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Automotive Stampings and Assemblies Directors Report, Auto Stampings Reports by Directors
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Automotive Stampings and Assemblies
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Directors Report Year End : Mar '15    « Mar 14
Dear Members,
 
 The Directors take pleasure in presenting the Twenty Fifth Annual
 Report together with the Audited Financial Statement of your Company
 for the year ended March 31, 2015. The Management Discussion and
 Analysis forms part of the Report.
 
 FINANCIAL RESULTS
 
 
                                                      (Rs. in Lakhs)
 
 Particulars                                          Financial Year
 
                                                 2014-15         2013-14
 
 
 Revenue from Sale of Products (Net)           28,864.98       33,757.54
 
 Other Operating Revenue                          185.14          408.60
 
 Other Income                                       4.68           12.07
 
 Total Revenue                                 29,054.80       34,178.21
 
 Cost of Materials Consumed (including 
 change in inventories)                        22,608.91       26,009.49
 
 Employee Benefit Expense                       4,073.56        4,043.21
 
 Other Expenses                                 3,016.26        3,147.27
 
 Earnings / (Loss) before Depreciation, 
 Financial Charges and Tax                      (643.93)          978.24
 
 Interest Expense 824.35 663.56
 
 Depreciation and Amortization Expense            968.90        1,519.97
 
 Profit / (Loss) before Tax                   (2,437.18)      (1,205.29)
 
 Tax Expense / (Credit)                         (120.09)        (376.00)
 
 Profit / (Loss) for the year                 (2,317.09)        (829.29)
 
 DIVIDEND
 
 Due to the loss during the year, the Board of Directors has not
 recommended a dividend.
 
 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 realise 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.
 
 The Auto Components Industry has been impacted during the year due to
 economic slowdown of the industry in general and particularly, the
 automobile industry.
 
 The chart below shows the sales of various categories of vehicles
 during FY 2014-15 compared to FY 2013-14:
 
 
 Segment                          2014-15          2013-14        Growth
 
 
 Passenger cers                 1,876,012        1,286,226         4.99%
 
 Utility vehicles                 553,699          525,839         5.30%
 
 Vans                             171,395          190,844     - 1 0.19%
 
 3 -wheelers                      531,927          490,085        10.80%
 
 Medium & Heavy commercial 
 vehicles ( M & HCVc)             252,755          250,618        16.02%
 
 Light commercial vehicles 
 (LCVs)                           382,206          432,233      - 11.57%
 
 
                                                     Source: SIAM report
 
 
 The Indian Auto Components Industry has also been facing its most
 formidable challenge to maintain volumes as well as 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''s sales during the year were impacted by lower volumes 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 sharper drop in volume and this had a very
 adverse effect on sales. Even though, the passenger car segment
 recorded growth of 4.99%, your Company couldn''t achieve corresponding
 growth since the anchor customer of your Company recorded a negative
 growth.
 
 Consequently, your Company could not utilize its capacity fully In
 addition, the frequent fluctuations in demand during the financial year
 2014-15 have made planning for other resources difficult.
 
 To minimise the impact of falling volumes and increasing input costs,
 your Company launched a number of containment actions and cost
 reduction drives as counter measures such as EBITDA improvement
 initiatives to enhance internal efficiencies and improve operational
 excellence. Apart from the cost reduction programmes, the Company has
 been aggressively pursuing new business opportunities. These
 initiatives will have a positive impact on volumes, margins and overall
 performance on a sustained basis in the future.
 
 INCOME AND EXPENDITURE
 
 Sales dropped by 14.49% to Rs. 28,864.98 Lakhs primarily due to lower
 volume and reduction in sales of tools, dies and moulds.
 
 Other Operating Revenue which mainly comprises income from job work,
 reduced by 54.69% to Rs. 185.14 Lakhs.
 
 Other Income, which mainly consists of interest on deposits, gain on
 exchange fluctuations and profit on sale of assets, reduced by 61.23%
 to Rs. 4.68 Lakhs. The prime reason for this was a loss caused by
 exchange fluctuations in the year under review against a gain in the
 previous year.
 
 Cost of materials consumed (including change in stock) as a percentage
 to sales increased by 1.28% to 78.33% because of change in the product
 mix due to lower volume of LCVs. The Management has been taking
 continuous steps to improve control over material utilisation.
 
