DIRECTORS' REPORT TO, THE MEMBERS, AUTOLITE (INDIA) LIMITED, JAIPUR. Your directors have pleasure in presenting the 38th Annual Report together with the Audited statement of Accounts of Autolite (India) Limited for the year ended March 31, 2015. 2. BUSINESS PERFORMANCE 3. Recognizing the need for greater penetration of Indian Automobile Segment, FY 2014-15 was a challenging year. The Company reported gross annual turnover which increased from Rs. 12167.63 Lacs in the previous year to Rs. 12834.48 Lacs in the current fiscal year. Looking further in Automobile Segment, your directors foresee enough opportunities in this segment and especially in domestic economy as a whole, all of which being on an expansion spree. MANAGEMENT DISCUSSION AND ANALYSIS A detailed Report on Management Discussion and Analysis is annexed with this Director's Report. [Refer-Annexure-1] DIVIDEND In order to conserve and plough back the resources, your directors have not recommended any dividend for the year on equity shares of the company. 5. DIRECTORS AND KEY MANAGERIAL PERSONNELS Key Managerial Personnel Sh. Mahipal Gupta, Chairman and Managing Director (DIN: 00057619) was designated as the Key Managerial Personnel of the Company in terms of Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of the Managerial Personnel) Rules, 2014, at the Meeting of Board of Directors held on 29.09.2014. Sh. Inder Bhan Soni, Chief General Manager (Legal & Finance) was appointed as the Chief Financial Officer (CFO) Key Managerial Personnel of the Company in terms of Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of the Managerial Personnel) Rules, 2014, at the Meeting of Board of Directors held on 29.09.2014. Sh. Vishal Agarwal, Company Secretary was designated as the Key Managerial Personnel of the Company in terms of Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of the Managerial Personnel) Rules, 2014, at the Meeting of Board of Directors held on 29.09.2014. Appointments & Re-appointments Smt. Madhu Choudhary (DIN: 01768000) was appointed as an Additional Non Executive Director of the Company at its board meeting held on 14.02.2015. Her tenure as an Additional Director is expiring on the ensuingAnnual General Meeting. Thus, the Board has received a notice from its members in writing in terms of Section 160 of the Companies Act, 2013 proposing her candidature as director of the Company. Hence, the re- appointment is subjected to the approval of the shareholders at theAnnual General Meeting through passing of an ordinary resolution in this regard. At the 37th Annual General Meeting of the Company held on 29th day of September, 2014, the Shareholders appointed Sh. Gauri Shankar Das (DIN: 01185570), Sh. Sooraj Praksh Batra (DIN: 01216047), and Sh. Rajendra Singh Mehta (DIN: 01183922) as an Non executive Independent Director of the Company for the term of (5) five consecutive years, commencing from the conclusion of 37th Annual General Meeting to 42nd Annual General Meeting. At the ensuing Annual General Meeting, Sh. Kuldeep Kumar Gupta (01591373) is retiring by rotation and being eligible have offered himself for re-appointment. Declaration of Independence Your Company has received declarations from all the Independent Directors under Section 149(7) of the Companies Act, 2013 confirming that they meet the criteria of independence as prescribed under Section 149(6) of Companies Act, 2013 read with the Schedules and Rules issued there under as well as Clause 49 of the Listing Agreement. 6. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The particulars as prescribed under Sub-Section (3)(m) of Section 134 of the Companies Act, 2013, read with the Companies (Accounts) Rules, 2014, are enclosed as [Annexure 2] to the Director's Report. A Statement depicting details of conservation of energy, technology absorption, foreign exchange earnings and outgo, in accordance with the Companies (Disclosure of particulars in the Report of Board of Directors) Rules, 1988 is annexed hereto. 7. CORPORATE GOVERNANCE Corporate governance is an ethically driven business process that is committed to values aimed at enhancing an organization's brand and reputation. This is ensured by taking an ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholders' expectations. At Autolite, it is imperative that our company affairs are managed in a fair and transparent manner. This is vital to gain and retain the trust of our stakeholders. We comply with the Securities and Exchange Board of India (SEBI)'s guidelines on Corporate Governance. We have documented our internal policies on corporate governance. Our Corporate Governance Report for fiscal 2015 is appended in the [Annexure- 5] of the Director's Report. 8. AUDITORS AND THEIR REPORT Statutory Auditor At the 37th Annual General Meeting of he Company held on 29th day of September, 2014, M/s. H.C. Garg & Co., Chartered Accountants, Jaipur, (Firm Registration No. 000152C) have been appointed as Statutory Auditors of the Company to hold office for a term of (3) three years from the conclusion of 37th Annual General Meeting till the conclusion of 40th Annual General Meeting of the Company (subject to ratification by shareholders at everyAnnual General Meeting). The Company has received consent from M/s. H.C. Garg & Co., Chartered Accountants, Jaipur, (Firm Registration No. 000152C), Auditors of the Company and confirmation regarding their eligibility to continue as Statutory Auditor of the Company. Your Directors request the shareholders to ratify the appointment of M/s. H.C. Garg & Co., Chartered Accountants, Jaipur, (Firm Registration No. 000152C) as Statutory Auditors of the Company at the ensuing 38th Annual General Meeting of the Company and to authorize the Board to fix the remuneration. REPLY TOAUDITOR'S QUALIFICATIONS Reply to the Auditor's Qualifications are given as follows:- 1. Regarding the observations made by Auditors for the Accounting Standard AS-2 (Accounting for Taxes on Income), we comment that the Company is paying its tax liability calculated as per the provisions of MAT under Section 115JB of Income Tax Act, 1961. The deferred tax assets and liabilities arises on account of timing difference of some of the items which has been mentioned in the Income Tax Act and are notional items which do not have any bearing on the profitability of the Company. Therefore, its impact is taken in the books of accounts it will not have any bearing on any profitability of the Company. Further, there is no convincing evidence of virtual certainty of realization of deferred tax asset arising out of timing difference. 