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Hindustan Aeronautics Ltd.

BSE: 541154 | NSE: HAL |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE066F01012 | SECTOR: Diversified

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Annual Report

For Year :
2019 2018

Director’s Report

BOARD'S REPORT

To the Members,

Your Board of Directors takes great pleasure in presenting their 56th Annual Report on the performance of the Company, together with the Audited Financial Statements for the financial year ended 31st March, 2019, along with Reports of the Statutory Auditors and the Comptrollers; Auditor General of India (C&AG) thereon.

Financial Highlights

The financial highlights for the year ended 31st March, 2019 are summarised as under:

 

 

(Rs. in lakh)

PARTICULARS

2018-19

2017-18

Turnover

19,70,455

18,28,386

Exports

40,504

31,402

Profit Before Tax (PBT)

3,62,764

3,23,985

Provision for Tax

1,34,520

1,25,243

Profit After Tax (PAT)

2,28,244

1,98,742

R&D Expenditure

1,46,440

1,61,186

Earnings/ Share (in Rs.)

68.26

56.15*

Book Value /Share (in Rs.)

324

284

*Earnings per Share is calculated based on the weighted average number of equity shares outstanding

During the year under review, the turnover of the Company increased by 7.8 per cent, to Rs. 19,70,455 lakh from Rs. 18,28,386 lakh of the previous year. The Profit Before Tax for the year increased by 12 per cent to Rs. 3,62,764 lakh from Rs. 3,23,985 lakh in the previous year. The Profit After Tax (PAT) increased by 14.8 per cent to Rs. 2,28,244 lakh from Rs. 1,98,742 lakh in the previous year.

Production Highlights

During the year 2018-19, your Company produced 41 new Aircraft and Helicopters. Additionally, we produced 102 New Aero-Engines and Accessories.

During the year 2018-19 your Company overhauled 213 platforms of various aircraft. Further, 560 Russian and western origin aero-engines were overhauled by the Company during the year under review.

Dividend

The Board of Directors of the Company has formulated a Dividend Distribution Policy keeping in view the provisions of Securities Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI (LODR) Regulations), the Companies Act, 2013 (Companies Act) and Guidelines issued by the Department of Public Enterprises (DPE Guidelines) and the Department of Investment and Public Asset Management (DIPAM). The Policy is available on the Company's website at https://hal-india.co.in/Common/ Uploads/DMS/Dividend Distribution Policy.pdf

During the year, your Company has paid interim dividend of Rs. 19.80 per share of Rs. 10 each (198 per cent) for the financial year 2018-19, totaling to Rs. 66,209 lakh, excluding dividend distribution tax of Rs. 13,609 lakh. No Final dividend has been recommanded by the Board for the financial year 2018-19.

Reserves

During the year under review, Rs. 21,488 lakh was transferred to Research & Development Reserve and Rs. 1,26,938 lakh to General Reserve.

Borrowings

As on 31st March, 2019, the short term and long term borrowings of the Company stood at Rs. 10,000 lakh and Rs. 4,05,801 lakh respectively.

Indian Accounting Standards

The Financial Statements have been prepared in compliance with Indian Accounting Standards (Ind AS) and provisions of the Companies Act.

Internal Financial Controls

The Company has in place adequate internal financial controls with reference to its financial statements. A detailed note on internal financial controls is provided in the Management Discussion and Analysis Report.

Significant Achievements

The Company has achieved several milestones during the year under review. A few of which are highlight as under:

Light Combat Helicopter (LCH) successfully completed all weapon integration and firing tests in January, 2019 and is ready for induction. Initial Operational Clearance (IOC) of LCH for Army version was accorded by CEMILAC on 15th February, 2019.

The maiden flight of third prototype (PT3) of Light Utility Helicopter (LUH) was successfully conducted on 14th December, 2018.

Advanced Light Helicopter (ALH) blade folding capability was demonstrated to customer on 19th December, 2018 on CG 855 helicopter. This is the First ALH manufactured for Coast Guard under 16th ALH contract of Coast Guard.

The LCA Tejas successfully completed mid-air refuelling trial by Wet (actual) engagement on 10th September, 2018.

Successfully accomplished 100 per cent running of HTFE-25 core-2 engine with Inlet Guide Vane (IGV) modulation in March, 2019.

Indigenously designed and developed (nation's first ever) Gas Turbine Electrical Generator (GTEG-60) Auxiliary Power Unit (APU) to start the main engines of AN-32 Military Transport aircraft was flown successfully on 11th February, 2019.

Astra Missile was successfully test fired by the IAF on 26th September, 2018.

The LCA Naval Prototype - 2 (NP2), safely executed the first contact of the HAL-designed and developed Arrester Hook System (AHS) with arresting wire at moderate taxi-in speed on 2nd August, 2018.

The first FOC standard Rear Fuselage Assembly of LCA Tejas has been completed. This is one of the major modules of LCA and jig out was done on 11th February, 2019, and Final Operational Clearance (FOC) of LCA received on 20th February, 2019.

The first Mirage 2000 aircraft upgraded to IOC standard with indigenous modification kits was delivered by the Company to the IAF on 1st January, 2019.

The Company successfully flew the Light Utility Helicopter (LUH) on 29th December, 2018.

Current Projects and Programs

During the year, the Company continued to carry out the production and supply of various type of aircraft held with IAF and aerospace structures to fulfil the requirements of our esteemed customers.

