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GS Auto International Ltd.

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Annual Report

For Year :
2015 2013 2012 2011 2010 2009 2006

Director’s Report

Dear Members, The Directors have immense pleasure in presenting the forty-first Annual Report on the business and operations of the Company and the accounts for the Financial Year ended 31st March, 2015:- 1. Financial Results: (Rs. In Lacs) 2014-15 2013-14 Gross Income 17486.12 14673.36 Less: Excise duty on sale 1960.62 1707.58 Net Income 15525.50 12965.78 Profit before Depreciation, Interest & Tax (PBDIT) 418.24 731.46 Less: Depreciation & Amortization 474.74 272.30 Profit/(Loss) before Interest and Taxes (PBIT) (56.50) 459.16 Interest & Financial expenses 531.82 457.91 Profit/(Loss) before Tax (PBT) (588.32) 01.25 Less: - Provision for Tax - Current 00.00 00.00 - Deferred Tax 166.52 19.86 -Wealth Tax 00.63 00.50 Profit/(Loss) after Tax (PAT) (422.43) (19.11) Balance of Profit from Previous Year 2661.59 2680.02 (Excess)/Short provision for taxation and Tax Payment (0.00) (0.68) Surplus retained in Profit & Loss Account 2239.16 2661.59 Earnings per Share (Rs.) Basic & Diluted (02.91) (0.13) Dividend per Share (Rs.) 2. Performance: During the year under review, the performance of the company was badly impacted due to overall slowdown in the automotive industry as a whole and slowdown in the Commercial vehicle segment in particular, causes to margin pressures on the bottom line of the Company. Due to overall slowdown in the economy, the newly set up Jamshedpur was not able to utilize its optimum capacity utilization, which had further impacted the bottom line of the Company. However, the overall turnover of the Company, during the year, had increased due to the commencement of the production at the Jamshedpur plant. However, due to first full year of operation at the Jamshedpur plant, the revenue from operations (net) has increased to Rs.15525.50 lacs, as compared to revenue from operations (net) of Rs.12965.78 lacs of the previous year; this performance seems quite satisfactory in the overall backdrop of lower growth rate of the Indian economy & particularly of the Indian automotive industry coupled with the lower capacity utilizations of the Jamshedpur plant. However, the other income during the year shows a decrease of 33.59% to Rs.40.46 lacs, as compared to previous year''s other income of Rs.60.92 lacs, which was mainly due to loss on foreign exchange rate fluctuation of Rs.9.70 Lacs as compared to previous year''s gain on foreign exchange rate fluctuations of Rs.27.22 lacs During the year, your company has earned profit before depreciation & amortization, Interest & taxes (PBDIT) of Rs.418.24 lacs (2.69% of Net Income) as compared to previous year''s profit before depreciation & amortization, Interest & taxes (PBDIT) of Rs.731.46 lacs (5.64% on Net Income), shows a decrease of 42.82%. After higher provision for depreciation and amortization of Rs.474.74 lacs (due to change in depreciation rate as per the new Companies Act, 2013) (previous year of Rs.272.30 lacs), Interest & financial expenses of Rs.531.82 lacs (previous year of Rs.457.91 lacs), the company has earned a loss before taxes of Rs.588.32 lacs as compared to the previous year''s marginal profit before taxes (PBT) of Rs.1.25 lacs. After providing a provision for taxation, deferred tax & wealth tax of Rs.(165.89) lacs (previous year Rs.19.68 lacs) there was a loss of Rs.422.43 lacs as compared to previous year''s loss after tax of Rs.19.11 lacs. Foreign Exchange Earnings: During the year, your company is the net foreign exchange earner and earned net foreign exchange of Rs.152.48 lacs (previous year Rs.674.62 lacs,), showing a decrease of Rs.522.14 lacs, after taking into foreign exchange payments of Rs.607.31 Lacs (previous year Rs.171.51 Lacs), on account of foreign exchange outgo, mainly for payment of interest & repayment of foreign currency term loan. Quality: The Company has retained its ISO/TS 16949 certifications for its Quality Management System. 3. Dividend: During the period under review, the Board has decided not to recommend any dividend for the financial year 2014-2015. 4. Management Discussion and Analysis Report: A Management Discussion and Analysis Report for the year under review, as stipulated under clause 49 of the Listing Agreement with stock exchanges in India, is presented in a separate section forming part of the Annual Report. In line with its aspirations for the long term capacity creations, the Company has set up a ferrous casting components unit at Jamshedpur. The first phase of the said new unit had already commenced its commercial production & the second phase has yet to commence its commercial production. 5. Cash flow Statement: In conformity with the provisions of Clause 32 of the Listing Agreement with the Stock Exchanges, the Cash Flow Statement for the year ended 31st March, 2015, is annexed hereto. 6. Material Changes and Commitments: There were no material changes and commitments, affecting the financial position of the Company that has occurred between the end of the financial year of the Company and the date of signing of this report. 