To the Members,
The Directors have the pleasure in presenting the 37th Annual Report on the business and operations of your Company together with the Audited Statements of Accounts for the financial period ended March 31, 2018:
(Rs. in million)
Profit before depreciation & tax
Less : Depreciation, amortization & Loss on assets discarded
Profit for the year after tax
Other comprehensive income for the year, net of tax
Total comprehensive income for the year
Balance of Profit from Previous Year
Dividend Distribution tax on Dividend
Profit available for appropriation
Indian Accounting Standards
The Ministry of Corporate Affairs (MCA), vide its notification dated February 16, 2015, notified the Indian Accounting Standards (Ind AS) applicable to certain classes of companies. Ind AS has replaced the existing Indian GAAP prescribed under Section 133 of the Companies Act, 2013, read with Rule 7 of the Companies (Accounts) Rules, 2014. Being applicable, the Company has adopted Ind AS from April 1, 2017 and accordingly, the transition was carried out, from the Indian GAAP as specified under Section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014 (previous GAAP) to Ind AS 101 “First time adoption of Indian Accounting Standards”.
The impact of transition has been recorded in opening reserves as at April 1, 2016 and the periods presented have been restated / reclassified. The reconciliation and descriptions of the effect of the transition from Indian GAAP to Ind AS have been provided in [Note 39 to 41] in the notes to accounts in the standalone and consolidated financial statements.
The Board, at its meeting held on May 8, 2018, is pleased to recommend a dividend of Rs.13.50/- per Equity Share of the face value of Rs.10/- each for the financial year ended March 31, 2018 subject to the approval of shareholders at the ensuing Annual General Meeting to be held on Monday, 13th August, 2018.
The total amount of Dividend aggregates to Rs.204.01 million, excluding Dividend Distribution Tax.
The register of members and share transfer books will remain closed from August 4, 2018 to August 13, 2018 (both days inclusive) for the payment of final dividend to the shareholders of the Company, for the year ended on March 31, 2018.
The Dividend will be paid to members within 30 days from the date of declaration of dividend to the Members whose names appear in the Register of Members as on August 3, 2018.
Transfer of unpaid or unclaimed amount to Investor Education and Protection Fund (IEPF)
Pursuant to provisions of the Companies Act, 2013, the declared dividends, which remained unpaid or unclaimed for a period of seven years, shall be transferred by the Company to the Investor Education and Protection Fund (IEPF) established by the Central Government.
Pursuant Section 124(6) of the Companies Act, 2013 read with Investor Education and Protection Fund Authority (Accounting , Audit, Transfer and Refund) Rules, 2016 as amended, all shares in respect of which dividend has not been paid or claimed for seven consecutive years or more, shall be transferred by the Company to the IEPF.
Accordingly, the Company has sent notice to the respective shareholders who have not claimed their dividend for seven consecutive years or more and the newspaper advertisement stating the same has been published in the newspapers.
In terms of the provisions of the Companies Act, 2013 and Investor Education and Protection Fund Authority (Accounting , Audit, Transfer and Refund) Rules, 2016 a sum of Rs.374,757/- which is unpaid/unclaimed dividends pertaining to the FY 2009-10 was transferred to the Investor Education and Protection Fund during the year.
The list of equity shareholders whose shares are transferred to IEPF can be accessed on the website of the Company at below mentioned link: www.autoaxle.com/Annual_reports. aspx under the head IEPF Transfers
Performance of the Company
The total income for the financial year under review was Rs.15,580.63 Million as against Rs.13,039.92 Million for the previous financial year. The Profit before tax (PBT) was Rs.1278.17 Million and the Profit after tax (PAT) was Rs.839.32 Million for the financial year under review, as against Rs.750.13 Million and Rs.494.18 Million respectively for the previous financial year.
The paid up Equity Share Capital as on March 31, 2018 stood at Rs.151.12 Million. During the year under review, the Company has not issued shares with differential voting rights nor has granted any stock options nor sweat equity.
Your Company has not accepted any deposits under Chapter V of the Companies Act, 2013 during the year.
Transfer to Reserve
The company has not proposed any amount to be transferred to the General Reserve.
The equity shares of the Company are listed with BSE Limited and National Stock Exchange of India Limited. There are no arrears on account of payment of listing fees to the Stock Exchanges.
Directors & Key Managerial Personnel:
As on March 31, 2018 there were seven (7) Directors on the Board of your Company, consisting of four (4) Independent Directors, one (1) Executive Director and two (2) NonExecutive Directors of whom one is the Chairman..
