DIRECTORS' REPORT To The Members Munjal Auto Industries Limited Your Directors are pleased to present Companys 30th Annual Report and audited financial statements for the year ended March 31, 2015. DIVIDEND Your Directors have pleasure to recommend a dividend of 125% i.e. Rs.2.50/- on equity share of face value of Rs. 2/- each for the fiscal year ended 31st March, 2015. The dividend, if approved by the Members in the ensuing Annual General Meeting, would absorb Rs.1504.47 lacs including dividend distribution tax (Rs. 1,462.43 lacs previous year) out of the distributable profits available. APPROPRIATIONS After setting aside amount of Rs.1504.47 lacs towards dividend including dividend distribution tax and after transferring an amount of Rs. Nil (Rs. 476.58 lacs previous year) to General Reserve, the balance amount of Rs.2059.87 lacs (Rs. 2,826.76 lacs previous year) is being retained in the Profit and Loss Account. PERFORMANCE The Company has achieved sales turnover of Rs. 961.42 Crore registering a modest growth of 9.08% per cent. Profit before tax is Rs.49.29 Crore and profit after tax at Rs. 38.03 Crore during the year as against Rs. 49.39 Crore and Rs. 47.66 Crore respectively in the previous year. Considering the overall sluggish conditions in Indian Economy and in auto sector, the operating numbers can be deemed as satisfactory. CAPACITY UTILIZATION & PLANT OPERATIONS All four units of the Company at Waghodia in Gujarat, Bawal as well as Dharuhera both in Haryana and Haridwar in Uttarakhand are running well and continue to operate at a satisfactory level of efficiency. SHARE CAPITAL The paid up equity capital as on March 31, 2015 stands at Rs. 10 Crore consisting of 5 Crore Equity Shares of Rs.2/- each. During the year under review, the Company has not issued any bonus shares, additional equity shares, any right shares with differential voting rights nor granted any stock options or issued any sweat equity shares. APPOINTMENT/ CESSATION OF DIRECTORS In terms of section 152 of Companies Act, 2013 and the applicable provisions therein, one-third of the retiring Directors (other than independent directors who are non retiring) shall retire by rotation, and if eligible, may offer themselves for re-election at the Annual General Meeting of the Shareholders. Accordingly, Mr. Sudhir Kumar Munjal retires by rotation at this Annual General Meeting and being eligible, offers himself for reelection. Your Board recommends re-appointment of Mr. Sudhir Kumar Munjal, retiring at the forthcoming AGM of Company in terms Section 152 of Companies Act, 2013, who in opinion of the Board fulfills the conditions for reappointment specified in the Act and rules made thereunder. Shri Satyanand ji Munjal, chairman of the Company has resigned, due to advanced age, from the directorship of the Company w.e.f. February 02, 2015. The Board of Directors, while wishing him a healthy, long life, takes on record the invaluable guidance provided by Shri Satyanand ji Munjal since inception of the Company. His guiding principles have laid the path of good governance in steering affairs of the Company all these years and his foundational values taking care of interests of all stakeholders in the company will continue to be a good legacy. Shri Sudhir Kumar Munjal has been appointed as Chairman & Managing Director of the Company w.e.f. March 28, 2015. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the performance of the Board and individual Directors was evaluated by the Board seeking relevant inputs from all the Directors. The Nomination and Remuneration committee (NRC) reviewed the performance of the individual Director. A separate meeting of Independent Directors was also held to review the performance of Non-Independent Directors, performance of the Board as a whole and performance of the Chair-person of the Company. QUALITY Your Company is focusing on quality, right from new product development stage such as design of processes, manufacturing of tools, fixtures & dies so as to ensure quality output on a sustainable basis. This attribute of your Company has enabled it remain a consistent quality producer over the years. FINANCE AND ACCOUNTS Your Company continued to focus on operational improvement. Continuing focus on managing optimal levels of inventory, sound business performance, operating efficiencies in various segments of business and cost saving drive across the organization have helped it generate decent cash flow from operations, notwithstanding headwinds blowing in automobile sector and sluggish macro-economic environ throughout the year. Your Company was able to raise the short-term/long term funds needed for its working capital related requirements & term loans for new capital expenditure at reasonable rates. Your Company continues to enjoy excellent credit ratings for both long and short tenure borrowings and maintains impeccable debt-servicing track record, which helps it retain excellent rapport with all of its bankers. CORPORATE GOVERNANCE The Company is committed to maintain the highest standards of corporate governance and adhere to the corporate governance requirements set out by SEBI. The report on Corporate Governance as stipulated under the Listing Agreement forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of corporate governance is attached to the report on Corporate Governance. CORPORATE SOCIAL RESPONSIBILITY The Corporate Social Responsibility (CSR Committee) has formulated and recommended to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, which has been approved by the Board. The amount required to be spent on CSR activities during the year under report in accordance with the provisions of section 135 of the Act is Rs. 92.94 lacs and the Company has spent Rs. 37.99 lacs during the current financial year. The shortfall in the spend during the year under report is intended to be utilized in phased manner in future, upon identification of suitable projects/programmes within the Company's CSR Policy. The requisite details on CSR activities pursuant to Section 135 ofthe Act and as per Annexure attached to the Companies (Corporate Social Responsibility Policy) Rules, 2014 are annexed asAnnexure A to this Report. FIXED DEPOSITS Your Company has not accepted any deposits within the meaning of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014. PARTICULARS OF LOANS, GUARANTEES, SECURITIES OR INVESTMENTS The Company has not given any guarantees or securities covered under the provisions of section 186 of the Companies Act, 2013 ('the Act'). However, the aggregate of loans and advances granted as also investments are within the limits of Section 186 of the Act. DECLARATION GIVEN BY INDEPENDENT DIRECTORS PURSUANT TO SECTION 149(6) OF THE ACT The Company has received declaration from all independent directors of the Company to the effect that they meet criteria of independence as stipulated u/s 149(6) of the Act and Clause 49 of the listing agreement. DIRECTORS' RESPONSIBILITY STATEMENT In terms of Section 134 (5) of the Companies Act, 2013, the directors would like to state that: a) In the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) The directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 of the Company for the year under review; c) The directors have 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 have prepared the annual accounts on a going concern basis; and e) The directors, have 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 have devised proper system to ensure compliance with the provisions of all applicable laws and that such system were adequate and operating effectively; PARTICULARS OF CONTRACTS OR ARRANGMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188 OF THE COMPANIES ACT, 2013 There were no related party transactions entered into during the financial year under section 188 of Companies Act, 2013. HOLDING COMPANY Thakur Devi Investments Private Limited is a holding company of the Company holding 74.81% Equity Share Capital of the Company. AUDIT COMMITTEE RECOMMENDATIONS During the year, The Board has accepted all recommendations of Audit Committee and accordingly no disclosure is required to be made in respect of no acceptance of the recommendation of the Audit Committee by the Board. RATINGS FOR BORROWING ICRA, the rating agency has reaffirmed AA- with stable outlook for the long term ratings for bank facilities and A1 + the short term rating for short term bank facilities and commercial paper of your Company. AUDITORS The auditors, M/s. VAKIL, JAIN & HINDOCHA, Chartered Accountants, retire at the ensuing Annual General Meeting. They have furnished their consent and requisite certificate pursuant to the Companies Act, 2013 in respect of their proposed reappointment. EXTRACT OF ANNUAL RETURN The extract of the Annual Return in form MGT-9 is annexed herewith as Annexure B. EXPLANATION/ COMMENTS ON QUALIFICATION/ RESERVATION/ ADVERSE REMARK/ DISCLAIMER BY THE AUDITORS, IF ANY Since there was no qualification/ reservation/ adverse remark/ disclaimer either by the Auditors or Secretarial Auditors in their respective report, no explanation/ comment is offered. CODE OF CONDUCT The Board of Directors has approved a Code of Conduct which is applicable to the Members of the Board and all employees in the course of day to day business operations of the company. The Code lays down the standard procedure of business conduct which is expected to be followed by the Directors and the designated employees in their business dealings and in particular on matters relating to integrity in the work place in business practices and in dealing with stakeholders. All the Board Members and the Senior Management personnel have confirmed compliance with the Code. All Management have been given appropriate training in this regard. WHISTLE BLOWER POLICY/ VIGIL MECHANISM The Company has a vigil mechanism/whistle blower policy to deal with instance of fraud and mismanagement, if any. In staying true to our values of Strength, Performance and Passion and in line with our vision of being one of the most respected companies in India, the Company is committed to the high standards of Corporate Governance and stakeholder responsibility. PREVENTION OF INSIDER TRADING The Company has adopted a Code of Conduct for Prevention of Insider Trading pursuant to new SEBI (Prohibition & Insider Trading) Regulation 2015 in place of SEBI (Prohibition & Insider Trading) Regulation 1992 with a view to regulate trading in securities 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 Directors and the designated employees have confirmed compliance with the Code. BOARD MEETINGS Five meetings of the Board of Directors were held during the year. Details of the composition of the Board and its committees and of the meeting held, attendance of the directors of such meeting and other relevant details are provided in the Corporate Governance Report. SECRETARIAL AUDITOR Pursuant to provisions 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 Devesh Vimal & Co., Company Secretaries in practice to undertake the Secretarial Audit of the Company. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith marked as Annexure C to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. RISK MANAGEMENT POLICY The Company has adopted a Risk Management policy in accordance with the provision of Companies Act 2013 and Clause 49 of Listing Agreement. It established various level of accountability and overview within the company, while vesting identified manager with responsibility for each significant risk. DETAILS OF SIGNIFICANT & MATERIAL ORDERS IMPACTING THE GOING CONCERN STATUS/ COMPANY'S OPERATIONS IN FUTURE No significant/ material orders have been passed by the regulators or courts or tribunals impacting the going concern status of the Company or company's operations in future. 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. Remuneration of KMP and Sitting fees paid to Independent Directors are provided in Annexure B i.e. Extract of Annual Return Form No. MGT-9. There was no employee of the Company except Executive Directors employed through out the year who was in receipt of the remuneration exceeding Rs. 60 Lacs per annuam. MANAGEMEMNT DISCUSSION AND ANALYSIS Management Discussion and Analysis Report for the year under review as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India is enclosed as per Annexure D and forms part of this report. INDUSTRIAL RELATIONS Industrial relations have remained cordial throughout the year in the Company at all of its units. ENVIRONMENT, HEALTH, SAFETY AND SOCIAL RESPONSIBILITY Your Company is committed in maintaining the highest standards of environment compliances and therefore adopted a systematic approach towards environment management by embedding a vision of being an 'Injury Free' and 'Zero Environment Incident' organisation. Over the past many years, your Company has been progressing well in terms of reducing injury frequency rates and has improved the safety records. Your Company is environment-conscious and committed to making a positive contribution to the communities where it operates. The Company has been proactively pursuing measures and reaching out to the communities surrounding the areas of its operations by extending support and lending a helping hand to some very credible social institutions that are committed to address social causes. Your Company has been certified for Occupation, Health and Safety (OHSAS)18001:2007from Bureau Veritas during FY 2012-13, which is valid for three years. Your Company is committed for safety and occupational health & compliance with applicable safety and occupational health legislation, regulations and other requirements. All incidents/ accidents are investigated and analysed to prevent reoccurrence and improve upon safety record. CONSERVATION OF ENERGY/ TECHNOLOGY ABSORPTION AS WELL AS FOREIGN EXCHANGE EARNINGS AND OUTGO The Company has not imported any foreign technology and hence, the company does not have any information to offer in respect of Technology absorption. However, information in respect of Conservation of energy & foreign exchange earnings and outgo is enclosed in Annexure E. COMPANY'S POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION 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 requisite details as required under Section 134(3)(e), Section 178(3) & (4) and Clause 49 of the Listing Agreement are annexed as Annexure F to this report. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY, IF ANY, DURING THE PERIOD FROM 31st MARCH, 2015 TO THE DATE OF THE REPORT There has no material change/ commitment affecting the financial position of the Company during the period from the end of the financial year on 31st March, 2015 to the date of the Report. ACKNOWLEDGEMENTS The Company would like to thank all of its Stakeholders, including inter alia Suppliers, Vendors, Investors and Bankers and appreciation to all its customers for their consistent, abiding support throughout the year. Your Company also records its appreciation of the contributions made by employees at all levels. Their commitment, cooperation and support are indeed the backbone of all endeavors of the Company. The Company would like to acknowledge Government of India, Customs and Excise Departments, Income Tax Department, Industrial & Labour Departments, Government of Gujarat, Government of Haryana, Government of Uttarakhand and other government agencies for the support; the Company has been receiving over the years and is looking forward to their continued support/guidance in times to come. For and on behalf of the Board Munjal Auto Industries Limited Sudhir Kumar Munjal Chairman & Managing Director Place : Waghodia Date : 29th May, 2015 DIN : 00084080 |