7. Share Capital: The paid-up share capital of the Company as at 31st March, 2015 is Rs. 7.25 Crores. The Company currently has no outstanding shares issued with differential rights, sweat equity or ESOS. 8. Subsidiary, Joint Venture and Associate Companies; Your Company does not have any subsidiary, Joint Venture & Associate Company. 9 Research And Development: The Company is developing certain machineries (Special purpose Machines), as per its various in house production process requirements, along with for the requirements of its group Companies, as & when required, under its Research & Development Centre. 10. Internal Financial Controls: The Company has in place adequate internal financial controls systems with reference to the financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed. 11. Risk Management: The Board of Directors in their meeting held on November 3, 2014 has constituted Business Development and Risk Management Committee of the Company which has been entrusted with the responsibility to assist the Board to look out for the new ventures/new business opportunities, for the long term growth of the Company, keeping in mind the future prospect of auto component business & overall automotive industry as a whole and with regard to the identification, evaluation and mitigation of operational, strategic and environmental risks efficiently and effectively. 12. Directors And Key Managerial Personnel: In accordance with the provisions of the Companies Act, 2013 and Articles of association of the Company, Ms. Dalvinder Kaur Ryait, Executive Director, retires by rotation at the at the ensuing Annual General Meeting and being eligible, offer herself for re-appointment. During the year under review, the members approved the appointments of Mr. Jasbir Singh Bir, Mr. Upkar Singh Ahuja, Mr. Sanjeev Sethi and Mr. Iqbal Singh as Independent Directors who are not liable to retire by rotation. The members have also appointed Ms. Dalvinder Kaur Ryait and Ms. Amarjeet Kaur Ryait as Executive Directors. The Company has received declarations from all the Independent Directors of the Company that each of them meets the criteria of independence as provided in Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement and there has been no change in the circumstances which may affect their status as independent director during the year. In the opinion of the Board, the independent directors possess appropriate balance of skills, experience and knowledge, as required. A brief note on Director retiring by rotation and eligible for re-appointment is furnished in the Report on Corporate Governance. 13. Key Managerial Personnel: During the year under review, the Company had appointed the following persons as Key Managerial Personnel: Mr. Jasbir Singh Ryait - Chairman and Whole Time Director Mr. Surinder Singh Ryait - Managing Director Mr. Neeraj Tuli - Chief Financial Officer Ms. Amninder Kaur - Company Secretary 14. Policy On Directors appointment And Remuneration And Other Details: The Nomination and Remuneration Committee has laid down the criteria for Directors'' appointment and remuneration including criteria for determining qualification, positive attributes and independence of a Director. The following attributes/ criteria for selection have been laid by the Board on the recommendation of the Committee:- - the candidate should possess the positive attributes such as Leadership, Entrepreneurship, Business Advisor or such other attributes which in the opinion of the Committee are in the interest of the Company. - The candidate should be free from any disqualifications as provided under Section 164 and 167 of the Companies Act, 2013. - The candidate should meet the conditions of being independent as stipulated under the Companies Act, 2013 and Listing Agreement entered into with Stock Exchanges, in case of an independent director. - The candidate should possess the appropriate qualification, skills, experience and knowledge in one or more fields of finance, law, management, sales, marketing, administration, research, corporate governance, technical operations, infrastructure, medical, social service, professional teaching or such other areas or disciplines which are relevant for the Company''s business. 15. Board Evaluation: Clause 49 of the Listing Agreement mandates that the Board shall monitor and review the Board Evaluation framework. 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. Schedule IV of the Companies Act, 2013 states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board in the following manner: Sr. No.I Performance evaluation of I Performance evaluation performed by 1. Board and individual directors Board after seeking inputs from all directors 2. Board Committees Board seeking inputs from all committee members 3. Individual Directors Nomination and Remuneration committee 4. Non-independent directors, Board as a whole and Separate meeting of independent directors after taking the Chairman views from executive directors. 5. Board, its Committees and individual Directors At the board meeting held after the meeting of the independent directors based on evaluation carried out as above. 16. Number of Meetings of the Board: The Board met ten times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013. 