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Automotive Stampings and Assemblies Ltd.

BSE: 520119 | NSE: ASAL |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE900C01027 | SECTOR: Auto Ancillaries

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Annual Report

For Year :
2019 2018 2017 2016 2015 2014 2013 2012 2011

Director’s Report

Dear Members,

The Directors take pleasure in presenting the Twenty Ninth Annual Report together with the Audited Financial Statements of your Company for the financial year ended March 31, 2019. The Management Discussion and Analysis forms part of this Report.

FINANCIAL RESULTS

(Rs. in Lakhs)

Particulars

Financial Year

2018-19

2017-18

Revenue from Sale of Products / Services (Net)

48,127.53

33,055.34

Other Operating Revenue

39.71

24.43

Other Income

199.11

4.56

Total Revenue

48,366.35

33,084.33

Cost of Materials Consumed (including change in inventories)

36,186.49

26,060.56

Employee Benefit Expense

3,750.00

3,468.36

Other Expenses

7,066.90

6,060.29

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

1,362.96

(2,504.88)

Finance cost

1,650.05

1,147.84

Depreciation and Amortization Expense

975.66

1,003.37

Profit / (Loss) before exceptional item and Tax

(1,262.75)

(4,656.08)

Exceptional items

-

-

Tax Expense / (Credit)

-

-

Profit/ (Loss) for the year

(1,262.75)

(4,656.08)

Other Comprehensive Income (OCI)

(1.29)

8.17

Total Comprehensive Income/ (loss) (net of taxes)

(1,264.04)

(4,647.91)

DIVIDEND

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

TRANSFER TO RESERVES IN TERMS OF THE COMPANIES ACT, 2013

Due to the loss during the year, your Company has not transferred any amount to General Reserve Account under the Companies Act, 2013.

SHARE CAPITAL

The paid up Equity Share Capital as at March 31, 2019 was Rs. 1586.44 Lakhs comprising of 15,864,397 equity shares of Rs.10 each. During FY 2018-19, your Company has neither issued any shares with differential voting rights nor has granted any stock options or sweat equity. As on March 31, 2019, none of the Directors or the Key Managerial Personnel of the Company holds instruments convertible into equity shares of the Company.

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 Automobile Industry is a growing sector in India with 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.

India is expected to emerge as the world''s third-largest passenger-vehicle (currently at 4th position) market by 2021. It took India around seven years to increase annual production to four million vehicles from three million vehicles. However, the next milestone five million is expected in less than five years. Hitting that mark will depend on today''s rapid economic development continuing, with a projected annual GDP growth rate of 7 percent through 2020, ongoing urbanization, a burgeoning consuming class, and supportive regulations and policies.

The Auto Components Industry in India comprises of 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, transmission drive & 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 and must be agile to adopt the changes in technology. Apart from this, it has to continuously raise the quality and delivery performance in stride with the requirements of OEMs.

Auto component manufacturers would need to keep pace with the changing needs of automotive OEMs, who in turn are coping with the dynamic expectations of the end customer, consolidation of platforms to reduce complexity and cost. These trend includes:

a) Constantly shifting market dynamics due to changing, customer demands and operating models.

b) The changing needs of OEMs, who are likely to want different, more agile and just in time deliveries.

c) An evolving regulatory and trade environment forming the backdrop for it all.

In FY 2018-19, Auto Industry witnessed a growth of 6.26 per cent. The Passenger Vehicle segment registered a meager growth of 0.14 per cent which includes passenger car vehicles and utility vehicles. Within this segment, the Utility vehicle market grew at 0.48 per cent and Van segment grew at 20.61 per cent, whereas the Passenger Car segment recorded a negative growth of 1.33 per cent. The Commercial Vehicle segment grew by 24.20 per cent driven by M&HCV segment which grew by 28.91 per cent and LCV segment grew by 21.26 per cent. The Two wheeler segment registered a growth of 5.82 per cent, whereas the three wheeler segment registered a growth of 24.12 per cent.