The Company has also continued its endeavour to design and develop new platforms towards contributing to new revenue lines for the Company.

Development Programs

The Company has achieved significant progress in various R&D / Development Projects, such as the Basic Trainer Aircraft (HTT-40), Light Combat Helicopter (LCH), Light Utility Helicopter (LUH), Light Combat Aircraft (LCA), Jaguar Darin III Upgrade, Mirage 2000 Upgrade, Hawk-i, UAV and Development of Engines. A project update for each of them is listed below:

(I) Fixed Wing Aircraft Combat Aircraft (a) Light Combat Aircraft (LCA) - Tejas

The LCA - Tejas is an indigenously designed and developed 'Make in India' fighter aircraft. It is the smallest and lightest multi-role supersonic single engine fighter in its class in the world.Tejas has thus far completed over 4250 test flights, of which 523 were carried out during the year under review, towards Final Operational Clearance (FOC). Its Maiden Midair Refueling Trial was successfully completed with the Wet (actual) engagement in September, 2018. This capability provides the IAF a much desired advantage during combat operations. Aeronautical Development Agency (ADA) also handed over the Drawing Applicability List (DAL) and equipment Standard of Preparation (SOP) documents towards FOC configuration, to the Company on 31st December, 2018. It was duly cleared by the Centre of Military Airworthiness & Certification (CEMILAC) to proceed with the production of FOC-standard aircraft. More recently, the FOC was issued on 20th February, 2019, which has now enabled the Company to take up production activities towards delivery of fighters against the FOC contract. The Company has earlier completed production of all the fighters against the IOC contract.

(b) LCA Mk 1A

The Company has undertaken the design and development of LCA Mk 1A, which will have additional features like an EW Suite, Active Electronically Scanned Array (AESA) RADAR and Beyond Visual Range (BVR) Missile. A Request for Proposal (RFP) was received from Air HQ for manufacturing and supply of 83 LCA Mk 1A on 20th December, 2017. The Company submitted the Technical & Commercial proposal on 13th March, 2018. The contract is expected to be finalised during the financial year 2019-20 and once finalised will be a significant boost to the order book position of the Company and will pave the way for the large scale induction of this indigenous combat aircraft to Services.

Trainer Aircraft

(a) Hindustan Turboprop Trainer (HTT - 40)

Aircraft Upgrades (a) Mirage 2000

HTT - 40 is the Basic Trainer Aircraft (BTA) currently being designed and developed indigenously by the Company. The aircraft would be used for basic flight training, aerobatics, instrument flying and close-formation flights with its secondary roles including navigation and night flying. A total of three prototypes have been built, with two flying prototypes and one Structural Test Specimen (STS). The two flying prototypes are undergoing flight trials with 260 cumulative test flights completed towards certification. The STS ultimate test was completed for Ultimate load (165 per cent).

HTT - 40 completed Stall tests and achieved acceptable stall characteristics. It also completed hot weather, Sea level, Cross wind, Range& Endurance, and Night Flying trials. Aircraft successfully entered and recovered from a two turn spin using conventional controls in November, 2018. Further spin tests are under progress.

Once certified, the aircraft will ensure availability of an indigenous platform in this segment. Further with 0-0 ejection seat, the aircraft has better safety features compared to the currently operational imported variant. Being an indigenous product it will also provide greater maintenance support and reduced dependence on exports at a much lower life cycle cost. The customer has evinced interest in the Aircraft and the Company is likely to get future orders once the Aircraft is fully certified.

Service Use Clearance was accorded by RCMA for the FOC upgraded Mirage 20001/TI aircraft on 29th May 2018. In-house developed MC2 Mission Computer has been cleared for service use and series upgrade commenced during the year 2018-19. Provisional clearance for DASH IV Helmet was also accorded by RCMA during the year. The first upgraded Mirage 2000 aircraft to IOC standard with indigenous modification kits was delivered by the Company to IAF on 1st January, 2019.

(b) Jaguar DARIN III

Final Operational Clearance (FOC) Weapon trials carried out in May 2018. During the year, Service Clearance & Production clearance for Jaguar DARIN-III Mission Computer (MC) has been received and series manufacturing commenced in March, 2019. Clearances for all LRUs obtained from RCMA except for RWR,.TCU & Lighting panel (Trainer). So far 436 flight trails have been completed and the programme is moving closer to FOC.

(c) Hawk Upgrade-Hawk-i

Hawk India (Hawk-i) is the indigenously-upgraded Hawk Mk 132 aircraft with enhanced operational and training capabilities. Flight evaluation of Radio Altimeter (RADALT), IFF Mk-XII, Solid State Digital Video Recording System (SSDVRS), Softnet Radio and ICU completed.

The Company has successfully integrated indigenous Smart Anti Airfield Weapon (SAAW), an aircraft-launched advanced precision strike weapon on Hawk-i aircraft, and completed its first sortie on 12th February, 2019. Spin & Stall trials of Hawk-i with CMDS modification were carried out up to two spins. Spin data analysis was completed and the report submitted to RCMA. Implementation of full Hawk Mk 132 functionalities through RTOS is in progress. So far, a total of 71 sorties have been completed.

