DIRECTORS' REPORT The Directors present their 51st Report together with the audited accounts of your Company for the year ended 31st March, 2014 DIVIDEND: In view of anticipated merger of the Company, your Board has not recommended any dividend for the financial year 2013-14. PERFORMANCE: The net sales value for the Stampings business for the year was Rs. 723.02 crore as compared to Rs 766.39 crore recorded in the previous year registering a decline of around 5.9%. The corresponding sales volume of the Stampings business was recorded at 62836 tons as compared to the sales of 69318 tons in the previous year, registering a decline of around 9.4% over the previous year. During the year under review the performance of the Stampings business was affected, mainly due to industry de-growth in Utility Vehicle segment (declined by 2%], Light Commercial Vehicle segment (declined by 14%] and medium & heavy vehicle segment (declined by 21%] and accordingly the Stampings' sales volume declined as compared to the previous year. The Company has utilized the phase of slowdown in the economy as an opportunity to: - Successfully develop products like Cargo Load body, Fuel Tank, Lower Control Arm, Semi Trailing Arm and Cross Car Beam Assembly, which shall be contributing to increasing our sales of Value-added-Products in the near future. - Implement various process improvement projects to improve productivity and profitability across all locations. - Commission Robotic Welding Assembly lines at Kanhe, Pune and Nashik plants which enable to improve the quality of products as well as productivity while reducing the need of manpower. These initiatives have strengthened the operations of the Company and helped it to face the challenges of slowdown in the economy and to some extent also absorb, the high inflationary pressures during the year. During the financial year under review, your Company earned a profit of Rs 26.86 crores before exceptional item and taxation as compared to Rs 3.58 crores recorded in the previous year. The gross income of the Company witnessed a decline from Rs. 992.89 crores (includes steel business figures up to 9th July, 2012] as recorded in previous year to Rs 728.84 crores registered in the financial year under review. The earnings before other income, interest and depreciation for the financial year under review was Rs 51.02 Crores (around 7.0%] as compared to Rs 58.81 Crores (around 5.9%] recorded in the previous financial year. After the proposed merger of the Company (through an Integrated Scheme of Merger, explained in detail in this report] with Mahindra CIE Automotive Limited, the stampings business expects to add new customers by leveraging the reach of CIE Automotive. The stampings business also expects to derive benefits from such merger in respect of the technical support for developing many new products and processes. Your Company is also setting up a new plant at Zaheerabad in Andhra Pradesh for manufacturing of Skin panels, welded assemblies and products. This plant is expected to be operational in last quarter of the financial year 2014-15. During the financial year under review, the Company sold its land of about 76 acres along with the buildings and structures situated at Khopoli, Maharashtra. The said land, buildings and structures were sold as per the valuation report of an Independent Valuer for approximately Rs. 126 crores. The said sale of the land, buildings and structures was with a view to monetise the value of its unutilized assets and improve shareholder value by freeing up capital to reduce debt and facilitate growth. SUBSIDIARY COMPANY: During the financial year under review, on 3rd October, 2013, your Company sold its entire equity stake of 51% (51,00,000 equity shares of Rs.10 each] held by it in the equity share capital of Mahindra Sanyo Special Steel Private Limited (MSSSPL] formerly known as Navyug Special Steel Private Limited, to Mahindra & Mahindra Limited and accordingly MSSSPL ceased as the subsidiary of the Company with effect from 3rd October, 2013. The Statement pursuant to Section 212 of the Companies Act, 1956 containing details of the Company's erstwhile subsidiary for the part of the year is attached. In accordance with the General Circular dated 8th February 2011, issued by the Ministry of Corporate Affairs, Government of India, the Balance Sheet, Statement of Profit and Loss and other documents of the subsidiary company for the part of the year under review, are not being attached to the Balance Sheet of the Company. The Company will make available the Annual Accounts of MSSSPL, which