GDP growth of Indian economy is estimated to be around 7.2 per cent. (Source: RBI)

The chart given below shows the production of various categories of vehicles during FY2018-19 vis-a-vis FY2017-18.

Segment

FY2018-19

FY2017-18

% Growth

Passenger cars

27,10,057

27,46,658

(1.33)

Utility vehicles

10,98,578

10,93,346

0.48

Vans

2,17,412

1,80,263

20.61

Passenger Vehicles

40,26,047

40,20,267

0.14

M&HCVs

4,44,202

3,44,592

28.91

LCV

6,67,974

5,50,856

21.26

Commercial vehicles

11,12,176

8,95,448

24.20

Three Wheelers

12,68,723

10,22,181

24.12

Two wheelers

2,45,03,086

2,31,54,838

5.82

Quadricycle

5,388

1,713

214.54

Total of All Categories

3,09,15,420

2,90,94,447

6.26

Source SIAM report

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

During the period under review, your Company has four manufacturing facilities at Bhosari, Chakan - Pune (Maharashtra), Halol (Gujarat) and Pantnagar (Uttarakhand).

During the period under review, your Company has;

a) Shifted its Registered Office with effect from December 28, 2018 for better administrative control from ‘G-71/2, MIDC, Industrial Area, Bhosari, Pune: 411026, Maharashtra, India'' to ‘TACO House, Plot No- 20/B FPN085, V.G. Damle Path, Off Law College Road, Erandwane, Pune: 411004, Maharashtra, India''.

b) Shifted manufacturing operations located at Bhosari in order to achieve operational efficiency and productivity improvements from ‘G-71/2, MIDC, Industrial Area, Bhosari, Pune: 411026, Maharashtra, India'' to new leased premises located at ‘Survey No. 679/2/2, Alandi Road, Kuruli, Chakan, Taluka - Khed, District- Pune: 410 501, Maharashtra, India''.

The Board of Directors of your Company vide Resolution dated January 15, 2019 approved transfer of rights in the leasehold land alongwith building located at G-71/2, MIDC, Industrial Area, Bhosari, Pune: 411026, Maharashtra subject to necessary approvals from concerned authorities and accordingly entered into Memorandum of Understanding (MOU) wrt aforesaid transaction. Your Company is in process of getting various approvals from concerned authorities including MIDC permission and the said approval is expected to be received shortly.

Your Company''s sales showed substantial improvement during the current financial year on account of new launches of models by OEMs which is partially offset due to decline in sales of older models.

During FY 2018-19 your Company has received additional business from OEMs in Passenger Vehicle / Utility Vehicle Segment and Commercial Vehicles Segment. Sales of your Company has grown due to ramp up of new businesses and higher off take from key customers. Therefore the capacity utilization of your Company was better as compared to last year. During the financial year 2018-19, the manufacturing costs increased due to increase in sales and change in product mix. However to minimize the impact, your Company has taken various cost reduction initiatives to enhance productivity and improve operational efficiencies. The Management is confident that the cost reduction initiatives and operational efficiencies are sustainable. Your Company has been aggressively managing its net working capital and was able to keep it under control.

Apart from the cost reduction programmes, your Company has been aggressively pursuing new business opportunities in Utility Vehicle segment, Commercial Vehicles Segment both in Heavy and Light Commercial Vehicles and Three Wheeler Segment by targeting greater share of business from existing Customers. This will not only increase the sales but also will help to reduce the dependency on one segment resulting in reducing overall risk.

Your Company is focused on achieving volume growth, reduction in costs and improving product portfolio. These measures will continue to drive improvement in your Company''s business. Your Company is exploring opportunities to participate in LCV and M & HCV segment by pursuing new business opportunities with existing and new Customers.

Further your Company is also working with Customers for supplying products in off -road segment.