(II) Helicopters

(a) Light Combat Helicopter (LCH)

The LCH is a dedicated combat helicopter designed and developed indigenously by the Company. It has the distinction of being the first attack helicopter to land at Siachen. Four Technology Demonstrators (TDs) have  been built and were extensively flight tested this year. A total of 1,498 flights have been carried out so far, of which 291 flights were completed during the year 2018-19. LCH has successfully completed all development trials including weapon (Turret Gun, Rocket System and Air to Air Missile) integration tests and is ready for operational induction awaiting orders. The quote was submitted by the Company in March, 2018 against RFP for the supply of an initial batch of 15 helicopters and order is awaited. Initial Operational Clearance (IOC) of LCH for Army version was accorded by CEMILAC on 15th February,2019. The commercial discussions are in final stage with the customer and the contract is excpected to be finalised during the financial year 2019-20.

(b) Light Utility Helicopter (LUH)

The LUH is a single engine, new generation 3-ton weight class helicopter, incorporating state-of-the-art technology features, planned to replace Cheetah and Chetak helicopters being operated by the Indian Armed Forces. During the year, the first flight of the third prototype (PT-3) of LUH was carried out on 14th December, 2018. All three prototypes are currently under flight trials with a total of 245 flighttests completed, of which 154 flights were carried out during the year. LUH has also completed envelope expansion trials. Cold Weather trials. Sea level flights with maximum all up weight and Hot weather trials. Further, development flights are under progress towards certifications.

(Ill) Aero Engines

(a) 25 KN Hindustan Turbofan Engine (HTFE-25)

Design and development of a 25kN thrust class turbofan engine, which can be used on Basic/Advanced military trainers, on small business jets and also large UAV applications is under progress. The engine can be used on a 5-ton weight class aircraft in single engine  configuration and on aircraft of up to 9-ton weight class with twin-engine configuration. Two core engines have been produced so far and are undergoing development trials. So far 339 runs have been completed on Core-1 and Core-2 engines, of which 96 runs were completed in 2018-19. HTFE-25 was successfully completed cold light up at 14°C with spark igniters and achieving 100 per cent max speed with and without IGV modulation. HTFE-25 engine was also successfully tested with a Technology demonstrator of Servo based Fuel Measuring Unit (FMU).

The Company has taken up the design and development of 'After burner Technology 'for HTFE-25 aero engine. The afterburner module was mounted on the PTAE engine followed by a successful demonstration of the basic afterburner technology using a fixed area propelling nozzle for HTFE-25 engine, in March, 2019.

(b) 1200 KW Turboshaft Engine (HTSE-1200)

The 1200KW Turbo shaft engine would be used as power plant for 3 to 6-ton category helicopters. One technology demonstrator of HTSE-1200 engine was built and is currently under testing. Sea level testing was conducted in DefExpo-2018 and a maximum speed of 76 per cent of engine has been achieved.

Technology demonstrators of Effusion Cooled Combustor and High Efficiency Compressor were developed and built for HTSE-1200 engine and successfully tested on the engine. Directionally Solidified Gas Generator (GG) Turbine blades were also successfully developed for the engine. So far 250 runs have been completed successfully.

Once certified, the above engine programmes promise self-reliance in the critical field of aero engines and availability of core engine technological capabilities within the country.

Order Book Position

We are pleased to report that the Order Book position of your Company as on 31st March, 2019 stands at Rs. 58,588 crore.

Loans, Guarantees and Investments

Details of Loans, Guarantees and Investments are covered under the provisions of Section 186 of the Companies Act and form part of notes to the Financial Statements provided in this Annual Report.

Related Party Transactions

There were no significant related party transactions with the Company's promoters. Directors, Management or their relatives, which could have had a potential conflict with the interests of the Company. All Related Party Transactions were placed before the Audit Committee and the Board, wherever applicable, for approval. Information pursuant to Section 188(2) of the Companies Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 on contract(s) or arrangement(s) with related parties referred to in Section 188(1) of the Companies Act is attached to this Report as Annexure-l.

Consolidated Financial Statements

The consolidated financial statements of your Company and its joint venture and subsidiary companies for the year ended 31st March, 2019 have been prepared in accordance with the provisions of Section 129(3) of the Companies Act and applicable Accounting Standards, and form part of this report.

Pursuant to the first proviso of Section 129(3) of the Companies Act read with Rule 5 of Companies (Accounts) Rules, 2014, a separate statement containing salient features of the financial statements of subsidiaries/associate/joint venture companies in Form AOC-1 is appended to this report, which forms part of the Financial Statements.

Subsidiary/Associate/Joint Venture Companies

As on 31st March, 2019, your Company has two Subsidiaries and fourteen Joint Venture Companies (JVCs) including two not-for-profit companies (Section 8 Companies). Naini Aerospace Limited, a wholly owned subsidiary of the Company is engaged in the business of manufacturing looms for aircraft and helicopters. During the year, your Company has made a further investment of Rs. 2,000 lakh in equity shares of the Company.

Pursuant to the provisions of Section 134(3)(q) of the Companies Act read with Rule 8(1) of the Companies (Accounts) Rules, 2014, a Report on the performance and financial position of each of the Joint Venture and Subsidiary Companies is provided herewith and annexed as Annexure II.

Annual Return

In accordance with the provisions of Section 92(3) and Section 134(3)(a) of the Companies Act read with Rules 12(1) of the Companies (Management and Administration) Rules, 2014, the extract of the Annual Return of the Company is made available on the Company website at http://www.hal-india.co.in/investors/Annual Reports.

Secretarial Standards

The Company complies with all applicable mandatory secretarial standards issued by the Institute of Company Secretaries of India.