Mr. Chrishan Anton Sebastian Villavarayan (DIN: 03020467) was appointed as an Additional Director of the Board based on nomination received from the Meritor Heavy Vehicle System LLC, one of the promoters, and also on the recommendation of Nomination & Remuneration Committee of the Company, in place of Mr. Joseph A Plomin (DIN: 06739214) who resigned from the Board, with effect from January 31, 2018. The Board places its appreciation for Mr. Plomin’s valuable contributions during his tenure. Mr. Villavarayan holds the office upto the ensuing Annual General meeting and his appointment is being sought to be regularised at the ensuing Annual General Meeting.
Mr. Satish Sekhri (DIN: 00211478) has resigned from directorship with effect from February 13, 2018. The Company has, on the recommendation of Nomination & Remuneration Committee and in accordance with provisions of the Act and Securities and Exchange Board of India (Listing Obligations and Disclosure requirements) Regulations, 2015, appointed Mr Rakesh Kalra (DIN: 00780354) as Additional and Independent Director, for a tenure of 5 years on February 13, 2018, subject to approval of Members at the forth coming Annual General Meeting (AGM) of the Company. He shall hold office as Additional Director upto the date of the AGM and is eligible for appointment as Director.
In terms of the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Dr. Narayanaswamy Muthukumar, President & Whole Time Director of the Company retires by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment.
Ms. Thejeshwini. N, Company Secretary resigned from her office with effect from 18th August, 2017 and Mr. Debadas Panda has been appointed as Company Secretary of the Company with effect from 18th August, 2017.
Declaration by Independent Directors
The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence and that there has been no change in the circumstances which may affect their status as independent director during the year as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure requirements) Regulations, 2015.
The Companies Act, 2013 states that a formal Annual Evaluation needs to be made by the Board of its own performance and that of its committees and individual Directors. Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, mandates that the Board shall monitor and review the Board evaluation framework. Pursuant to these provisions, the Company has developed a framework for the Board evaluation. The framework includes evaluation on various parameters such as information flow, Board dynamics, decision making, company performance and strategy, Board and committee’s effectiveness and peer evaluation.
The evaluation of all the Directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board.
During the year 2017-18, Independent Directors met on February 13, 2018, discussed and reviewed the below:
o Performance of Non Independent Directors o Performance of the Chairman o Performance of the Board Committees o Discussed on the quality, quantity and timeliness of flow of information between the Company management and the Board Members. o Overall performance of the Company.
Familiarization programme for the Board Members
Your Company has in place a structured induction and familiarization programme for all its Directors including Independent Directors and new appointee(s) to the Board. Through such programs, the Directors are briefed on the background of your Company, their roles, rights, responsibilities, nature of the industry in which it operates, business model operations, ongoing events etc.
The Board members are provided with the necessary documents, brochures, reports and internal policies to enable them to familiarize with the Company’s procedure and practice.
Periodic presentations are made at the Board Meetings, Board Committee Meetings and Independent Directors Meetings on business and overall performance updates of the Company, business strategy and risk involved.
The details of programs for Familiarization for Independent Directors are posted on the website of the Company and can be accessed at: www.autoaxle.com/Directors.aspx
Directors’ Responsibility Statement
Pursuant to the requirements under Section 134(5) of the Companies Act, 2013 with respect to Directors’ Responsibility Statement, your Directors make the following statements:
(a) i n the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures if any;
(b) we have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company as at March 31, 2018 and of the profit of the company for the year ended on that date;
(c) we have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(d) we have prepared the annual accounts on a going concern basis;
(e) we 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) we have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Auditors & Auditors’ Report
a. Statutory Auditors
At the 36th Annual General Meeting of the Company held on 18th August, 2017, M/s. S R Batliboi & Associates LLP, Chartered Accountants [Firm Registration No.: 101049W/E300004], were appointed as Statutory Auditors to hold office upto the conclusion of the 41st Annual General Meeting of the Company subject to ratification of appointment at every Annual General Meeting. However, the Companies (Amendment) Act, 201 7, published in the Gazette of India on January 3, 2018, omitted first proviso to Section 139(1) of Companies Act 2013, which provided for ratification of appointment of Statutory Auditors by members at every AGM which has been effective from May 7, 2018.
In view of the above, the Board of Directors of the Company have proposed to ratify the appointment of Statutory Auditors and recommended to continue their appointment for the period of four years commencing from the conclusion of this AGM, till the conclusion of 41st AGM, without seeking any further ratification of their appointment from members at the ensuing AGMs.
The Notes on financial statement referred to in the Auditors’ Report are self-explanatory and do not call for any further comments. The Auditors’ Report does not contain any qualification, reservation or adverse remark.
