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.
(Rs. in Lakhs)
Particulars Financial Year
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)
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
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
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.
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
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
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
* 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
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
The Company operates only in the Automobile Component Segment in the
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
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
* Internal audits are conducted by external auditors and they audit all
aspects of business, based on audit programmes finalised by the Audit
* Review of the financial performance by Audit Committee.
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
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
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
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.
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
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.
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
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.
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
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
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.
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
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
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.
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.
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
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
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
Pune, April 22, 2015 Chairman