INCOME AND EXPENDITURE

During the year under review, the net Sales increased by 45.61 per cent to Rs. 48167.24 Lakhs as compared to previous year primarily due to increase in Customer volumes in few models leading to higher component, tooling sales and services. Other operating income increased from Rs. 24.43 Lakhs to Rs. 39.71 Lakhs. Other income mainly consists of refund of GST under Budgetary Support Scheme of Rs. 108.70 Lakhs, gain on sale of assets of Rs. 44.75 Lakhs, foreign exchange gain (net) of Rs. 18.81 Lakhs and interest income of Rs. 23.84 Lakhs.

Cost of materials consumed (including change in stock) as a percentage to sales decreased by 3.65 per cent to 75.12 per cent due to various cost reduction initiatives undertaken by your Company like negotiations with customers and vendors, blank optimisation, increase in CTS (Cut to Size) Coil ratio and change in the product mix. The Management has been taking continuous steps to improve material yield.

Employee benefits expense increased by 8.12 per cent as compared to previous year due to changes in manpower requirements and introduction of new Programmes by OEMs.

Other Expenses comprising Administration and Selling Expenses have increased to Rs. 7,066.90 Lakhs largely due to increase in costs related to rent and leasing, logistic costs, freight and forwarding charges, rates and taxes, power and fuel, packing materials, machinery repairs and maintenance, consultancy fees etc. During FY 2018-19, Finance cost increased to Rs. 1,650.05 Lakhs due to increased borrowings.

Your Company is taking various initiatives on productivity improvements and cost reduction Programmes.

Key Financial Ratios

Sr.

No.

Ratios

31.3.2019

31.3.2018

% CHANGE

1

Debtors Turnover

12.06

10.49

15%

2

Inventory Turnover

26.92

31.32

(14%)

3

Interest Coverage Ratio

0.83

(2.18)

138%

4

Current Ratio

0.51

0.41

23%

5

Debt Equity Ratio

6.98

5.64

24%

6

Operating Profit Margin (%)

0.80%

(10.61%)

108%

7

Net Profit Margin (%)

(2.62%)

(14.08%)

81.37%

8

Return on Net Worth (%)

(30.39%)

(161.05%)

81.13%

Notes:

1. Increase in EBDIT resulted in better interest coverage ratio in FY 18-19 as compared to FY 17-18.

2. During the year under review, the net Sales increased by 45.61 per cent as compared to previous year primarily due to increase in Customer volumes in few models leading to higher component, tooling sales and services. This led to better utilisation of resources resulting in better operating profit margin, reduction in loss and thus improved net profit margin in FY 18-19 as compared to FY 17-18.

3. Increase in EBT resulted in better net profit margin in FY 18-19 as compared to FY 17-18.

4. The net worth has substantially improved by 81.13% in the FY 18-19 due to reduction in losses in comparison to FY 17-18.

OPPORTUNITIES AND THREATS

- Investment in Technology / Process:

To meet the Customer''s expectations, it is important for the automotive industry to continuously upgrade its technology and processes. Your Company is also upgrading its technology to participate in new vehicle programmes launched by Customers. Your Company has invested in automation in Weld Shop for various new programmes especially at Chakan plant.

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

The profitability of the Indian Auto Components Industry is likely to continue to be subdued due to pricing pressures from OEMs.

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

Your Company is undertaking various new technology initiatives, process upgradation and system enhancements like installation of Robotic Welding Lines for new Customer programmes at Chakan and Pantnagar plants,

During the year under review, you Company has initiated the process of migration and up gradation of its current SAP version to latest version “SAP S/4 HANA”. SAP S/4 HANA is a combination of Database, Hardware and Software for fast & quick computation. Migrating to the SAP S/4 HANA will allow your Company for a digital transformation The same is expected to ‘go live'' in FY 2019-20.

Programme Management for new Projects is being tracked through ‘SAP - Programme Management Module''. This will further improve the productivity and potential for acquiring new businesses from existing and new customers. This will not only enhance the capacity utilisation but also broaden the customer base and introduction into new business segments.