was the subsidiary Company for the part of the year under review, and the related detailed information, to any Member of the Company who may be interested in obtaining the same. Further, the Annual Accounts of the erstwhile subsidiary would also be available for inspection by any Member at the Registered Office of the Company during working hours up to the date of the Annual General Meeting. INTEGRATED SCHEME OF MERGER: On 15th June 2013, the Board of Directors, subject to necessary approvals and satisfaction of contractual and statutory conditions, approved the Integrated Scheme of Merger (Scheme] consisting of merger of the Company, Mahindra Hinoday Industries Limited, Mahindra Investments (India] Private Limited, Mahindra Gears International Limited, Participaciones Internacionales Autometal Tres, S.L. ("PIA 3"] with Mahindra Forgings Limited {now known as Mahindra CIE Automotive Ltd. (MCIE]]. Subsequent to the approvals received from the stock exchanges, on which securities of the Company are listed and other statutory applicable provisions, the Company has filed the said Scheme with Hon'ble High Court of Judicature at Bombay seeking its directions for holding the meeting of equity shareholders of the Company for approval of the Scheme. The Hon'ble High Court vide by an Order made on 2nd May, 2014, has directed a meeting of the equity shareholders of the Applicant Company be held on the 5th day of June, 2014 for the purpose of considering and approving, with or without modification(s], the Scheme. The notice to this effect has already sent to the shareholders of the Company. The Company is also seeking the approval of the public shareholders of the Company to the Integrated Scheme of Merger by way of postal ballot and e-voting process in compliance with the requirements of circular number CIR/CFD/DIL/5/2013 dated February 4, 2013 read with circular number CIR/ CFD/DIL/8/2013 dated May 21, 2013, both issued by the Securities and Exchange Board of India ("SEBI Circular"], conditions laid down in the observation letters dated March 7, 2014, issued by the BSE Limited and the National Stock Exchange of India Limited (collectively referred to as "Observation Letters"] and under relevant provisions of applicable laws. After receipt of all approvals and satisfactions of the conditions, contractual and legal, the Scheme will be implemented and the record date will be determined for considering the shareholders entitlement to the equity shares of MCIE as per the share swap ratio mentioned in the Scheme i.e. 284 (Two Hundred Eighty Four] fully paid-up Equity Share of Rs.10 each of MCIE for every 100 (One Hundred] Equity Shares of Rs.10 each held by the shareholders in the Company. CONSOLIDATED FINANCIAL STATEMENT: The Consolidated Financial Statement of the Company, and its erstwhile subsidiary (MSSSPL] prepared, in accordance with Accounting Standard AS 21 forms part of this Annual Report. The Consolidated Financial Statements presented by the Company include the financial results of its erstwhile subsidiary company and its associate. MANAGEMENT DISCUSSION AND ANALYSIS REPORT: A detailed analysis of the Company's performance is mentioned in the Management Discussion and Analysis Report, which forms part of this Annual Report. CORPORATE GOVERNANCE: Your Company is committed to following the highest standards of corporate governance. A Report on Corporate Governance along with a certificate from the Auditors of the Company regarding compliance thereof as stipulated under Clause 49 of the Listing Agreement forms part of the Annual Report. FINANCE: During the financial year under review, the liquidity position of the Company has improved substantially due to receipt of proceeds from sale of land and investments and subsequent repayment of debts. During the financial year under review, the Company met its obligations towards capital expenditure and working capital through mix of internal accruals and external borrowings. STOCK OPTIONS: During the financial year under review the Company allotted 1,81,750 equity shares to the stock options holders who have exercised their options as per the Employees Stock Option Scheme, 2006, of the Company. Accordingly the paid-up equity share capital of the Company has been increased to Rs. 32,66,42,790/- comprising of 3,26,64,279 equity shares of Rs. 10 each. Details required to be provided under the Securities and Exchange Board of India (Employee Stock Option Scheme and Employee Stock Purchase Scheme] Guidelines, 1999 are set out in Annexure I to this Report. INDUSTRIAL RELATIONS: During the year under review, the