the Companies Act, 2013. Cost Auditors The product "Bearings" was subject to cost audit under the Central Government rules. The cost audit report for the year ended 31.3.2014 was reviewed by the audit committee at their meeting held on 1st August, 2014 and has been filed in xbrl format on 22nd September, 2014. Cost audit for the year ended 31st March, 2015 is not applicable. Secretarial Audit 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 has appointed Mr.U C Shukla, Practicing Company Secretary to undertake the Secretarial Audit of the Company. The report is annexed as Annexure 3. 16. Extract of Annual Return The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure 4. 17. Particulars of employees 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 Report and Accounts are being sent to the Members excluding this information. 18. Acknowledgement The Directors wish to convey their appreciation for the tremendous support of our workforce- both unionized and management and the confidence and loyalty shown by our customers. The Directors also wish to thank the shareholders, suppliers, bankers and all other business associates for the continuous support given by them to the Company and their confidence in its management. On behalf of the Board (Ms) H S Zaveri Managing Director & President Place : Mumbai date : May 18,2015 |