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Automotive Stampings and Assemblies

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Directors Report Year End : Mar '17    Mar 16

BOARD’S REPORT

Dear Members,

The Directors take pleasure in presenting the Twenty Seventh Annual Report together with the Audited Financial Statements of your Company for the financial year ended March 31, 2017. The Management Discussion and Analysis forms part of this Report.

FINANCIAL RESULTS

(Rs, in Lakhs)

Particulars

Financial Year

2016-17

2015-16*

Revenue from Sale of Products / Services (Net)

30,367.74

26,245.79

Other Operating Revenue

34.39

38.35

Other Income

178.71

125.06

Total Revenue

30,580.84

26,409.20

Cost of Materials Consumed (including change in inventories)

21,913.17

19,496.31

Employee Benefit Expense

4,690.54

4,123.14

Other Expenses

3,703.49

2,974.09

Earnings / (Loss) before Depreciation, Financial Charges and Tax (EBIDTA)

273.64

(184.34)

Interest Expense

912.05

932.62

Depreciation and Amortization Expense

932.65

963.23

Profit / (Loss) before exceptional item and Tax

(1,571.06)

(2,080.19)

Exceptional items

1,284.00

-

Tax Expense / (Credit)

-

-

Profit/ (Loss) for the year

(287.06)

(2,080.19)

Other Comprehensive Income (OCI)

(68.22)

32.23

Other Comprehensive Income (net of taxes)

(68.22)

32.23

* Due to Ind - AS applicability from FY. 2016-17 adjustments / regrouping was made in the previous year 2015-16 figures.

DIVIDEND

Due to the loss during the year, the Board of Directors has not recommended any dividend.

TRANSFER TO RESERVES IN TERMS OF THE COMPANIES ACT, 2013

Your Company has not transferred any profit from Profit and Loss Account to General Reserve Account as under the Companies Act, 2013.

MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian Automobile Industry is made up of Original Equipment Manufacturers (OEMs) i.e. Automobile manufacturers and auto component manufacturers.

The Industry is an emerging sector in India with almost all global majors having set up their facilities here. The Industry has been continually evolving and absorbing newer technologies in order to align itself with global developments and realize its full potential.

The Auto Components Industry in India comprises Tier One manufacturers who supply complete component modules to OEMs, Tier Two manufacturers who cater to Tier One manufacturers and Tier Three manufacturers who supply components to Tier Two manufacturers. The Industry is divided into five segments viz. engine parts, drive transmission & steering parts, suspension & brake parts, electric parts and body & chassis. The fortunes of the Auto Components Industry are closely linked with those of the OEMs.

In FY 2016-17, Auto Industry witnessed a Domestic growth of 5.41 percent (as per the table given below). The Passenger Vehicle segment registered a growth of 9.42 percent which includes passenger car vehicles and utility vehicles. Within this segment, the Utility vehicle market grew at 26.32 percent due to new launches in the compact Utility Vehicle segment whereas the Passenger Car segments grew at only 5.40 percent. The commercial vehicle segment was affected by demonetization. The CV segment grew by 3 percent as compared to 12.10 percent in last year. The LCV segment grew by 4.97 percent as compared to 2.77 percent in last year. The three wheeler segment registered a negative growth of (16.16 percent).

The chart given below shows the production of various categories of vehicles during FY 2016-17 vis-a-vis FY 2015-16:

Segment

2016-17

2015-16

% Growth

Passenger cars

27,04,600

25,65,970

5.40

Utility vehicles

9,06,750

7,17,809

26.32

Vans

1,80,190

1,81,266

(0.59)

Passenger Vehicles

37,91,540

34,65,045

9.42

M&HCVs

3,42,733

3,41,287

0.42

LCV

4,67,553

4,45,405

4.97

Commercial vehicles

8,10,286

7,86,692

3.00

Three Wheelers

7,83,149

9,34,104

(16.16)

Two wheelers

1,99,29,485

1,88,30,227

5.84

Quadricycle*

1,584

531

198.31

Total of All Categories

2,53,16,044

2,40,16,599

5.41

* Only Oct- March 16 data is available for 15-16

Source SIAM report

The chart below shows sales and export of various categories of vehicles during FY 2016-17 compared to FY 2015-16:

Segment

Domestic Sales

Exports

2016-17

2015-16

% Growth

2016-17

2015-16

% Growth

Passenger cars

2,102,996

2,025,097

3.85

602,341

532,630

13.09

Utility vehicles

761,997

586,576

29.91

154,153

118,741

29.82

Vans

181,734

177,535

2.37

2,336

1,682

38.88

Passenger

Vehicles

3,046,727

2,789,208

9.23

758,830

653,053

16.20

Segment

Domestic Sales

Exports

M&HCVs

302,529

302,397

0.04

43,719

35,197

24.21

LCVs

411,703

383,307

7.41

64,552

67,927

(4.97)

Commercial

Vehicles

714,232

685,704

4.16

108,271

103,124

4.99

Three wheelers

511,658

538,208

(4.93)

271,894

404,441

(32.77)

Two wheelers

17,589,511

16,455,851

6.89

2,339,273

2,482,876

(5.78)

Quadricycle*

-

-

-

1556

334

-

Total of All Categories

21,862,128

20,468,971

6.81

3,479,824

3,643,828

(4.50)

* Only Oct- March 16 data is available for 15-16

Source: SIAM report

The overall Commercial Vehicles segment registered a growth of 4.16 percent in FY 2016- 17 as compared to the same period last year largely driven by replacement demand, declining fuel prices, pre-buying ahead of BS IV norms. Medium & Heavy Commercial Vehicles (M&HCVs) grew by 0.04 percent and Light Commercial Vehicles grew by 7.41 percent during FY 2016-17 over the same period last year because of rising private final consumption expenditure and high re-distribution freight but dampened by demonetization.

Three Wheelers sales declined by (-) 4.93 percent in FY 2016-17 over the same period last year. Passenger Carrier sales declined by (-) 8.83 percent and Goods Carrier sales grew by 12.75 percent in FY 2016-17 over FY 2015-16.

The Indian Auto Components Ancillary Industry continues to face adverse headwinds to maintain volumes and margins.

Your Company operates in Sheet Metal Components, Assemblies and Sub-assemblies segment of the Auto Components Industry. It manufactures a range of sheet metal components and assemblies for the Automobile Industry and is a Tier One auto components supplier.

OPERATIONS

Your Company has four manufacturing facilities at Bhosari, Chakan - Pune (Maharashtra), Halol (Gujarat) and Pantnagar (Uttarakhand). Your Company’s sales during the year were impacted by lower volumes than expected in the segment in which it predominantly operates. Some of the models under passenger car segment and LCV segment, on which your Company has heavy dependence, recorded drop in volume and this had an adverse effect on sales. Even though, the passenger car production recorded growth of 5.40%, your Company couldn’t achieve corresponding growth since the growth of major customer including anchor customer of your Company happened for models in which your Company is not present. Your Company has been aggressively managing its net working capital and was able to keep it under control.

During FY 2016-17 your Company has received additional resourcing business from its anchor customer in Commercial Vehicle segment and Passenger Vehicle segment. Sales of your Company did not grow as expected due to slower ramp up of new businesses and lower off-take from key customers. The capacity utilization of your Company was therefore low. To minimize the impact of falling volumes and the increase in minimum wages, bonus and energy costs, your Company has taken various cost reduction initiatives as counter measures such as EBITDA and labour efficiency improvement programmes, TPM, to enhance productivity and improve operational efficiency.

Apart from the cost reduction programmes, your Company has been aggressively pursuing new business opportunities in Utility Vehicle segment, Commercial Vehicles Segment and Three Wheeler Segment by targeting greater share of business from existing Customers. Your Company is also participating in new programme launches in LCV segment which will further enhance its share of business in this segment. Your Company is exploring to participate in M & HCV segment by pursuing new business opportunities with major Customers. Your Company plans to build “Centre of Excellence” (COE) for product categories like Rear Twist Beam, Sub frame, Cross Car Beam and fuel tanks in which it has manufacturing capability. Such COE’s will help your Company to get further business in this product category. Your Company plans to move up the value chain by manufacturing modules and aggregates such as fuel tank, Cross Car Beam, closures, bonnets, doors and tailgates. Focus is on resourcing business to avoid ramp up delays and using Company’s existing facilities. Further your Company will also be adding components for non-auto business.