Meetings of the Board

During the year, 11 (eleven) Board Meetings were held and the maximum interval between any two meetings was not more than 120 days. The details of meetings of the Board and Committees thereof held during the year are furnished in the Corporate Governance Report, which forms part of this Report.

Changes in Board of Directors and Key Managerial Personnel

The following changes took place in the Board of Directors and of Key Managerial Personnel (KMP) of your Company during the financial year:

S.N.

Name of the Director

Designation

Date of Appointment

Date of Cessation

1

Dr. C.P. Ramanarayanan

Govt. Nominee Director

01.05.2018

19.06.2018 (Nomination withdrawn)

2

Shri Chandraker Bharti

Govt. Nominee Director

15.05.2018

-

3

Shri D.K. Venkatesh

Director (Engg. and R&D)

-

31.05.2018 (Superannuation)

4

Shri Arup Chatterjee

Director (Engg. and R&D)

01.06.2018

-

5

Dr. Tessy Thomas

Govt. Nominee Director

02.07.2018

-

6

Dr.S. Malla Reddy

Independent Director

24.07.2018

-

7

Rear Adml. K.C. Shekar (Retd.)

Independent Director

24.07.2018

-

8

Shri C.V.Ramana Rao

Director (Finance) & CFO

-

31.07.2018 (Superannuation)

9

Shri C.B. Ananthakrishnan

Director (Finance) & CFO

01.08.2018

-

10

Shri T. Suvarna Raju

Chairman and Manging Director

-

31.08.2018 (Superannuation)

11

Shri R. Madhavan

Chairman and Manging Director

01.09.2018

-

On completion of tenure of Ms. Dipali Khanna, Part-Time Non-Official (Independent) Director on 7th January, 2019, the Ministry of Defence, DDP, re-appointed her for a period of one year w.e.f. 8th January, 2019.

Committees of the Board

As on 31st March, 2019, the Board had five Statutory Committees namely Audit Committee, Nomination & Remuneration Committee, Corpoate Social Responsibility & Sustainable Development Committee, Stakeholders Relationship Committee and Risk Management Committee.

A detailed note on the composition of the Board and its Committees is provided in the Corporate Governance Report.

Declaration from Independent Directors

The Company has received necessary declarations from each Independent Director of the Company under the Companies Act stating that the Independent Directors of the Company  met with the criteria of their independence laid down in Section 149(6) of the Companies Act and Regulation 25(8) of the SEBI (LODR) Regulations.

Company's Policy on Directors' Appointment and Remuneration

The appointment, tenure and remuneration of Directors (Functional Directors including CMD) are determined by the Government of India. Selection is made by the Public Enterprises Selection Board (PESB). The Terms & Conditions of appointment, including the period of appointment, the Scale of Pay and other entitlements are notified by the Government of India.

Government Nominee Directors are appointed by the Department of Defence Production, Ministry of Defence and they are not entitled to any remuneration / sitting fees.

Independent Directors are appointed by the Government of India and they are entitled to sitting fees for attending the Board / Committee meetings as prescribed by the Board in adherence with the statutory rules and regulations.

In view of the Gazette Notification No GSR 463 (E) dated 5th June, 2015 of the Ministry of Corporate Affairs (MCA), your Company, as a Government Company, is not required to frame a policy on Directors' appointment and remuneration, including criteria for determining qualifications etc. under Section 134(3)(e) of the Companies Act.

Board Evaluation

Pursuant to the Notification No. 463 (E) dated 5th June, 2015 issued by the Ministry of Corporate Affairs, the statement indicating the manner in which formal annual evaluation has been made by the Board of its own performance and that of its committees and individual directors is not required for your Company, as the performance of directors is evaluated by the Administrative Ministry.

The performance evaluation of the Independent Directors was carried out by the entire Board and found to be satisfactory. The Board opined that all Independent Directors fulfil the conditions specified in the Companies Act and SEBI (LODR) Regulations, and are independent of the management.

The performance of non-independent directors and Board as a whole was reviewed by the Independent Directors during the year.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

As a defence Central Public Sector Enterprise (CPSE), your Company was granted exemption by MCA vide Notification GSR No.680 (E) dated 4th September, 2015. from the disclosure of information with respect to conservation of energy, technology absorption, foreign exchange earnings and outgo under the provisions of Section 134(3)(m) read with Rule 8(3) of the Companies (Accounts) Rules, 2014.

Outsourcing

The Company has embarked on a path to be a lead integrator of aircraft and helicopter platforms on par with the global OEMs, Outsourcing had been taken up diligently even in upcoming platforms including LCA, HTT - 40, LUH, LCH etc.

Development and Implementation of Risk Management Policy

The Company has a Board approved Risk Management Policy in place. The policy aims at elimination or reduction of risk  exposures through identification and analysis of various types of risks and facilitating timely action for taking risk mitigation measures. The policy envisages that all programs & project reviews will highlight the progress of risk mitigation plans until the closure and signing off the mitigation plans.

Corporate Social Responsibility (CSR)

Your Company, as a responsible Corporate, has been driven by a vision of a developed India, underlining its commitment to give back to the society and environment. This has influenced the design and implementation of the Company's CSR plans.

Pursuant to the provisions of Section 135 of the Companies Act and Companies (Corporate Social Responsibility Policy) Rules, 2014 & DPE Guidelines, the Company has undertaken various activities as per the CSR Policy. The projects / programmes / activities were taken up in line with Schedule VII of the Companies Act.