SEGMENT-WISE PERFORMANCE

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

FUTURE OUTLOOK

According to outlook of SIAM, in FY 2019-20, passenger vehicle sales are projected to grow between 3-5 per cent and commercial vehicle at 10-12 per cent. The three wheeler segment is pegged to grow between 7-9 per cent.

It is expected that PV segment will witness muted growth, postponement of purchases and pessimistic consumer sentiment. LCVs Segment is expected to grow in FY 19-20 due to replacement demand of old vehicles. MHCV segment in FY 19-20 is expected to be impacted by revised Axle norm increasing freight capacity, weak demand and expected lower diesel prices. Driving this growth will be overall infrastructure and Gross domestic product that is estimated to grow at 7 perc ent during FY20. Other reason cited for growth are pre-buying of BS-IV vehicles in FY20 before BS-VI implementation and several new launches in the current fiscal year. Auto Industry growth story will likely to remain intact with GDP growth outlook and infrastructure expenditure.

However, despite positive outlook projections, key concerns relate to below normal monsoons, rise in commodity price, recent repo rate cut by RBI and dipped consumer sentiment continue to be challenges for the auto industry.

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:

- Concentrated Customer Base: Your Company has taken 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.

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

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

Your Company is working diligently to mitigate the above risks and concerns.

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

Internal financial control systems of the Company are commensurate with its size and the nature of its operations. Your Company has developed 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. The Audit Committee satisfied itself of the adequacy and effectiveness of the internal financial control system as laid down and kept the Board of Directors informed.

Some significant features of the internal control systems are:

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

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

- 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 succour 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 your Company have been certified for EMS 14001 and OHSAS 18001 and National Safety Council (NSC). During the period under review, Company''s Bhosari plant received ‘Certificate of Appreciation'' from NSC. All plants are especially focused on the wellness initiative and monthly wellness program have been conducted by Group Medical Chief.

Your Company has engaged the British Safety Council (BSC) for certification. Your Company is in process of getting BSC Certification in the FY 2019-20. 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 counselling 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. Thermography Survey was conducted to reduce electricity / power consumption Overheating.

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 regularly 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.

- Re-appointment of Mr. Pradeep Bhargava (DIN: 00525234) as Non-Executive Independent Director to hold the office for a second term of 4 (four) consecutive years on the Board of the Company from July 22, 2019 to July 21, 2023.

- Re-appointment of Ms. Rati Forbes (DIN: 00137326) as Non-Executive Independent Director to hold the office for a second term of 1 (one) consecutive year on the Board of the Company from July 22, 2019 to July 21, 2020.

As per the provisions of Section 149 of the Act, they will not be liable to retire by rotation. Members are requested to refer to Item Nos. 5 and 6 of the Notice of the 29th Annual General Meeting and the Explanatory Statement for details of their qualifications and experience.

- Appointment of Mr. Shrikant Sarpotdar (DIN: 01800442) as an Additional Director designated as Non-Executive Independent Director of the Board with effect from April 24, 2019 to hold office upto 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. Shrikant Sarpotdar is eligible for appointment as Non-Executive Independent Director of the Company. His appointment is for a term of 5 (five) consecutive years commencing from April 24, 2019 up to April 23, 2024. 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.7 of the Notice of the 29th Annual General Meeting and the Explanatory Statement for details of his qualifications and experience.

- Appointment of Mr. Sanjay Sinha (DIN: 08210898) and Mr. Arvind Goel (DIN 02300813) as Additional Directors designated as Non-Executive and Non-Independent Directors of the Board with effect from October 26, 2018 and January 21, 2019 respectively to hold office upto 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. Sanjay Sinha and Mr. Arvind Goel vacates office and are eligible for appointment as Non-Executive Directors of the Company liable to retire by rotation.

- Retirement of Directors

Mr. Deepak Rastogi (DIN: 02317869) retired by rotation and was re-appointed in the 28th Annual General Meeting held on June 05, 2018. Mr. Bharat Parekh (DIN: 01521346) will retire by rotation at the conclusion of the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment.