INCOME AND EXPENDITURE

Net Sales increased by 15.70% to Rs, 30,367.74 Lakhs primarily due to increase in Customer volumes in few models leading to higher component, tooling sales and services. Other operating income decreased by 10.30% to Rs, 34.39 Lakhs. Other income mainly consists of interest income of Rs, 40.40 Lakhs, claims of Rs, 98.80 Lakhs, and profit on sale of assets (net) of Rs, 36.51 Lakhs.

Cost of materials consumed (including change in stock) as a percentage to sales decreased by 2.12% to 72.15% because of lower steel prices and change in the product mix. The Management has been taking continuous steps to improve material yield.

Employee expenses increased by 13.76% compared to previous year on account of wage settlements, pay revisions, actuarial valuation etc.

Other Expenses comprising Administration and Selling Expenses have increased to Rs, 3703.49 Lakhs largely due to increase in costs related to rent and leasing, freight and forwarding charges, rates and taxes, power and fuel, packing materials, machinery repairs and maintenance charges.

With the increase in net sales and with the help from initiatives on productivity improvements and cost reduction programmes, your Company achieved EBIDTA of Rs, 273.64 Lakhs as against EBIDTA Rs, 184.34 Lakhs in the previous year. Interest expense was reduced owing to phased repayment of loans.

OPPORTUNITIES AND THREATS - Company’s own technology / processes / system improvement plan:

Your Company is undertaking various new technology initiatives, process up gradation and system enhancements which will further improve the productivity and potential for new businesses from existing and new customers. This will not only enhance the capacity utilization but also broaden the customer base and introduction into new business segments.

- Investment in Technology / Process:

As the automotive market is continually upgrading its technology and processes, your Company is also upgrading its technology to participate in new vehicle programmes launched by Customer.

The auto industry is growing moderately but the major customers of your Company have to regain market position in their respective segments.

The profitability of the Indian Auto Components Industry is likely to continue to be under strain due to pricing pressures from OEMs because of new product launches which has created heightened competitive intensity thereby constraining their pricing flexibility.

SEGMENT-WISE PERFORMANCE

Your Company operates only in the Automobile Component Segment in the Domestic Market.

FUTURE OUTLOOK

According to SIAM, in FY 2017-18 Passenger Vehicle sales are expected to grow between 7-9 % with good monsoon, implementation of GST and continued investment in Infrastructure. However, increase in raw material costs and oil prices may negatively impact sales during the ongoing fiscal. The number of new model launches will also remain low. The Car segment is likely to see more launches compared to Utility Vehicles segment. Improvement in the economic growth and also consumer sentiment is expected. It is expected that factors like lower borrowing costs, pent-up demand after demonetization and a mild budgetary support to incomes will drive consumption growth in FY 2017-18.

In FY 2017-18, Commercial Vehicle segment is likely to see 4-6 % growth. M & HCVs sales will continue to be muted. In FY18, some disruption of sales on account of GST implementation is expected. Advancement of purchases to avoid price rise on account of BS-IV has resulted in slight increase in sales in FY 2016-17, but will hamper sales in 2017-18.LCV sales are likely to increase because of rising private final consumption expenditure and high redistribution freight. Three-wheeler sales are expected to grow around 4-6 %.

While the borrowing costs have reduced, the Company does not expect it to drop further. Demonetization has improved liquidity and there is an improvement in general sentiments for FY 2017-18. The key concerns are increasing commodity prices, high vehicle finance rates and adhoc changes in policy environment which could affect profitability.

As per Reserve Bank of India’s (RBI) forecast, during FY 2017- 18 the overall GDP of the country is expected to grow at a rate of 7.4 % with risks evenly balanced.

RBI has kept the repo rate unchanged at 6.25 % shifting focus to ways to mop up excess cash in the banking system that threatens to stoke inflation. The interest may not drop further given that interest rates in US may harden.