The Corporate Social Responsibility Policy of the Company is available on the Company's website at https://hal-india.co.in/ Common/Uploads/DMS/CSR_Policy.pdf. Salient features of the Policy form part of the Annual Report.

A separate Report on CSR activities undertaken by your Company during the year 2018-19 is enclosed as Annexure-lll.

Business Responsibility Report

SEBI (LODR) Regulations stipulate that the annual report shall include a Business Responsibility Report describing the initiatives taken by the listed entity from an environmental, social and governance perspective in the format specified. Accordingly, the Business Responsibility Report for the year 2018-19 has been drawn up and appended to this Report.

Significant and Material Orders

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company's operation in the future.

Public Deposits

During the year, your Company has not received any deposits from the public.

Maintenance of Cost Records

Your Company maintains cost records as specified by the Central Government under Section 148(1) of the Companies Act.

Transfer of Shares

During the year under review, 400 equity shares of Rs. 10 each were transferred from Nominees of the President of India to the President of India.

Issue of Equity Shares with Differential Rights

During the year, the Company has not issued any equity shares with differential rights as to dividend, voting or otherwise.

Particulars of Employees and Related Disclosures

The provisions of Section 197 of the Companies Act and the relevant Rules do not apply to your Company, in view of the Gazette Notification No. G.S.R. 463 (E) dated 5th June, 2015 issued by the Ministry of Corporate Affairs, Government of India.

MoU with Government

Your Company continues to sign the annual Memorandum of Undertaking (MoU) with the Ministry of Defence, Government of India.

The performance of the Company for the year 2017-18 has been rated as Excellent in terms of MoU with the Government. MoU rating for the year 2018-19 is under review by the Government.

Events subsequent to the date of Financial Statements

There are no material changes and commitments affecting the financial position of the Company, that have occurred between 31st March, 2019 and date of signing of this Report.

Research and Development Efforts

During the year, the Company continued to focus its efforts towards development of new platform, technology and activities to enhance its capability with a view to bring technological superiority to its products and in order to cope with the future technological challenges. Towards the progress of the R&D efforts, the Company has incurred a total expenditure of Rs. 1,46,440 lakh for the year 2018-19 which is 7.43 per cent of the turnover.

The Company continues to work with premier R&D organisations like DRDO laboratories, CSIR-NAL, the IITs and IISc towards self-reliance in the Aviation field. The Company has established chairs at IIT Madras, IIT Roorkee, IIT Kharagpur, IIT Bombay, IIT Kanpur and IISc Bangalore to enhance its R&D efforts.

The Company has transferred a sum of Rs. 21,488 lakh (10 per cent of Operating PAT) to the R&D reserve for contribution to the R&D corpus during the year 2018-19.

During the year, the Company filed 82 IPR applications, making a total of 1,621 IPRs filed by Company. 70 IPRs were granted during the year, taking the total IPR held by the organization to 178.

Exports

The Company has achieved export sales of Rs. 40,504 lakh. The major exports include supply of one Do-228 aircraft to Seychelles People's Defence Forces, Structural Work Packages,

Forgings, Castings and Rolled Rings to major Aerospace OEMs and Repairables, Spares & Services to foreign aircraft operators.

Towards enhancing its brand and showcasing its products and capabilities, the Company participated in leading international Air Shows/Exhibitions, including Defexpo-2018 (lndia),ARMY-2018 (Moscow), Farnborough Air Show 2018 (UK), Africa Aerospace & Defence (South Africa), DEFPOL-2018 (Vietnam), Indo Defence Exhibition-2018 (Indonesia), EDEX-2018 (Egypt), Aero India 2019, and LIMA 2019 (Malaysia).The Company is also making efforts to secure export orders for aircraft and helicopter platforms arising out of bilateral Defence Cooperation agreements signed between the Government of India and the respective Countries.

With an objective to enhance business opportunities, your Company's focus is on securing long term projects towards meeting the entire global requirements, through Offset programs accrued from the Indian Defence Capital Acquisition. Various strategic initiatives were taken to establish and progress business framework/agreement with the OEMs.

Vendor Development

During the year, the Company conducted 27 vendor development programmes, of which eight were for Micro & Small Enterprises (MSEs) owned by SC/ST Entrepreneurs.

The Company has registered with RXIL and M1 exchange for enabling payments through TReDS platform. The Company has already made payments through TReDS-RXIL platform. All efforts are made to bring the MSEs on TReDS platform. Currently, several vendors are registered with TReDS platform and efforts are being made to bring other vendors also on the portal. The Company has also registered with MSME SAMADHAAN portal and the same is being monitored regularly for resolution of grievances of MSEs, if any. The procurement details are being updated monthly in MSME SAMBANDH Portal.

The Company has implemented the Purchase Preference Policy (Make in India) w.e.f 1st July, 2018 in line with provisions indicated in Public Procurement (Preference to Make in India), Order 2017 issued by the Department of Industrial Policy and Promotion (DIPP) to encourage 'Make in India' and promote manufacturing and production of goods and services in India.

The Company has registered on DPE portal and the weekly data is regularly uploaded w.r.t procurement from MSME through GeM portal and payment through TReDS platform.

Procurement from Micro & Small Enterprises (MSEs)

During the year, the total value of procurement including outsourcing made from MSEs was Rs. 73,389 lakh.