industrial relations scenario at all the operating plants of the Company was satisfactory. SAFETY, HEALTH AND ENVIRONMENTAL PERFORMANCE: Your Company has a defined policy on general health, safety and environmental conservation and every employee is responsible for the observance of measures designed to prevent accidents, damage to health and to avoid environmental pollution. The Safety Committee members comprising representatives of workers and executives from various departments meet periodically for reviews. DIRECTORS: During the year under review, Mr. Keshub Mahindra, step down from his directorship and Chairmanship of the Company, after a long and eventful innings of about 50 years of service of which more than 13 years were as the Chairman of the Company, with effect from the conclusion of the Meeting of the Board of the Directors held on 29th October, 2013. The Board has, placed on its record a note of appreciation in recognition of Mr. Keshub Mahindra's outstanding contribution to the Company. The Board of Directors has appointed Mr. Anand Mahindra as the Chairman of the Company with effect from the conclusion of the Board meeting dated 29th October 2013. Further during the year under review, Mr. S Ravi, has tendered his resignation as the Director of the Company with effect from 24th September 2013, the same was also accepted by the Board of directors after placing of a note of appreciation for his valuable contribution at the Meeting of the Board of the Directors held on 29th October, 2013 Mr. Anand Mahindra and Mr. Uday Gupta, Directors, retires by rotation at the ensuing Annual General Meeting, and being eligible, offer themselves for re-appointment. During the year Mr. Mukesh Kumar Gupta was appointed as an additional director of the Company. He holds the office of director upto the date of the forthcoming Annual General Meeting. A notice has been received from a member proposing the candidature of Mr. Mukesh Kumar Gupta for the office of Director of the Company at the forthcoming Annual General Meeting. As per provisions of Section 149, 152 read with Schedule IV and all other applicable provisions of the Companies Act, 2013 and the Companies (Appointment and Qualification of Directors] Rules, 2014 (including any statutory modification(s] or re-enactment thereof for the time being in force] and Clause 49 of the Listing Agreement, the Board recommends the appointment of Mr. Manoj kumar Maheshwari, Mr. R. R. Krishnan, Mr. Sanjiv Kapoor and Mr. Daljit Mirchandani as the Independent Directors of the Company for a fixed period of 1(one] year from the date of forthcoming Annual General Meeting. Further, Mr. Nikhilesh Panchal, Independent Director, whose period of office was liable to determination by retirement of directors by rotation under the provisions of the companies Act, 1956 and whose term expires at this Annual General Meeting is proposed to be appointed for a fixed term of 1 (one] year as an independent director from the date of forthcoming Annual General Meeting. The above directors have being eligible, offered themselves for their above proposed respective appointments. The Company has received requisite notices in writing from member proposing Mr. Nikhilesh Panchal, Mr. Manojkumar Maheshwari, Mr. R. R. Krishnan, Mr. Sanjiv Kapoor and Mr. Daljit Mirchandani as the Independent Directors of the Company. The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under the applicable provisions of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. DIRECTORS' RESPONSIBILITY STATEMENT: Pursuant to Section 217(2AA] of the Companies Act, 1956, your Board of Directors, based on the representations received from the Operating Management and after due enquiry, confirm that (i] in the preparation of the annual accounts, the applicable accounting standards have been followed; (ii] they have, in the selection of the accounting policies, consulted the Statutory Auditors and these have been applied consistently and reasonable and prudent judgments and estimates have been made so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2014 and of the profit of the Company for the year ended on that date; (iii] proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (iv] the annual accounts have been prepared on a going concern basis. AUDITORS: M/s. Deloitte Haskins & Sells LLP (DHS], Chartered Accountants, retire as the Statutory Auditors of the Company at the ensuing Annual General Meeting and have given their consent for re-appointment as the Statutory Auditors of the Company. The Shareholders will be required to elect Auditors