The rapidly globalizing world is opening up newer avenues for the transportation industry, especially while it makes a shift towards electric, electronic and hybrid cars, which are deemed more efficient, safe and reliable modes of transportation. Over the next decade, this will lead to newer verticals and opportunities for auto-component manufacturers, who would need to adapt to the change via systematic research and development.

RISKS AND CONCERNS

Your Company has systems in place to identify, assess, monitor and mitigate various risks to key business objectives. Major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. These are discussed regularly at Audit Committee meetings.

Risks Identified and Mitigating actions:

- Rising input costs: Rising input costs are a risk and hence, your Company has ongoing improvement initiatives like conversion cost reduction, supply chain efficiency improvement and material yield improvement.

- Skill Availability: Your Company focuses on recruitment and in house skill development to address this challenge.

- Concentrated Customer Base:

Your Company has been taking steps to mitigate this risk by business development activities to enhance the customer base and striving to increase share of business with existing customers where Company’s share is low.

STATE OF COMPANY’S AFFAIRS

Discussion on state of Company’s affairs has been covered as part of the Management Discussion and Analysis.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Your Company has developed robust internal control systems by documenting procedures covering financial and operating functions. These systems are providing a reasonable assurance with regard to its financial and operations controls.

Some significant features of the internal control systems are:

- A detailed preparation and subsequent monitoring of both Annual Budgets & Capital Expenditure budgets for all its functions.

- SAP is used for control of all transactions including finance, materials, dispatch, quality, costing etc. across all locations.

- Internal audits are conducted by external auditors and they audit all aspects of business based on audit programmes finalized by the Audit Committee.

- Review of the financial performance by Audit Committee.

RELATED PARTIES

Note No. 35 of the Financial Statements sets out the nature of transactions with Related Parties. Transactions with Related Parties are carried out in the ordinary course of business and at arm’s length. The details of the transactions are tabled before the Audit Committee. Further details on this are explained in the Corporate Governance Report. None of the transactions with related parties falls under the scope of Section 188 (1) of the Companies Act, 2013. Hence, no particulars are being provided in Form AOC-2.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

Pursuant to the provisions of the Companies Act, 2013, and Rules made there under, amended from to time, your Company is not mandatorily required to spend any amount in view of the losses. Your Company has however been undertaking CSR initiatives voluntarily.

CSR Committee constituted in terms of Section 135 of the Companies Act, 2013 monitors the CSR activities undertaken by the Company as per CSR Policy. The CSR Policy has been uploaded on the website of the Company: www.autostampings.com.

The employees from all plants of the Company voluntarily contribute their time by visiting orphanages/ old age homes, schools, etc. to provide some companionship and succor to children and aged people.

Your Company identifies employable local youth and provides training to them under their Skill Development Centre.

ENVIRONMENT, HEALTH AND SAFETY

Your Company is committed to provide a safe, secure and healthy workplace and this has been documented in the Health, Safety and Environment (HSE) policy which is part of the Overarching Wellness strategy of your Company. Your Company has therefore adopted a comprehensive approach to implement this by adopting ‘Total Safety Culture’ concept across its operations. All the Plants of the Company have been certified for EMS 14001 and OHSAS 18001. All plants are especially focused on the wellness initiative.

Your Company has initiated a process for implementation of the British Safety Council (BSC) Certification. All plants have achieved four star ratings. Internal Audits of BSC for health, safety and environment have been conducted at all Plants every quarter and training and awareness initiatives have been undertaken. Health checks and counseling are extended to employees.

During the year, the approach to safety has been further strengthened in all operations of your Company. Regular safety drills and safety audits are conducted at all plants. The requisite training is provided to the employees in Safety.

Your Company has taken initiatives to reduce its carbon footprint by reducing power consumption and selling steel scrap to be reprocessed and sold.

There is a continued focus on tracking of “near miss” incidences which has resulted not only in reduction of reportable accidents but even in first aid injuries and non- reportable accidents. Safety competitions, presentations on safety kaizens, mock drills, etc. are conducted for achieving a safe and healthy work environment.

Your Board of Directors are continually updated on Health, Safety and Environment related matters. QUALITY INITIATIVES

All the manufacturing Plants of your Company are certified under TS 16949 and ISO 14001. Your Company has been implementing the Tata Business Excellence Model to build excellence in its business operations.