Indigenisation

The Company's endeavour to boost the indigenisation programme is consistently progressing to achieve self reliance in the field of Aeronautics. Obsolescence management, savings in foreign exchange and cost reduction of various items for manufacture and ROH of Aircraft and Helicopters are the consideration for Indigenisation. During the year, the number of items indigenized is 1,566 and total foreign exchange saving is Rs.11,767 Lakhs.

Make In India Initiatives HAL's Make in India Portal

In support of the Make in India programme, the Company has listed over 350 imported systems and subsystems used in its projects, including ALH, LCA, Do-228 and Jaguar. Private industries are invited to come forward for indigenous production of these systems, leading to import substitution.

The Company has also hosted more than 100 Tools, Testers and Ground Equipment for manufacturing/ ROH / maintenance of SU-30 MKI on its website under the Make in India program.

Make-ll Framework and Indigenisation Policy

The Company is in the process of implementing the following policy/ Framework promulgated by MoD:

Framework for implementation of 'Make-ll' Procedure at DPSUs;

Policy Initiatives for Indigenisation of Components and Spares Used in Defence Platforms for DPSUs.

Human Resource Development

The number of employees as on 31st March, 2019 stood at 28,345.

During the year 2018-19, opportunities for Officers to build their knowledge-based competencies were supported. Ten Officers were sponsored for M.Tech programmes at the Defence Institute of Advanced Technology, Pune/ Indian Institutes of Technology and 5 Officers were sponsored for a PG Diploma in Public Policy & Management at the Indian Institute of Management, Bangalore. One Officer was sponsored for the 74th Staff Course at the Defence Staff College, Wellington, Tamil Nadu. Four Officers were sponsored for Ph.D Programmes at the IISc, Bangalore and IITs. As on 31st March, 2019, a total of 4,105 Apprentices were engaged in the Company, comprising 10.29 per cent of the total employee strength including contractual staff.

Employee Welfare

The Company continues to extend welfare benefits to the employees and their dependants including comprehensive Medical Facilities, Housing Facilities, Canteen Facilities (for employees only). Educational Facilities for Employees Children, and Sports Facilities.

REPRESENTATION OF SC/STs

The position regarding representation of Scheduled Castes / Scheduled Tribes (SC/STs) is as follows: Representation of SC/STs in the total strength of the Company as on 1st January, 2018 and 1st January, 2019

Category

Total Strength as on

Number of SCs as on

Number of STs as on

(Grade / Scale of Pay)

1.1.2018

1.1.2019

1.1.2018

1.1.2019

1.1.2018

1.1.2019

Group –A

(Grade -II & above)

8,807

8,554

1,557

1,516

529

514

Group -B (Grade -I)

43

31

8

4

4

2

Group -C

(Scale - 3 to Special Scale)

20,354

19,972

3,501

3,501

1,473

1,463

Group -D (Scales -1 &2)

 

 

 

 

 

 

(i) Excluding Safai Karmacharis

15

15

4

4

-

-

(ii) Safai Karmacharis

 

 

 

 

 

 

Total

29,219

28,572

5,070

5,025

2,006

1,979

Recruitments made during the period 1st January, 2018 to 31st December, 2018 and the SC/STs amongst them

Category (Grade / Scale of Pay)

Total number of posts filled

No. of Reservations made for

No. of Posts filled by appointment of

 

SCs

STs

SCs

STs

Group -A (Grade- II & above)

22

-

-

2

1

Group -B (Grade - I)

-

-

-

-

-

Group - C (Scale-3 to Special Scale)

233

64

35

55

22

Group -D (Scales -1 &2)

 

 

 

 

 

(i) Excluding Safai Karmacharis

-

-

-

-

-

(ii) Safai Karmacharis

-

-

-

-

-

Total

255

64

35

57

23

Vacancy-Based Promotions made during the period 1st January, 2018 to 31st December, 2018 and the SC/STs amongst them.

Category (Grade / Scale of Pay)

Total number Promoted

No. of Reservations made for

No. of Posts filled by Promotion of

 

SCs

STs

SCs

STs

Group -A (Grade- II & above)

1,272

NA

NA

203

67

Group -B (Grade- I)

-

-

-

-

-

Group - C (Scale-3 to Special Scale)

-

-

-

-

-

Group -D (Scales -1 &2)

 

 

 

 

 

(i) Excluding Safai Karmacharis

-

-

-

-

-

(ii) Safai Karmacharis

-

-

-

-

-

Total

1,272

-

-

203

67

Employee Relations (ER) / Industrial Relations

The Employee Relations Scenario in the Company has been peaceful and cordial during the year. Smooth relations were maintained between the Management and the Unions / Associations by effective communication Meetings with the representatives of the recognised Unions / Officers Associations at the Divisional, Complex & Corporate Levels were held to discuss issues.

Plant Level & Shop Level Committees with representatives from the Management & Workmen / Union Representatives are functioning in the Divisions to discuss and resolve production-related issues and other related matters. Grievance Redressal Mechanisms are in place to address Employee / Public Grievance / Representations in the Company.

Rajbhasha Implementation

In accordance with the Guidelines issued by the Department of Official Language, Ministry of Home Affairs, New Delhi, vigorous efforts are being made by all the Divisions of the Company towards implementation of the Official Language Policy (OL Policy) of the Government of India. To bring awareness about the OL Policy & Technical Facilities developed in the field of Official Language, a two-day Training Programme on 'Usage of Technical Terminology & OL Policy' was organised in April 2018 for Bengaluru-based Divisions and Offices with the help of the Commission for Scientific & Technical Terminology, Ministry of HRD, Gol. A seminar was organised for all the Divisions of the Company on 21st April, 2018 and an OL Policy Booklet was released on this occasion. Hindi Fortnight was celebrated from 14th September to 28th September 2018 by all the Divisions of the Company that saw enthusiastic participation by the employees. The 16th All HAL Hindi Utsav was organised between 5th December, 2018 and 8th December, 2018. More than 300 Workmen / Officers took part in the various competitions organised during the Utsav.