Further, no frauds have been reported by the Auditors in their reports.
b. Internal Auditor
The Audit Committee and the Board of Directors recommend for the re-appointment of M/s. Pricewaterhouse Coopers Pvt. Ltd. as Internal Auditors of the Company for the Financial Year 2018-19.
c. Secretarial Auditor
Pursuant to the provisions of the Section 204 of the Companies Act, 2013 and the rules made there under and based on the recommendations of the Audit Committee, CS Pracheta M, Practicing Company Secretary has been appointed to conduct Secretarial Audit of the Company’s secretarial and other related records for the Financial year 2017-18.
The Secretarial Audit Report for the financial year ended March 31, 2018 in form MR-3 is appended to this report under Annexure - A
Explanation for observations made by the Company Secretary in practice:
Explanation for observation under clause no. (a) of the Secretarial Audit Report please refer to the reason for ‘part of CSR Amount Un-spent’ mentioned in Annexure - G attached to this report.
Explanation for observation under clause no. (b) of the Secretarial Audit Report: Company has good systems and practices for compliances under the Companies Act, 2013 and the Secretarial Standards. During the year Company has met with all the compliance requirements and its process except for few suggestions on improvement on current procedural requirements and henceforth which would be taken care with.
Internal Financial Control
The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Company’s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.
During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.
Corporate Governance is about maximizing the value and to ensure fairness to all its shareholders. Your Company is renowned for its exemplary governance standards and believe that sound corporate governance is critical to enhance and retain investor trust. Your Company ensures that performance is driven by integrity.
The Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 have strengthened the governance regime in the country and your Company is in compliance with the governance requirements provided under the law both in letter and spirit. The Board also exercises its fiduciary responsibilities in the widest sense of the term.
Your Company has in place all the statutory committees required under the law. Details of the Board Committees along with their terms of reference, composition and meeting of the Board and its Committees held during the year are provided in the Corporate Governance Report which is presented in a separate section forming part of the Annual Report.
A Certificate from an Independent Practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Regulation 34(3) Schedule V (E) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 is attached to the Corporate Governance Report.
Meetings of the Board
During the financial year, the Board met four times, details of which are provided in the Corporate Governance Report. The maximum interval between any two meetings did not exceed 120 days as prescribed under the Companies Act, 2013.
Committees of the Board
Your Company has the following committees which have been established as a part of the corporate governance practices and are in compliance with the requirements of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015.
- Audit Committee
- Nomination and Remuneration Committee
- Stakeholders Relationship Committee
- Corporate Social Responsibility Committee
- Risk Management Committee
The details with respect to the compositions, roles, number of meetings held during the year is detailed in the corporate governance report of the Company, which forms a part of this Board’s Report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are appended as Annexure - B to this report.
Particulars of Remuneration of Directors & certain specified employees:
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5 of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, the ratio of remuneration of each Director to the median of the employees’ remuneration, a statement containing the names of top ten employees in terms of remuneration drawn and every employee who is employed throughout the financial year and was in receipt of a remuneration of Rs.102 lacs per annum or more and of every employee who is employed part of the financial year, was in receipt of remuneration of Rs.8.50 lacs or more per month is appended as Annexure - C.
Extract of Annual Return 2017-18
The detail forming part of the extract of Annual Return in MGT-9 is appended as Annexure - D to this report.
Particulars of Loans, Guarantees or Investment under section 186 of the Companies Act, 2013
Particulars of loans covered under section 186 of the Companies Act, 2013 form part of the notes to the financial statement provided in this Annual Report. These loans are primarily granted for furtherance of business of the borrowing companies.
Your Company has not given any guarantee or provided any security in connection with a loan to any other body corporate or persons and has not made any investment in the securities of any other body corporate.
Policy on Directors’ Appointment & Remuneration
The current policy is to have an appropriate mix of executive and independent directors to maintain the independence of the Board and separate its functions of governance and management. On March 31, 2018, the Board consisted of seven members, one of whom is executive or whole-time director, two are non executive directors and four are independent directors out of whom one is Independent Woman Director.
The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management Personnel and their remuneration.
The Nomination and Remuneration policy is appended as Annexure - E to this report.
Particulars of contracts or arrangements with Related Parties (RPT)
The related party transactions that were entered into during the financial year were in the ordinary course of business and on the arm’s length basis.
All related party transactions are placed before the Audit Committee and also the Board for approval. Prior omnibus approval of the Audit Committee is obtained on a yearly basis for the transactions, which are foreseen and of repetitive nature.
For transactions with Meritor HVS (India) Limited, the Company has obtained shareholders’ approval at their 33rd Annual General Meeting held on February 5, 2015 for transaction value annually of Rs.25,000 Million p.a for a period of five (5) financial years starting from October 1, 2014.