17. Familiarization Program For Independent Directors: To familiarize the new inductees with the strategy, operations and functions of our Company, the senior management personnel make presentations to the inductees about the Company''s strategy, operations, product offerings, markets, organization structure, finance, human resources, technology, quality, facilities and risk management. 18. Meetings of the Board and Committees thereof: This information has been furnished under Report on Corporate Governance, which is annexed along with Annual Report. 19. Committees of The Board: Currently, the Board has four committees: the audit committee, nomination and remuneration committee, stakeholders'' relationship committee and business development and risk management committee. All committees consist of a combination of Independent as well as non independent directors as stipulated under the provisions of the Companies Act, 2013. A detailed note on the Board and its Committees is provided under the Corporate Governance Report section in this Annual Report. The composition of the committees and compliances, as per the applicable provisions of the Act and Rules, are as follows: Name of the Composition of the! Highlights of Duties, responsibilities and activities. Committee Committee Audit Committee Mr. Sanjeev Sethi . The Company has adopted the Vigil Mechanism for directors and employees to report concerns airman about unethical behavior, actual or suspected Mr. Jasbir Singh Bir fraud, or violation of the Company''s Code of Conduct and Ethics. The Vigil Mechanism Policy r. asbir in g yai is appended as Annexure II Mr.Iqbal Singh . In accordance with the provisions of the Listing Agreement, the Company has formulated policies on related party transactions and material subsidiaries. The policies are available on the website. Nomination and Mr. Jasbir Singh Bir . The committee overseas and administers Remuneration executive compensation, reviews the Committee airman compensation program to align both short term Mr. Sanjeev Sethi and long term compensation with business objectives and to link compensation with the r. p ar ing uja achievement of measurable performance goals. - The Nomination and Remuneration Committee has framed the Nomination and Remuneration Policy. A copy of the policy is appended as Annexure III Stakeholders Mr. Sanjeev Sethi - The committee reviews and ensures redressal of Relationship investor grievances. Committee airman . The committee noted that all the grievances of Mr.Upkar Singh Ahuja the investors have been resolved during the Mr. Jasbir Singh Bir year. Business Development Mr. Surinder Singh Ryait . The purpose of Committee is to look out for the and Risk Management new ventures/new business opportunities, for Committee airman the long term growth of the Company, keeping MrJasbir Singh Ryait in mind the future prospect of auto component business & overall automotive industry as a arma whole and with regard to the identification, Mr.Anadi Sharma evaluation and mitigation of operational, strategic and environmental risks efficiently and effectively. 20. Auditors, Audit Report and Audited Accounts: M/s Nanda & Bhatia. (ICAI Firm Registration No. 004342N), Chartered Accountants, retire as auditors and being eligible, offer themselves for re-appointment. The Auditors'' Report read with the notes to the accounts referred to therein are self-explanatory and, therefore, do not call for any further comments. There are no qualifications, reservations or adverse remarks made by the Auditors. 21. Cost Audit: Pursuant to the provisions of Section 148 of the Companies Act, 2013, M/s. P.K. Verma & Co., Cost Accountants were appointed as the Cost Auditors to conduct audit of cost records. 22. Secretarial Audit: Pursuant to the provisions of Section 204 and other applicable provisions, if any, of the Companies Act, 2013, M/s. Bhupesh Gupta & Associates, Practicing Company Secretaries were appointed as the Secretarial Auditor for auditing the secretarial records of the Company for the financial year 2014-15. The Secretarial Auditors'' Report in Form No. MR-3 as required under the Act for the financial year ended March 31, 2015 is annexed hereto. There are no qualifications, reservations or adverse remarks made by the Secretarial Auditors. The Report forms part of this report as Annexure IV. 23. Corporate Governance: As per the requirement of listing agreement with the Stock Exchanges, the Company has complied with the requirements of Corporate Governance in all material aspects. A report on Corporate Governance (Annexure- I ) together with a certificate of its compliance from a Practicing Company Secretary, forms part of this report. 24. Fixed Deposits: During the year under review, the Company has not accepted any fixed deposits and as such no amount of principal or interest on deposits from public was outstanding as on the date of the balance sheet. 25. Safety, Environment and Health: The Company considers safety, environment and health as the management responsibility. Regular employee training programmes are carried out in the manufacturing facilities on safety, environment and health. 