During the year, Hindi Language Training (Prabodh, Praveen and Pragya courses) were organised for the Bengaluru Divisions with the cooperation of the Central Hindi Teaching Institute (CHTI), Bengaluru. A Training Session was conducted on filing up of Quarterly Progress Report (QPR) on 15th March, 2019.

The progress made towards OL Implementation by the Divisions of the Company was reviewed by the Hindi Margdarshan Samiti at the Corporate level. Inspections of various Divisions related to Official Language have been conducted successfully by the Department of Official Language / Ministry of Defence during the year.

Prohibition of Sexual Harassment of Women at Workplace

The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 has been notified in the Company. In line with the Guidelines received from time to time, necessary actions have been taken to prevent Sexual Harassment of Women at Workplace. The HALCDA Rules applicable to Officers and the Certified Standing Orders applicable to Workmen have the required provisions in this regard.

Internal Complaints Committees as per Section 4 of the Act have been put in place. Information for the year 2018, in terms of Section 22 of the Act, is as indicated below:

(i)

Number of Cases pending as on 1st January, 2018

2

(ii)

Number of Complaints of Sexual Harassment received in the year 2018

2

(iii)

Number of Complaints disposed off during the year 2018

3

(iv)

Number of Cases pending as on 31st December, 2018 & its status

1 Case was pending at the ICC Inquiry stage as on 31st December, 2018. However, the case was subsequently closed on 27th February, 2019.

Information Technology (IT) Initiatives

Your Company has taken up many IT initiatives to ensure Customer delight, Process Improvement and IT Security. Towards enhancing customer experience, a Flight Operations & Safety (FOS) portal was launched, to record and track actions related to accidents. The portal is integrated with Quality & Customer Service dashboards to follow up on issues related to these. The portal is also integrated with internal mailing system for automated reports on incidents/ accidents.

As part of employee enablement in the Company, an Employee Self Service (ESS) portal that facilitates automation of address proof, salary certificate, NOC etc., has been developed. The system has the provision to digitally sign the certificate by the issuing authority thereby providing for a paperless system with compliance to IT Security. In continuation with the efforts towards a performance appraisal for Officers, we have shifted Workmen performance appraisals online. Two portals have been launched for productivity improvement, viz., a

Task Management application, and a Meeting Management application for scheduling meetings with both external/ internal stakeholders. Both portals are configured with SMS/ mail alerts for faster collaboration.

On the infrastructure front, a Multi Protocol Label Switching (MPLS) Wide Area Network covering 16 locations of the Company has been established for high speed data transfer.

Your Company has been keen towards improving the IT Security posture by implementing best practices and complying with applicable guidelines. As part of this, details of all IT Assets in the Company have been collected and published on the IT Asset management portal. A set of directives for Mobile Device Security has been framed to prevent leakage of information from mobile devices accessing the Company's server/ network on the internet. The Electronic Information Asset Protection Guidelines, a set of directives to protect users from the risks emanating from sharing of confidential data outside the Company Network was also framed during this period.

Awards & Recognitions

During the year, your Company received various Awards and Recognitions. Some of the important awards conferred to the Company are as under:

• Golden Peacock Innovative Product / Service Award for the year 2018 for the project Repair of Non ToT Test Equipment ARM-RLSU (SNK-30 MK) used for Checking of Radar Complex of Su-30 MKI Aircraft, during the Global Convention held between 17th and 19th April, 2018 at Dubai.

• Star Performer Award for the year 2016-17 in the Product Group - Defence Related Items, Large Enterprise, was presented by the Engineering Export Promotion Council (EEPC) India on 31st May, 2018 at New Delhi.

• The Gold Trophy in recognition of outstanding contribution to Skill Development was awarded to your Company in the Best PSU- Public Sector Training Programme category, during the Summit-cum-Awards function on Skilling India, organised by ASSOCHAM on 1st November, 2018 at New Delhi.

• 41st EEPC Southern Region Export Award for 'Excellence in Export of Engineering Services' for the year 2016-17 on 28th December, 2018.

• Governance Now 6th PSU Award for Technology Adaptation under Navratna Category at New Delhi on 17th January, 2019.

• The Apex India CSR Excellence Awards 2018 in the Aerospace Sector, for outstanding achievement in CSR

Management of the Kumudvathi River Rejuvenation project was awarded by the Apex India Foundation, on 18th February 2019 at New Delhi.

• The HAL CSR Project Kumudvathi River Rejuvenation was declared as the joint winner under the Water & Sanitation category during the CSR Rotary Karnataka Conference 2019 organised by The Rotary District 3190, on 15th February, 2019 in Bengaluru.

Vigilance

The Vigilance Department of the Company is headed by the Chief Vigilance Officer (CVO), an IPoS Officer on deputation from the Govt. of India. Vigilance Officers and Staff are posted to the Corporate Office and all the Divisions and Complexes of the Company.The Vigilance Department has been certified as ISO 9001: 2015 compliant, an initiative for delivering Quality Vigilance work. The Quality Management System (QMS) has been designed to effectively implement Quality Policies through Quality Objectives.