DIRECTORS AND KEY MANAGERIAL PERSONNEL - Appointment of Directors

During the year under review, the Board made the following appointments based on the recommendations of Nomination and Remuneration Committee. In compliance with the provisions of Companies Act, 2013, the appointment of following Directors is being placed before the Members in the ensuing Annual General Meeting for their approval.

- Appointment of Mr. Ramnath Mukhija (DIN: 00001653) as an Additional Director designated as Non-Executive and Independent Director of the Board with effect from March 10, 2017 to hold office up to the date of ensuing Annual General Meeting. Pursuant to the provisions of Section 161 of the Companies Act, 2013 and Article 37 of the Articles of Association of the Company, Mr. Mukhija vacates office and is eligible for appointment as Non-Executive, Independent Director of the Company. His appointment will be effective up to retirement age as per the Governance Guidelines adopted by the Board i.e. up to February 4, 2019. As per the provisions of Section 149 of the Act, he will not be liable to retire by rotation. Members are requested to refer to Item No.4 of the Notice of the Annual General Meeting and the Explanatory Statement for details of his qualifications and experience.

- Appointment of Mr. Harish Pathak (DIN: 02426760) and Mr. Bharatkumar Parekh (DIN 01521346) as Additional Directors designated as Non-Executive and Non-Independent Directors of the Board with effect from March 10, 2017 to hold office up to the date of ensuing Annual General Meeting. Pursuant to the provisions of Section 161 of the Companies Act, 2013 and Article 37 of the Articles of Association of the Company, Mr. Pathak and Mr. Parekh vacates office and are eligible for appointment as Non-Executive,

Non- Independent Directors of the Company. Members are requested to refer to Item Nos. 5 and 6 of the Notice of the Annual General Meeting and the Explanatory Statement for details of their qualifications and experience.

The Company has received notice in writing from a Member of the Company proposing the candidature of each of them for the office of Director of the Company under Section 160 of the Companies Act, 2013 along with the requisite deposit.

- Retirement by Rotation and Resignation of Directors

Mr. Deepak Rastogi (DIN: 02317869) retired by rotation and was re-appointed in the 26th Annual General Meeting held on July 25, 2016.

Mr. Ajay Tandon (DIN: 00128667 ) will retire by rotation at the conclusion of the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment.

Mr. Arvind Goel (DIN: 02300813) resigned as Director with effect from March 10, 2017. The Board took on record its sincere appreciation for the valuable contribution made by him during his tenure with the Company.

- Key Managerial Personnel

Pursuant to the provisions of Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company are: Mr. Prashant Mahindrakar, Manager designated as Chief Executive Officer, Mr. Ajay Joshi, Chief Financial Officer and Mr. Ashutosh Kulkarni, Company Secretary.

Mr. Anil Khandekar resigned as a Manager designated as Chief Executive Officer of the Company with effect from January 14, 2017 to pursue his interest elsewhere. The Board placed on record its sincere appreciation for valuable contribution made by him during his tenure with the Company.

Mr. Prashant Mahindrakar was appointed as a Manager designated as Chief Executive Officer of the Company with effect from January 15, 2017. The approval of the Members will be obtained for his appointment and remuneration at the ensuing Annual General Meeting. Members are requested to refer to Item No. 7 of the Notice of the Annual General Meeting and the Explanatory Statement for details.

EVALUATION OF DIRECTORS, THE BOARD & ITS COMMITTEES

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and as per Guidance Note on Board Evaluation issued by SEBI on January 5, 2017, the Board has carried out the annual performance evaluation for FY 2016-17 of (a) its own performance; (b) the Directors individually; and (c) the working of its Committees viz. ‘Audit Committee’, ‘Nomination and Remuneration Committee’, ‘Corporate Social Responsibility Committee’. ‘Finance Committee’ and the ‘Stakeholders Relationship Committee’. The details of evaluation process have been explained in the Corporate Governance Report.

REMUNERATION POLICY

The details of the Remuneration Policy as approved and adopted by Board are stated in the Corporate Governance Report.