2. The Company has recognized export incentive receivable on accrual basis as per prevailing provisions of the export incentive schemes announced by the Government of India for export promotion. The Company has availed export claim in the year 2014-15 pertaining to earlier years from the Government. For balance amount claim of Rs. 308.68 Lacs, Company is in process of providing various documents, clarifications and explanations as and when required by Government Authorities and Company hopes to get remaining claims settled with the Government Authorities very soon. 3. With regard to the advance made to a company which is registered with Board for Industrial and Financial Reconstruction (BIFR) against which no provision was made, we wish to state that the Company is doing job work exclusively for Autolite (India) Limited on regular basis for last many years and the manufacturing facilities are exclusively dedicated for the job work of Autolite (India) Limited. As Hon'ble BIFR has not passed the order, the management is unable to quantify the sacrifice which the Company may have to make. The Company will recover the amount as per the scheme as and when sanctioned by Hon'ble BIFR and remaining amount will be written off in due course. 4. Regarding the observations made byAuditors for claim receivable of Rs. 90 Lacs, we comment that Company has lodged claims of development cost and also the supplies against Pal Peugeot Limited, Mumbai with receiver/ Official Liquidator attached to Bombay High Court. The Claim is under process and the Company hopes to get the amount of claims on final decision of Bombay High Court in respect of settlement of claims against Pal Peugeot Limited. Further, company has filed criminal suit in the court against Megha Enterprises for loss of duty free license benefit and hopes to recover the same. Based on the legal opinion, Management is of the view that Company shall be able to recover the amount in near future and as such it was recognized as claims receivable. 5. Regarding the observations made by Auditors for the Accounting Standard AS-26 (Intangible Assets), we comment that the Company had treated new export development expenses through participation in Foreign Trade Fairs, New product development and technical know how as deferred revenue expenses whose benefit shall accrue to the Company over a period of time. Hence, management had treated these expenses as deferred revenue expenses which are to be amortized in subsequent five years. Now, due to change in Accounting Standard on Deferred Revenue Expenditure issued by The Institute of Chartered Accountants of India, the Deferred Revenue Expenditure are to be booked in full in the year of its incurrence of the expenditure without any carry forward for future period. Deferment of DRE is now not allowed as per change in Accounting Standard. During the year, the Company has not booked any expenditure on DRE account and also proportionately writing off the earlier years DRE in the books of accounts. However, balance of earlier years DRE for writing off remained Rs. 199.40 Lacs which Company shall write off in the financial year 2015-16. 6. Due to liquidity constraints, there has been delay in depositing TDS, PF and ESI dues with the appropriate authorities during the period under review. However, the delay was not for the period exceeding six months. 7. With regard to recovery of loans from parties covered under Section 189 of the Companies Act, 2013, the Company is under the process of recovery of the amount of advances and Management is confident to recover the said amount in phased manner from the respective parties in future. It is pertinent to mention that on the basis of decision of Securities and Exchange Board of India, the Company had preferred an appeal before Securities and Appellate Tribunal (SAT) in the matter of re-instatement of financial results for the Financial Year 2012-13 with regard to Auditors qualifications mentioned in Point No. (1) to (4). Further, the Company has received intimation from National Stock Exchange (NSE) that SEBI had informed the NSE that on the basis of deliberation at QARC, the qualifications made by the Auditors on the Balance sheet for the Financial Year 2013-14 were referred to Financial Reporting Review Board (FRRB) of Institute of Chartered Accountants of India. The company had not received any communication from FRRB thereafter. Secretarial Auditor Pursuant to the provision of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s JPS & Associates., Company Secretaries in Practice, (C.P. No.5161) to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is appended as [Annexure 4] of the Director's Report. Cost Auditor Pursuant to the provision of Section 148 of the Companies Act, 2013 M/s PRJ &Associates, Cost Accountants, (Firm Registration Number: 101998) was appointed as the Cost Auditors of the Company to carry out an audit of Cost Accounting Records of the Company for the financial year 2014 -15. The due date for filing the Cost Audit Report for the financial year 2014-15 with the Ministry of Corporate Affairs (MCA) is 180 days from the end of Company's financial year i.e. 27th September, 2015. Further, the Board of Directors has appointed M/s PRJ & Associates, Cost Accountants, Jaipur as Cost Auditors of the Company for the financial year 2015 -16. Your directors have proposed the ratification of remuneration by the members payable to PRJ & Associates, Cost Accountants (Firm Registration Number: 101998). 