 Employee expenses have remained almost at the same level as in the
 previous year since the effect of productivity improvements done was
 offset by the salary increases.
 
 Other Expenses comprising Manufacturing, Administration and Selling
 Expenses reduced by 4.16% to Rs. 3,016.26 Lakhs due to reduction in
 Sales volumes and implementation of EBITDA improvement programmes.
 However, the reduction was partly offset by the increase in expenses on
 Repairs and maintenance.
 
 The Loss before Depreciation, Financial Charges and Tax was Rs. 643.93
 Lakhs as against Earnings before Depreciation, Finance Costs and Tax of
 Rs. 978.24 Lakhs in the previous year.
 
 Interest expense increased by 24.23% to Rs. 663.56 Lakhs due to
 increase in borrowings.
 
 Depreciation and amortization expense have reduced due to revision in
 the estimated useful lives of fixed assets, primarily plant and
 machinery, effective April 1, 2014 pursuant to the provisions of the
 Companies Act, 2013.
 
 OPPORTUNITIES AND THREATS
 
 * Investment in Technology:
 
 As the automotive market is continually upgrading its technology, your
 Company is also upgrading its technology to participate in new vehicle
 programmes.
 
 * Companies'' own technology improvement plan:
 
 Your Company is undertaking various new technology initiatives which
 will further improve the potential for new businesses from existing and
 new customers.
 
 The rural market is also facing a slowdown because of the impact of
 unseasonal rains that have hit the agricultural sector. Slowdown in
 industrial activity and modest income growth have been the key growth
 retarders over the past few years. 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
 
 The Company operates only in the Automobile Component Segment in the
 Domestic Market.
 
 FUTURE OUTLOOK
 
 The industry is expected to benefit from lower fuel costs and softening
 of interest rates that would ideally help in replacements in the
 automotive sector. It is likely that the hatchback segment will see a
 visible growth as first-time buyers prefer new cars to two-wheelers or
 used cars.
 
 The medium and long term outlook remains positive for the automotive
 sector and consequently, the auto component sector. This confidence is
 based on strong sector fundamentals which include low incidence of
 vehicle penetration in the country, projected high rate of GDP growth
 for the Indian economy, huge investments being made by the Government
 in infrastructure along with migration of middle class population to
 urban areas with aspirations for better living standards.
 
 RISKS AND CONCERNS
 
 * Rising input costs:
 
 The rising input cost is a cause for concern which, unless controlled,
 will impact sales and also erode margins.
 
 * Skill Availability:
 
 In some of the locations of our operations, sourcing of skilled labour
 is an issue which may create challenges for future growth.
 
 * Concentrated Customer Base:
 
 Concentrated OEM and limited product portfolio make the component
 manufacturers vulnerable to the vagaries of business cycles.
 
 Your Company has been taking steps to mitigate the risks by creating a
 state of internal readiness to seize opportunities that unfold and
 continues to explore new business opportunities.
 
 INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
 
 Your Company has developed a robust internal control systems by
 documenting procedures covering financial & operating functions. These
 systems are providing a reasonable assurance with regard to its
 financial & 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.
 
 * Implementation of ERP (SAP) for online 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 finalised by the Audit
 Committee
 
 * Review of the financial performance by Audit Committee.
 
 RELATED PARTIES
 
 Note 24 of the Accounts sets out the nature of transactions with
 related parties. Transactions with Related Parties are carried out in
 the ordinary course of business and at the 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.
 
 CORPORATE SOCIAL RESPONSIBILTY (CSR)
 
 Pursuant to the provisions of the Companies Act, 2013, your Company is
 not mandatorily required to spend any amount on this account in view of
 the losses. Your Company has however been undertaking CSR initiatives
 voluntarily.
 
 Your Company has constituted a Corporate Social Responsibility
 Committee in terms of section 135 of the Companies Act, 2013. The
 Committee has formulated a CSR Policy to be undertaken by your Company
 covering the activities specified in the Act. The 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 succour to the needy 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. The Pune plants are
 especially focused on the wellness initiative.
 
 Your Company has initiated a process for implementation of the British
 Safety Council (BSC) Certification.  Internal Audits have been
 conducted at all Plants and training and awareness initiatives have
 been undertaken.
 
 During the year, the approach to safety has been further strengthened
 in all operations of your Company.  Regular safety drills and safety
 audits are continued at all plants. The requisite training is provided
 to the employees in Safety. HSE audits are carried out every quarter
 and health checks & counseling are extended to employees.
 