POLICY WRT QUALIFICATIONS, ATTRIBUTES AND INDEPENDENCE OF A DIRECTOR

The Company has adopted the Guidelines on Board Effectiveness (“Governance Guidelines” or “guidelines”) which inter-alia cover the criteria for determining qualifications, attributes and independence of a Director. The details of the Policy are stated in the Corporate Governance Report.

DECLARATION BY INDEPENDENT DIRECTORS

The Company has received necessary declarations from all the Independent Directors under Section 149 (7) of the Companies Act, 2013 that they meet the criteria of independence laid down in Section 149 (6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

BOARD AND COMMITTEE MEETINGS

The details of Board and Committee meetings held during the year are given in the Corporate Governance Report.

CHANGE IN THE NATURE OF BUSINESS

During the year under review, there has been no change in the nature of business of the Company.

MATERIAL CHANGES AND COMMITMENTS, IF ANY AFFECTING FINANCIAL POSITION OF THE COMPANY

There are no adverse material changes or commitments occurring after March 31, 2017 which may affect the financial position of the Company or may require disclosure.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There are no significant or material orders passed by the Regulators / Courts which would impact the future operations / going concern status of the Company.

PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS

There are no loans, guarantees or investments made by Company under Section 186 of the Companies Act, 2013.

DEPOSITS

The Company has not accepted deposits under Chapter V of the Companies Act, 2013. CORPORATE GOVERNANCE

In terms of Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations,

2015, the Report on Corporate Governance along with the Certificate of Compliance from the Auditors forms part of this Report.

DIRECTORS’ RESPONSIBILITY STATEMENT

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory and secretarial auditors including audit of internal financial controls over financial reporting by the Statutory Auditors and the reviews performed by the Management and the relevant Board Committees including the Audit Committee, the Board is of the opinion that the Company’s internal financial controls were adequate and effective during the financial year 2016-17.

Accordingly, pursuant to Section 134 (3) (c) and 134 (5) of the Companies Act, 2013, the Board of Directors to the best of their knowledge and ability, confirm that:

1. in the preparation of the annual financial statements for the year ended March 31, 2017, the applicable accounting standards have been followed and there are no material departures;

2. accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017 and of the loss of the Company for the year ended on that date;

3. proper and sufficient care have been taken for the maintenance of accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company, for preventing & detecting fraud and/or other irregularities;

4. the annual accounts have been prepared on a going concern basis;

5. internal financial controls have been laid down by the Company and that such internal financial controls are adequate and are operating effectively; and

6. proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed as Annexure I to this Report.

EXTRACT OF ANNUAL RETURN

Pursuant to Section 92 (3) of the Companies Act, 2013 and Rule 12 (1) of Companies (Management and Administration) Rules, 2014, the extract of Annual Return in Form MGT-9 is annexed as Annexure II to this Report.

PERSONNEL

At the end of March, 2017, your Company had 584 employees (excluding trainees and apprentices) as compared to 636 employees as on March 2016.

Your Company accords high importance in building and sustaining healthy employee engagement with the aim of achieving competitive productivity and harmonious work environment. The industrial relations during the year was remained peaceful. Your Company has been organizing “ASAL Premier League” consistently from last 3 years under Sport & Cultural Activity. With a view to ensure prompt resolution of employee’s grievances, various Committees have been set up under the capable Chairmanships which are guided by Functional Heads / Department Heads e.g. Works Committee, Health, Safety and Environment Committee, Prevention of Sexual Harassment Committee (POSH) etc. The functioning of these Committees are regularly reviewed by the Management and the Board is also updated regularly. During the year, the Employee Engagement Survey has been carried out which had shown significant improvement from 37% in year 2013 to 91% in year 2016.

Your Company has formed HR help desk initiative to resolve grievances/day to day issues of employees within time bound manner. This results in maintaining transparent culture and help to increase satisfaction level of the employees. During the year, your Company received “Best HR Practices Award” from Vibrant HR, Pune.

During the year, your Company has signed a ‘Long Term Wage Settlement Agreement’ with workers union of Chakan plant which is unique and historical in many ways. Considering the competitive market scenario, it has become essential to have substantial improvement in the productivity on the shop floor. Your Company has been implementing TPM, WCSQ, Kaizen and other various systems to improve overall performance of all plants.