9. LOANS, GUARANTEES OR INVESTMENTS The particulars of Loans, Guarantees or investment made under the provision of Section 186 of the Companies Act, 2013 are given in the Financial Statements provided in the Annual Report. 10. RESERVE The Company has not transferred any amount out of profits to the Reserve of the Company. The detailed amount of Reserve and Surplus is forming part of the Audited Balance Sheet of the Company in Note no. 4 of the Notes of the Financial Statement for the year ended on March 31, 2015. 11. MATERIAL CHANGES AND COMMITMENTSAFFECTING FINANCIAL POSITION OF THE COMPANY There have been no material changes and commitments, which is affecting the financial position of the Company which have occurred between April 01, 2015 and the date on which this Report has been signed. 12. BUSINESS RISK MANAGEMENT The Company has been addressing various risks impacting the Company and the policy of the Company on risk management is provided in Management Discussion and Analysis forming part of this Annual Report. 13. ANNUAL EVALUATION FOR BOARD'S PERFORMANCE Pursuant to the provisions of companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholder committee. The manner in which the evaluation has been carried out has been explained in Corporate Governance Report. The performance of individual directors was evaluated on parameters, such as, number of meetings attended, contribution in the growth and formulating the strategy of the Company, independence of judgment, safeguarding the interest of the Company and minority shareholders, time devoted apart from attending the meeting of the Company etc. The directors expressed their satisfaction with the evaluation process. 14. PATICULARS OF EMPLOYEES The information required pursuant to Section 197 of the Companies Act, 2013 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 Companies Act, 2013, the Report 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 business hours on working days of the Company upto the date of the ensuing Annual General Meeting. If any member is interested in inspecting the same, such member may write to the Company Secretary in advance. 15. NUMBER OF MEETINGS OF THE BOARD The Board met (8) Eight times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013. 16. POLICY ON DIRECTOR'S APPOINTMENT AND REMUNERATION The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board, and separating its functions of governance and management. As on March 31, 2015, the Board consists of Eight (8) members, (1) One of whom is a Chairman and the Managing Director, (2) two Executive or Whole-time Directors, (4) four are Independent Directors and (1) one Non-executive Non-independent Director. The Board periodically evaluates the need for change in its composition and size. The policy of the Company on directors' appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under Sub Section (3) of Section 178 of the Companies Act, 2013, adopted by the Board, is appended as to the Corporate Governance Report. We affirm that the remuneration paid to the directors is as per the terms laid out in the nomination and remuneration policy of the Company. 17. BOARD EVALUATION Clause 49 of the Listing Agreement mandates that the Board shall monitor and review the Board evaluation framework. The Companies Act, 2013 states that a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and Individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of Independent Directors shall be done by the entire Board of Directors, excluding the director being evaluated. The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. The evaluation process has been explained in the Corporate Governance Report Section in this Annual Report. The Board approved the evaluation results as collated by the Nomination and Remuneration Committee. 18. COMMITTEES OF THE BOARD Currently, the Board has (3) three committees: the Audit Committee, Nomination and Remuneration Committee and Stakeholders Grievance Committee. A detailed note on the Board and its committees is provided under the Corporate Governance Report Section in this Annual Report. 19. EXTRACT OF ANNUAL RETURN In accordance with Section 134(3)(a) of the Companies Act, 2013, an extract of the Annual Return in the prescribed format is appended as [Annexure-3] to the Director's Report. 20. CORPORATE SOCIAL RESPONSIBILITY The provisions of the Companies Act, 2013 regarding Corporate Social Responsibility are not applicable to the Company. 21. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to Section 134(3) (C) of the Companies Act, 2013, the Directors confirm that: i) in the preparation of the annual accounts , the applicable accounting standards have been followed along with proper explanations relating to material departures; ii) the directors have 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 ended on March, 31, 2015 and of the profit of the company for that period; iii) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; iv) the directors had prepared the annual accounts on going concern basis. v) 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. vi) 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. 