In accordance with the Group retirement policy for Board of Directors the following Directors retired during the period under review:

1. Mr. Ajay Tandon (DIN: 00128667) and Mr. Harish Pathak (DIN: 02426760) retired as NonExecutive Directors of the Company, from the close of working hours of September 4, 2018 and December 31, 2018 respectively on attaining the age of retirement in accordance with Governance Guidelines on Board Effectiveness adopted by the Company.

2. Mr. Ramnath Mukhija, (DIN: 00001653) Non-Executive Independent Director and Chairman on the Board, retired from the close of working hours i.e. February 04, 2019, on attaining the age of retirement in accordance with Governance Guidelines on Board Effectiveness adopted by the Company.

The Board of Directors placed on record its sincere appreciation for the valuable guidance and immense contributions made by Mr. Ajay Tandon, Mr. Harish Pathak and Mr. Ramnath Mukhija during their tenure as Directors of the Company and wished them well for future endeavors.

The Board appointed Mr. Pradeep Bhargava, Non-Executive Independent Director as the Chairman of the Board wef April 24, 2019.

- Key Managerial Personnel

Pursuant to the provisions of Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company are: Mr. Neeraj Shrivastava, Manager designated as Chief Executive Officer, Mr. Easwaran S., Chief Financial Officer and Mr. Ashutosh Kulkarni, Company Secretary.

During the period under review, Mr. Prashant Mahindrakar resigned as a Manager designated as Chief Executive Officer of the Company with effect from close of working hours of August 5, 2018 to take up new responsibility with another TATA Company. The Board placed on record its sincere appreciation for valuable contribution made by him during his tenure with the Company.

Mr. Neeraj Shrivastava was appointed as Manager designated as Chief Executive Officer of the Company for a term of 3 years w.e.f. August 6, 2018. 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. 8 of the Notice of the Annual General Meeting and the Explanatory Statement for details

During the year, Mr. Anubhav Maheshwari resigned as Chief Financial Officer of the Company with effect from close of working hours of November 14, 2018. The Board placed on record its sincere appreciation of the services rendered by him during his tenure with the Company.

Mr. Easwaran S. has been appointed as Chief Financial Officer of the Company w.e.f. January 21, 2019.

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 2018-19 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'' 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 and SEBI Listing Regulations that :

a) 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

b) they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence pursuant to Regulation 25 of the Listing Regulations.

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 have been no material changes and commitments, which affect the financial position of the company which have occurred between the end of the financial year to which the financial statements relate and the date of this 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.

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 during the year under review. No amount on account of principal or interest on deposit from public was outstanding as on March 31, 2019.

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 2018-19.

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, 2019, 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, 2019 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 as amended from time to time, the extract of Annual Return in Form MGT-9 is annexed as Annexure II to this Report.

PERSONNEL

At the end of March, 2019, your Company had 591 employees (excluding trainees and apprentices) as compared to 585 employees as on March 31, 2018.

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 remained peaceful. 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 per cent in year 2013 to 84 per cent in year 2018.

Your Company has HR help desk 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.

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. Awareness Programmes were conducted at various plants of the Company.

Your Company has not received any complaint of sexual harassment during the financial year 2018- 19.

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 under review.

AUDITORS

1. Statutory Auditors:

The Board of Directors at its meeting held on May 22, 2017 appointed B S R & Co. LLP, Chartered Accountants, Pune with Registration no. 101248W/W-100022 as Statutory Auditors for a period of 5 years, to hold office till the conclusion of 32nd AGM to be held in FY 2022-23 which was approved by the Members at the 27th AGM held on July 28, 2017.

Vide notification dated May 7, 2018 issued by Ministry of Corporate Affairs, the requirement of seeking ratification of appointment of statutory auditors by members at each AGM has been done away with. Accordingly, no such item has been considered in notice of the 29th AGM.