 Your Company has adopted Grey to Green climate change policy 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 & 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
 
 Mr. Arvind Goel will retire by rotation at the conclusion of the
 forthcoming Annual General Meeting and being eligible, has offered
 himself for re-appointment.
 
 EVALUATION OF DIRECTORS, THE BOARD & ITS COMMITTEES
 
 Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of
 the Listing Agreement, the Board has carried out the annual performance
 evaluation for FY 2014-15 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
 
 On the recommendation of the ''Nomination and Remuneration Committee'',
 the Board has approved and adopted a Remuneration Policy. The details
 of the Policy 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) and Clause 49 of the Listing Agreement.
 
 BOARD AND COMMITTEE MEETINGS
 
 The details of Board and Committee meetings held during the year are
 given in the Corporate Governance Report.
 
 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.
 
 CORPORATE GOVERNANCE
 
 In terms of Clause 49 of the Listing Agreement with the Stock
 Exchanges, the Report on Corporate Governance, along with the
 Certificate of Compliance from the Auditors, forms a 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 and the reviews
 performed by 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 2014-15.
 
 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, 2015, 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, 2015 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 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 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, 2015, your Company had 636 employees (excluding
 trainees and apprentices) as against 661 in March, 2014.
 
 Your Company accords high importance to building and sustaining healthy
 industrial relations with the aim of achieving competitive productivity
 & cordial work environment. The industrial relations have remained
 harmonious. With a view to ensure prompt resolution of employee
 grievances, various Committees have been set up under the Chairmanship
 of Functional Heads / Department Heads e.g. Works Committee, Health,
 Safety and Environment Committee, Prevention of Sexual Harassment
 Committee, etc.
 
 The functioning of these Committees is regularly reviewed by the
 Management and the Board is also updated regularly.
 
 During the year, your Company has signed a long term productivity
 linked wage agreement at Halol plant.  Considering the competitive
 market scenario, it has become essential to substantially improve the
 productivity on the shop floor. Your Company has been implementing TACO
 Productivity Management System (TPMS) on the principles of Maynard
 Operation Sequence Technique (MOST) to improve productivity, resulting
 in rationalisation / reduction in manpower in all the Plants.
 
 The Information required under section 197(12) read with Rule 5 of
 Companies (Appointment and Remuneration of Managerial Personnel) Rules,
 2014 is set out in Annexure III to this Report.
 
 There was no employee of the Company who received remuneration in
 excess of the limits prescribed under Section 197 of the Companies Act,
 2013, read with Rule 5 (2) and (3) of Companies (Appointment and
 Remuneration of Managerial Personnel), Rules, 2014.
 
 POLICY ON PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT AT
 WORKPLACE
 
 The 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. The 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.
 
 The Company has not received any complaint of sexual harassment during
 the financial year 2014-15.
 
 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
 
 The 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.
 
 AUDITORS
 
 1.  Statutory Auditors:
 
 M/s. Price Waterhouse, Chartered Accountants (Firm Reg. No. 301112E)
 will retire at the conclusion of the ensuing Annual general meeting of
 your Company as Statutory Auditors and being eligible, offer themselves
 for re-appointment. Your Company has received a certificate, confirming
 that if re-appointed, their re-appointment will be in accordance with
 Section 139 read with Section 141 of the Act. Members are requested to
 consider the re-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 M/s. SVD &
 Associates, Company Secretaries for conducting Secretarial Audit of the
 Company for FY 2014-15. 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 M/s. SVD & Associates, Company Secretaries for
 conducting the Secretarial Audit for FY 2015-16.
 
 The Auditors'' Report and the Secretarial Audit Report for the year
 ended March 31, 2015 do not contain any qualification and adverse
 remark.
 
 AWARDS AND RECOGNITION
 
 Your Company received ''Supplier Quality Excellence Award'' from General
 Motors, India and ''Overall Performance Award'' from Tata Motors Limited.
 
 FORWARD LOOKING STATEMENTS
 
 Certain statements describing the Future Outlook, Industry Structure
 and Developments may be construed forward-looking statements within
 the meaning of applicable securities laws and regulations. Actual
 results may differ materially from those 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 Shareholders.
 
 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
 Pune, April 22, 2015                        Chairman
Source : Dion Global Solutions Limited
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