Information required under Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is set out in

Annexure III to this Report.

Information required under Section 197(12) of the Companies Act, 2013 read with Rule 5 (2) (i) to (iii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is not given since there is no employee who received remuneration in excess of the limits prescribed therein.

The information required under Rule 5(2) and (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in the Annexure forming part of the Report. In terms of the first proviso to Section 136 of the Companies Act, 2013 the Report and Accounts are being sent to the Members excluding the aforesaid Annexure. Any Members interested in obtaining the same may write to the Company Secretary at the Registered Office of the Company. None of the employee listed in the said Annexure is related to any Director of the Company.

POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT WORKPLACE

Your Company has adopted a Policy on Prevention, Prohibition and Redressal of Sexual Harassment at the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. Your Company has also constituted an Internal Complaints Committee, known as the Prevention of Sexual Harassment (POSH) Committee, to inquire into complaints of sexual harassment and recommend appropriate action.

Your Company has not received any complaint of sexual harassment during the financial year 2016

17.

RISK MANAGEMENT

The details of Risk Assessment framework are set out in the Corporate Governance Report forming part of the Board’s Report.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

Your Company has adopted a vigil mechanism. The details of the same are explained in the Corporate Governance Report and also posted on the website of the Company.

NAMES OF THE COMPANIES WHICH HAVE BECOME / CEASED TO BE SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR

Your Company did not have any subsidiaries, associates or joint ventures during the year.

AUDITORS 1. Statutory Auditors:

The Statutory Auditor Price Waterhouse, Chartered Accountants, firm Registration No. 301112E hold office till the conclusion of ensuing Annual General Meeting of the Company.

In accordance with the provisions of Section 139 of the Companies Act, 2013, B S R & Co. LLP, Chartered Accountants (BSR) (Firm Registration No. 101248W/W-100022) are proposed to be appointed as Statutory Auditors for a period of 5 years from FY 2017-18 to hold such office from the conclusion of this 27th AGM till the conclusion of the 32nd AGM of the Company to be held in the FY 2022-23, subject to ratification of their appointment at every AGM, if so required under the Companies Act, 2013.

Your Company has received consent for such appointment and a Certificate prescribed under Section 141 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014 from B S R & Co. LLP, Chartered Accountants to the effect that their appointment, if made is within the prescribed limits under the Companies Act, 2013 and that they are not disqualified. Members are requested to consider the appointment of the Statutory Auditors and authorize the Board of Directors to fix their remuneration.

2. Secretarial Auditors:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed SVD & Associates, Company Secretaries for conducting Secretarial Audit of the Company for FY 2016-17. The Report of the Secretarial Audit is annexed herewith as Annexure IV to this Report.

Based on the Audit Committee recommendations, the Board has approved re-appointment of SVD & Associates, Company Secretaries for conducting the Secretarial Audit for FY 2017-18.

The Auditors’ Report and the Secretarial Audit Report for the year ended March 31, 2017 do not contain any qualification, reservation and adverse remark.

AWARDS AND RECOGNITION

During the year, your Company received the “Best Supplier - Delivery 2016 Award” from Tata Motors Limited and the “Certificate of Appreciation” from National Safety Council, India for “Meritorious Performance in Safety” in Manufacturing Sector.

FORWARD LOOKING STATEMENTS

Certain statements describing the Company’s Estimates, Projections, Expectations, Future Outlook, Industry Structure and Developments may be construed “forward-looking statements” within the meaning of applicable laws and regulations. Actual results may differ materially from those either expressed or implied in this Report.

ACKNOWLEDGEMENTS

Your Directors place on record their sincere thanks and appreciation for the confidence reposed and continued support extended by Central and State Governments, Bankers, Customers, Suppliers and Members. Your Board would like to place on record its sincere appreciation to the employees for the dedicated efforts and contribution in playing a very significant part in the Company’s operations.

For and on behalf of the Board of Directors

Pradeep Mallick

Chairman

Place: Pune

Date: May 22, 2017

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