22. LISTING STATUS AND LISTING FEES Your company's shares are listed and actively traded at the following Stock Exchanges: - National Stock Exchange of India Ltd. - BSE Limited Listing fees have already been paid to the above Stock Exchanges for the period up to 31st March, 2016. The SEBI through its press release no PR no. 75/ 2015 dated March 24, 2015 have given the exit order in respect to Jaipur Stock Exchange Ltd (JSE) , therefore the shares of the Company is no more listed on JSE. Further through SEBI press release no PR 132/ 2015 dated May 14, 2015 have given the exit order in respect to Madras Stock Exchange Limited (MSE) , therefore the shares of the Company is no more listed on MSE. The Company's Shares are also listed on Delhi Stock Exchange but as the SEBI has withdrawn the recognition granted to Delhi Stock Exchange in November 2014, therefore since then the Shares are not traded over there. 23. RELATED PARTY TRANSACTIONS There were no contracts or arrangements entered into by the company in accordance with provisions of Section 188 of the Companies Act, 2013. All material related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There are no materially significant related party transactions made 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 Related Party Transactions are placed before the Audit Committee as also the Board for approval. The details of transactions are duly given in the Notes of the Financial Statement of the Company for the year ended on March 31, 2015. Accordingly no transactions being reported in Form AOC-2, in terms of Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website. None of the Directors has any pecuniary relationships or transaction vis-a-vis the Company. 24. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES The Company has only one Subsidiary Autopal Inc, USA which is mainly engaged in the business of trading of the automotive headlamps and halogen bulbs to cater the requirements of Northern America. As per Rule 6 of the Companies (Accounts) Rules, 2014 and as required salient features of Financial Statement of the Autopal Inc, USA has been disclosed in this Report. Further none of the companies become or ceased to be its Subsidiaries, Joint Ventures or Associate Companies during the year. 25. SHARE CAPITAL The Company has converted 727,500 warrants into 727,500 equity shares during the year under review. The Paid up Share Capital of the Company thereafter in accordance with the Audited Balance Sheet as on March 31, 2015 is Rs. 105,812,410. The Audited Balance sheet forms the part of this Annual Report. 26. NATURE OF BUSINESS The Company is engaged in Production of Automotive Head Lamps and Halogen Bulbs. Further there was no change in the nature of business during the year. 27. DEPOSITS There were no public deposits accepted during the financial year or any amount of principal or interest thereof was outstanding in terms of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014, for the financial year ended on March 31, 2015. The amount of outstanding deposits as on March 31, 2014 has been transferred to Investor Education and Protection Fund in compliance with the order of Registrar of Companies, Rajasthan, Jaipur. Further there was no unpaid or unclaimed dividend amount as on March 31, 2015. 28. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE During the year under review there has been no such significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company's operations in future. 29. PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 and Rules made there under, the Company was required to constitute an Internal Complaints Committees (ICC) which would be eligible to hear and pass an order against the allegations of Sexual Harassment filed by any female employee of the Company caused at workplace. But though the Company does not have more than 1 number of female employees and subjected to the provisions of the Section 2 of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 the Internal Complaints Committees (ICC) cannot be constituted due to the lack of number of female employees. Therefore the Company has organized an awareness programme for the female employees in respect to spread the awareness of this Act and has informed them to file any complaint of Sexual harassment caused at workplace to the Local Complaints Committee (LCC) Constituted in every District as per the provision of Section 5 of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. During the year, no complaints with allegations of sexual harassment were filed with the LCC as per the provisions of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013. 30. EMPLOYEE STOCK OPTION During the year under report, no stock options were issued by the Company. 31. HUMAN RESOURCES The well disciplined workforce which has served the company for more than three decades lies at the very foundation of the company's major achievements and shall well continue for the years to come. The management has always carried out systematic appraisal of performance and imparted training at periodic intervals. The company has always recognized talent and has judiciously followed the principle of rewarding performance. 32. VIGIL MECHANISM The Company has establishes a vigil mechanism through a Whistle Blower Policy and through the Audit Committee, oversees the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against mechanism of employees and Directors who may express their concerns pursuant to the policy. The policy is uploaded on the website of the Company at <http://www.autopal.com/> announcements.php. 33. ACKNOWLEDGEMENT We thank our customers, vendors, investors and bankers for their continued support during the year. We place on record our appreciation of the contribution made by our employees at all levels. The Company's consistent growth was made possible by their hard work, solidarity, cooperation and support. We also thank to various statutory and administrative agencies and look forward to their continued support in the future. BY ORDER OF THE BOARD Sd/- (MAHIPAL GUPTA) Chairman & Managing Director DIN : 00057619 Date : 26th August, 2015 Place: Jaipur |