26. Particulars of Loans, Guarantees and Investments: The Company has not given any loans or guarantees or made investments in contravention of the provisions of the Section 186 of the Companies Act, 2013. The details of the loans and guarantees given and investments made by the Company are provided in the notes to the financial statements. 27. Related Party Transactions: All related party transactions that were entered into during the financial year, if any, were on arm''s length basis and were in the ordinary course of Company''s business. The Company has not entered into any contract, arrangement or transaction with any related party which could be considered as material within the meaning of clause 49 of the listing agreement. All the related party transactions are placed before the Audit Committee as well as the Board for approval on a quarterly basis. Omnibus approval was also obtained from the Audit Committee and the Board on an annual basis for repetitive transactions. Related party transactions under Accounting Standard - AS18 are disclosed in the notes to the financial statements. 28. Employee Strength: The total number of permanent employees on the rolls of the Company was 1794 as on March 31, 2015 (1738 was on the previous year). 29. Particulars of Employees The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the company, will be provided upon request. In terms of Section 136 of the Act, the Annual Report excluding the aforesaid information is being sent to all the members and others entitled thereto. Any shareholder interested in obtaining such particulars may write to the Company Secretary at the corporate office of the company. The said information is also available for inspection at the registered office during working hours up to the date of the Annual General Meeting. 30. Code of Conduct:- The Board has laid down a code of conduct for board members and senior management personnel of the Company. The code incorporates the duties of independent directors as laid down in the Companies Act, 2013. The said code of conduct is posted on Company''s website www.gsgroupindia.com. The Board members and senior management personnel have affirmed compliance with the said code of conduct. A declaration signed by the Managing Director is given at the end of the Corporate Governance Report. 31. Prevention of Insider Trading The Company has also adopted a code of conduct for prevention of insider trading. All the Directors, senior management employees and other employees who have access to the unpublished price sensitive information of the Company are governed by this code. During the year under Report, there has been due compliance with the said code of conduct for prevention of insider trading. The Board at its meeting held on 14th May, 2015 has adopted a revised Code of Prevention of Insider Trading based on the SEBI (Prohibition of Insider Trading) Regulations, 2015. The same has been placed on the website of the Company www.gsgroupindia.com 32. Significant and Material orders passed By the Regulators or Courts There are no significant or material orders passed by any regulator, tribunal or court that would impact the going concern status of the Company and its future operations. 33. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo In accordance with the requirements of Section 134 of the Companies Act, 2013, statement showing particulars with respect to conservation of energy, technology absorption and foreign exchange earnings and outgo is furnished as Annexure V to this report. 34. Extract of Annual Return: In accordance with the requirements of Section 92 (3) of the Companies Act, 2013 and rule 12 (1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in Form MGT-9 is furnished as Annexure No.VI-to this report. 35. Directors'' Responsibility Statement: Your Directors confirm: a) that in the preparation of the annual accounts, the applicable accounting standards have been followed alongwith proper explanation relating to material departures; b) that your Directors 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 at the end of the financial year March 31, 2015 and of the loss of the Company for the financial year; c) that your Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) that your Directors have prepared the annual accounts on a going concern basis; e) that your Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and f) that your Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. 36. Acknowledgements: Your Directors place on record their sincere appreciation gratitude to the continuing patronage and trust of our valued customers, bankers, financial institutions, business associates, shareholders and other statutory authorities who have extended their continued support and encouragement to your Company. Your Directors wish to convey their deep appreciation to the dealers, distributors of the Company for their achievements in the field of sales and service and to suppliers and vendors and other business associates for their valuable support. Your directors also place on record their sincere appreciation for the enthusiasm and commitment of all its employees for the growth of the Company and look forward to their continued involvement and support. For and on behalf of the Board of Directors Sd/- Jasbir Singh Ryait Surinder Singh Ryait Ludhiana: 14th August,2015 Chairman Managing Director DIN NO.:00104979 DIN No.:00692792

Director’s Report