for the current year and fix their remuneration. The Company has received a Certificate from M/s. Deloitte Haskins & Sells, LLP, to the effect that if their re-appointment is made which would be within the prescribed limits under section 141(3] (g] and other applicable provisions of the Companies Act, 2013 read with the Companies (Audit and Auditors] Rules 2014 and that they are not disqualified for re-appointment. COST AUDIT REPORT: Your Company had appointed Mr. Kishore Bhatia, a qualified practicing Cost Accountant holding valid Membership No. 8241 for the financial year 2012-13 with the approval of the Central Government, Ministry of Corporate Affairs, New Delhi to carry out cost audit of the Company. The Cost Auditor has filed the Cost Audit Report for the financial year 2012-13 on 27th September 2013 to the Central Government, Ministry of Corporate Affairs, New Delhi. The due date for filing the said Cost Report was 30th September 2013. The Board of Directors of your Company has upon recommendation of the Audit Committee appointed Mr. Kishore Bhatia, Cost Accountant, to audit the cost accounts of the Company for the financial year ending 31st March, 2014 and the Central Government has approved the appointment. As required under the provisions of Section 224(1B] read with Section 233 (B](2] of the Companies Act, 1956, the Company has obtained a written confirmation from Mr. Kishore Bhatia to the effect that he is eligible for appointment as Cost Auditor under Section 233B of the Companies Act, 1956. The Audit Committee has also received a certificate from the Cost Auditor certifying his independence and arm's length relationship with the Company. PUBLIC DEPOSITS AND LOANS/ADVANCES: An amount of Rs 0.55 Lakhs in the aggregate consisting of 3 matured fixed deposits had remained unclaimed as at 31st March, 2014. Your Company had, from 1st May, 2005 discontinued acceptance of and renewal of deposits under the provisions of the Companies Act, 1956 read with Companies (Acceptance of Deposits] Rules, 1975. The particulars of loans/advances and investment in its own shares by listed companies, their subsidiaries, associates, etc., required to be disclosed in the Annual Accounts of the Company pursuant to Clause 32 of the Listing Agreement are furnished separately. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND: Pursuant to the provisions of Section 205A(5] and 205C of the Companies Act, 1956, relevant amounts which remained unpaid or unclaimed for a period of seven years have been transferred by the Company, from to time to time on due dates, to the Investor Education and Protection Fund. Pursuant to the provisions of Investor Education and Protection Fund (Uploading of information regarding unpaid and unclaimed amounts lying with companies] Rules, 2012, the Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 25th July, 2013 (date of last Annual General Meeting] on the Company's website as also on the Ministry of Corporate Affairs' website. CORPORATE SOCIAL RESPONSIBILITY (CSR): Your Company is committed to its social responsibilities and takes initiatives to serve the society as a good corporate citizen. Your Company, during the year under review, has successfully undertaken several CSR activities under the group's Employees Social Option Scheme (ESOPS] such as; • A Sustainability Awareness Program conducted for students about Environmental, Water and Energy Conservation at Rudrapur Plant. • Distribution of stitched 104 uniforms, bags to students including few blind students. • Distribution of school stationary to water bottles, bags & uniforms. • Health/Eye check up camp, medication & advise for the students, Children. In addition to above few more notable initiatives taken are plantation of about 7775 trees at Kanhe, Nashik and Rudrapur plants of the Company and nearby villages, distributed of Solar Lanterns, Donation of school benches, Blood donation camps at Kanhe, Nasik, Rudrapur plants, Health check up camps with Symptomatic treatment for 114 villagers & 59 students at Sangvi village and Vahangaon village, etc. Your Company continue its emphasis on its CSR objective of performing its responsibility towards society at large and, during the year under review, the Board of Directors has constituted the Corporate Social Responsibility Committee (CSR] Committee comprising of directors namely Mr. R. R. Krishnan (Chairman], Mr. Uday Gupta and Mr. Nikhilesh Panchal, as its members. The major role of this Committee is to formulate, recommend, implement and monitor the CSR activities to be undertaken by the Company to meet/contribute