The Statutory Auditors'' Report for FY 2018-19 on the financial statement of the Company forms part of this Annual Report.

There are no qualifications, reservations or adverse remarks made by the statutory auditors in their audit reports on the financial statements for the year ended March 31, 2019. The observations of the Statutory Auditors in their Reports are self-explanatory and therefore Directors don''t have any further comments to offer on the same.

Necessary disclosures and explanations on observation of Statutory Auditors on Corporate Governance Report are given in point no. 2 (C) below.

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, Practicing Company Secretaries for conducting Secretarial Audit of the Company for FY 2018-19. The Report of the Secretarial Audit is annexed herewith as Annexure IV to this Report.

Pursuant to recent amendments in Listing Regulations read with SEBI circular No. LIST/ COMP/14/2018 dated June 20, 2018, a certificate from SVD & Associates, Company Secretary in practice that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as directors of companies by the SEBI/Ministry of Corporate Affairs or any such statutory authority is annexed to Corporate Governance Report.

The Secretarial Auditors in their Secretarial Audit Report have observed that:

A) Due to resignation of Non- Executive Director w. e. f September 6, 2018, the Stakeholders Relationship Committee has only one Member. However the company appointed another director on October 26, 2018 and reconstituted the Stakeholders'' Relationship Committee.

Comments by the Board of Directors - During the quarter ended September, 2018, Mr. Ajay Tandon stepped down as a Non-Executive Director of the Company upon reaching superannuation with effect from the close of business hours of September 5, 2018 and hence consequently ceased to be a member of the Stakeholders Relationship Committee apart from other Board Committees. The Board of Directors of the Company at its meeting held on October 26, 2018, approved and reconstituted the Stakeholders Relationship Committee in terms of Companies Act, 2013 and Listing Regulations. There was no Board meeting held post superannuation date of Mr. Ajay Tandon i.e. September 5, 2018 till October 26, 2018, the Stakeholders Relationship Committee of the Company could not be represented through adequate number of members in the interim.

B) The transfer of 2538 shares to the IEPF Authority as required under subsection (6) of the Section 124 of the Companies Act 2013, the intimation notice to the shareholders, Issue of Public notice and filing of Corporate Actions with Depositories as per clause (a) of Sub rule (3) of Rule 6 of Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 has been done after the prescribed time period.

Comments by the Board of Directors - The Company has total 25 Shareholders holding 2538 equity shares wrt financial year 2010-11 who has not claimed any dividend from past 7 consecutive years or more. There was some delay wrt transfer of these shares to IEPF Demat Account due to technical issue. However once the issue got resolved, the shares were immediately transferred to IEPF Demat Account without any delay.

C) The Chairperson of the Company has ceased to be a Director on attaining the superannuation w.e.f. February 5, 2019 and in the Board Meeting held on 12th March, 2019 the Board has appointed one of the Independent Director as Chairman of the Meeting. In the absence of appointment of any other person as Chairperson of the Company, the compliance under regulation 17 (1) (b) of Listing Regulations, during that period cannot be ascertained.

Comments by the Board of Directors - The Company has Mr. Ramnath Mukhija, Non-Executive Independent Director as regular Chairperson till February 4, 2019. Mr. Ramnath Mukhija retired from the close of working hours i.e. February 04, 2019, on attaining the age of retirement in accordance with Governance Guidelines on Board Effectiveness adopted by the Company. The Company has appointed Mr. Pradeep Bhargava, Non-Executive Independent Director as regular Chairperson of the Board at Board meeting held on April 24, 2019.

COMPLIANCE OF SECRETARIAL STANDARDS

The Company complies with all applicable Secretarial Standards.

REPORTING OF FRAUDS BY AUDITORS

During the year under review, neither the statutory auditors nor the secretarial auditor has reported to the Audit Committee, under Section 143 (12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers or employees, the details of which would need to be mentioned in the Board''s report.

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 Bhargava

Chairman

(DIN:00525234)

Place: Pune

Date: April 24, 2019

Director’s Report