Further, all transactions entered into pursuant to the omnibus approval so granted are reviewed and a statement giving details of all related party transactions is placed before the Audit Committee and the Board of Directors for their approval on a quarterly basis.
In accordance with the requirements of the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 your Company has formulated a Policy on Related Party Transactions which is also available on Company’s website at www.autoaxle.com/Policy.aspx.
Related Party disclosures as per Indian Accounting Standards (Ind AS)-24 have been provided in Note No. 34 to the financial statement.
The particulars on RPTs in AOC 2 is annexed to the Report as Annexure - F
Risk Management System
The Company has a robust risk management framework comprising risk governance structure and defined risk management processes. The risk governance structure of the Company is a formal organisation structure with defined roles and responsibilities for risk management.
The processes and practices of risk management of the Company encompass risk identification, classification and evaluation. The Company identifies all strategic, operational and financial risks that the Company faces, by assessing and analysing the latest trends in risk information available internally and externally and using the same to plan for risk activities.
The Company has set up a Risk Management Committee to review the risks faced by the Company and monitor the development and deployment of risk mitigation action plans and the status is updated to the members of the Audit Committee and the Board of Directors on quarterly basis.
Corporate Social Responsibility (CSR):
The Company has been carrying out various Corporate Social Responsibility (CSR) activities. These activities are in terms of section 135 read with Schedule VII of the Companies Act, 2013 and Companies (Corporate Social Responsibility Policy) Rules, 2014. During the year the Company has spent Rs.7.13 Million on various CSR activities.
The Annual Report on CSR activities that includes details about the CSR policy developed and implemented by the Company and CSR initiatives taken during the year is appended to the Report as Annexure - G.
State of Company’s Affairs
Discussion on state of Company’s affairs has been covered as part of the Management Discussion and Analysis (MDA). MDA for the year under review, as stipulated under Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of the Annual Report.
Management Discussion and Analysis Report
Pursuant to Regulation 34(2)(e) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report.
Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors have formulated a Whistle Blower Policy which is in compliance with the provisions of Section 1 77 of the Companies Act, 2013 and Regulation 22 of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirement) Regulations, 2015. Under the policy, the Directors and Employees are free to report any violation of the applicable laws and regulations and the code of conduct of the Company. The reportable matters are to be disclosed to the Audit Committee. During the year under review, the Company has not received any complaints under the said mechanism.
Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
Your Company has always believed in providing a safe workplace for every individual working in Company’s premise through various interventions and practices. The Company always endeavours to create and provide an environment that is free from discrimination and harassment including sexual harassment.
In terms of provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated a Policy to prevent Sexual Harassment of Women at Workplace. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Significant and Material Orders
No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future.
Material Changes and Commitments, if any, affecting the Financial Position of the Company
There were no adverse material changes or commitments occurred after March 31, 2018 which may affect the financial position of the Company or may require disclosure.
Subsidiaries, Joint Ventures and Associates
Your Company does not have any subsidiary, joint venture nor any associates.
Change in the nature of business
There is no change in the nature of business of your Company.
The Company has complied with the applicable secretarial standards. The improvements suggested by the Secretarial auditor shall be implemented in the ensuing year.
Awards and Recognition
During the year 2017-18, your Company was conferred with awards and recognition as listed below:
1. The Company bags Gold Award for outstanding performance in delivery during the Ashok Leyland Supplier Conference meet held in Chennai during April’ 2017.
2. Got Certified by Union of Japanese Scientists & Engineers (JUSE) through Quality Circle Forum of India (QCFI) in the month of Dec 2017 for Implementing best 5S practices.
3. During Quality Circle Forum of India (QCFI) 1st Chapter Convention held on May 28, 2017 at Vidyavardhaka Engineering College, Mysuru, AAL Teams bagged 9 gold awards and 1 silver award.
4. Won Gold Awards in Ooty and Bangalore conventions which was organised by Quality Circle Forum of India (QCFI) during the months of Aug and Sep 2017.
5. Won 3 Excellence and 1 Par Excellence Awards during National Convention on Quality Concepts-at Mysuru held during the month of Dec 2017 including one 5S Home Kaizen Award.
Your Directors wish to convey their gratitude and place on record their appreciation for all the employees at all levels for their hard work, cooperation and dedication during the year. Your Directors sincerely convey their appreciation to customers, shareholders, bankers, business associates, regulatory and government authorities for their continued support.
Your Directors wish to place on record their appreciation for the continued co-operation and support extended by Kalyani Group, Pune, and Meritor Inc., USA
For and on behalf of the Board of Directors
Place : Pune Dr. N. Muthukumar B. C. Prabhakar
Date : 8th May 2018 President & Whole-time Director Director