towards its Corporate social responsibility and sustainability objectives. Accordingly the Committee has also framed its CSR policy for carrying out activities in compliance with the provisions of the Companies Act 2013 read with relevant Rules framed there under. The said Policy has been approved by the Board. Some of the activities which have been undertaken by the Company during the year under review are; • Donation to Project Nanhi Kali - Employees voluntarily contribute donations to Nanhi Kali Project. • Project Hariyali - Contribution towards Hariyali Project to increase green cover by planting trees every year on an ongoing basis. • Education: Scholarships/Felicitation is given to the meritorious wards of the employees and village students to help /support in their further education. • Employees Social Option Scheme (ESOPs) - Employees are encouraged to volunteer for various CSR projects in the areas of education, health and environment. • Disaster Relief and Rehabilitation - consistent and timely support to relief and rehabilitation initiatives to those who are affected due to natural calamities by either contributing to the Prime Minister's or Chief Minister's Relief Fund by contributing one day salary, donating clothes & other items. • Health Services - Organize health check up services for school students and villagers to detect and take early treatment for the various illnesses /diseases. • Environment - Providing of street light and poles, solar lanterns, drinking water tanks and coolers, tree plantation, development of gardens inside the plant premises, etc. SUSTAINABILITY INITIATIVES: Your Company continues to be aligned to Mahindra Group's approach towards sustainable development by making conscious efforts to reduce environmental impact of business as well as enhancing its responsibility towards society. Your company continued its drive to identify and implement projects for reduction in energy, water consumption, and waste generation and GHG emissions, to achieve the targets set under its Sustainability Roadmap. During the year under review various initiatives /activities were taken by the Company on eco-efficiencies, employee health & safety as well as community development, the highlights of which are given below: 1. A Common Guaranteed Safety Program was run across all plants, to ensure improved awareness, on the job safety training and use of personal protective equipment was rolled out. 2. Energy efficiency continued to be high on the agenda which led to improvement in the specific energy use per ton of production, as well as reduction in GHG emissions. 3. During the year, the new facility at Pantnagar was also OHSAS 18001 and ISO 14001 certified. 4. In 2012-13, a beginning was made to cascade sustainability awareness to the supply chain. During 2013-14, this initiative was taken forward through a series of training programs and audits of key suppliers having significant impact on our material supplies. 5. All plants continued to effectively engage the local communities through employee volunteering programs (ESOPs], which has brought about positive change in and around the areas of operation. These initiatives have also earned a series of awards for your company, and more importantly, recognition from a valued customer, Tata Motors Limited, for best performance. During the year the triple bottom line performance for the financial year 2012-13 was published as a part of the Mahindra Group's Sustainability Report, in accordance with the latest guidelines of the internationally accepted Global Reporting Initiative or the GRI standards and like the previous reports, this report was externally assured by E&Y with an A+ rating and GRI checked. PARTICULARS OF EMPLOYEES: The Company has no employee who was in the employment of the Company throughout the financial year under review and was in receipt of remuneration of not less than Rs 60,00,000 per annum during the financial year ended 31st March, 2014 or not less than Rs. 5,00,000 per month during any part of the said year. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO: Particulars required to be disclosed under the Companies (Disclosure of Particulars in the Report of Board of Directors] Rules, 1988 are set out in Annexure II to this Report. ACKNOWLEDGEMENTS: Your Directors wish to express their appreciation of the continued support and co-operation received from the Banks, Financial Institutions, Government Departments, Vendors, Customers and Employees of the Company. For and on behalf of the Board Anand Mahindra Chairman Place : Mumbai: date : 21st May 2014 |