During the year, the Vigilance Department handled 313 complaints; and 1,123 Surprise/ Routine checks & CTE Type inspections were carried out in the Divisions in corruption-prone areas. Based on the outcome of checks/inspections and complaints, 34 cases were taken up for further investigation. The investigations on 27 cases were concluded with 14 cases referred for disciplinary action, six cases for administrative action while seven cases were closed with nothing adverse found during investigation.

During the year, final orders awarding 3 major penalties, 8 minor penalties, 25 advisory, 5 counselling, 1 warning and 2 exoneration were issued by the concerned disciplinary authorities.

Preventive and Proactive Vigilance has been the thrust area of the Vigilance Department. Some of the major initiatives by the Department during the year were:

• Amendment to Purchase Manual: Vigilance took initiative and organised a brainstorming session on the prevailing Supply Chain Management of the Company. As a result, 16 amendments were issued to the Purchase Manual which will help Managers in the decision-making and procurement process.

• System studies were carried out to streamline procedure for:

• Engagement of job contract labour/ skilled contract labour vis-a-vis their attendance and payments;

• Management of HAL schools including engagement of teachers;

• Procurement of medicines;

• Measures towards cost efficiency and cost reduction.

• Sensitisation on Vigilance: 76 (Seventy six) sessions were conducted to sensitise the HAL fraternity to be vigilant and join hands in curbing corruption. Workshops were held across the Divisions on Vigilance-related topics.

• Workshops: Several workshops were conducted with important functionalities/stakeholders in areas like Material Management, Finance, HR, Service Contracts, and Work Contracts.

Fraud Reporting

During the year, a fraud involving misappropriation of funds of Rs. 1,876 lakh by a Company Official in Koraput Division of the Company was reported. The matter is under investigation by the CBI. The details of the same are covered under Clause 21 of Note No. 49 of the financial statements.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 134(3)(c) of the Companies Act, your Directors state that:

(a) In the preparation of the annual accounts for the year ended 31st March 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the 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 as on 31st March, 2019 and of the profit and loss of the Company for the year ended on that date;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a going concern basis;

(e) the directors have laid down internal financial controls which are being followed by the Company and that such internal controls are adequate and are operating effectively;

(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively;

AUDITORS

Statutory Auditors

The Statutory Auditors of your Company were appointed by the Comptroller& Auditor General of India (C&AG). M/s. Maharaj N.R. Suresh & Co., Chartered Accountants, Bengaluru were appointed as Statutory Auditors for auditing the Accounts of the Company for the year 2018-19 and 18 firms of Chartered Accountants were appointed as Branch Auditors.

The notes on the financial statements referred to in the Auditors' Report are self-explanatory and do not call for any further comments.

Auditors' Report

The Auditors' Report on financial statements for the financial year 2018-19 and comments of the Comptroller & Auditor General of India (C&AG) under Section 143(6) of the Companies Act are appended to this Report. The statutory auditors' report does not contain any qualification, reservation or adverse remarks.

Cost Auditor

M/s. KPR & Associates, Cost Accountants were appointed as Cost Auditors for conducting the Cost Audit of the Company for the year 2018-19.

Secretarial Auditor

In terms of Section 204(1) of the Companies Act, the Company has engaged Shri S. Viswanathan, Practicing Company Secretary, Bengaluru to conduct Secretarial Audit of the Company for the year 2018-19. The Secretarial Audit report is annexed to this Report as Annexure - IV and forms part of Annual-Report. The said report does not contain any qualification, reservation or adverse remarks.

Annual Secretarial Compliance Report

The Company has filed the Annual Secretarial Compliance Report for the year 2018-19 with the BSE Ltd and National Stock Exchange of India Limited. The report was received from Practising Company Secretary and filed within the stipulated time as specified under Regulation 24A of the SEBI (LODR) Regulations.

Corporate Governance

Your Company has taken firm and structured initiatives to maintain the highest standards of Corporate Governance and its practices which are valued by our stakeholders. The practices emanate from the need to position multi-layered checks and balances at various levels to ensure transparency of its operations and in the decision making process.

In terms of SEBI (LODR) Regulations and DPE Guidelines, a report on Corporate Governance for the year ended 31st March, 2019 along with a certificate from the Company's Secretarial Auditor confirming compliance of applicable laws, rules and regulations is included in this Annual Report.

Management Discussion and Analysis Report

As per Regulations 34(2)(e) of the SEBI (LODR) Regulations, the Management Discussion and Analysis Report (MDAR) forms part of the Annual Report of the Company.

Vigil Mechanism

The Company has a Whistle Blower Policy approved by the Board and the same is made available on the Company's website.

Employees are encouraged to raise any of their concerns by way of whistle blowing and none of the employees have been denied access to the Audit Committee.

Quality Initiatives and Safety

Quality Management System in all the Production Divisions and Research & Design Centers of the Company has been successfully transitioned to the latest version of International Aerospace Standard AS9100D. Overhaul Division was certified for AS9110C on Requirements for Aviation Maintenance Organization. Additionally, all Production Divisions and Research & Design Centers are approved by the Directorate General of Aeronautical Quality Assurance (DGAQA) as per their latest document Approval of Firm and its Quality Management System (AFQMS), Issue-ll dated June 2018. Production Divisions catering to Civil Customers are approved by the Director GeneraI of Civil Aviation (DGCA) as a Production/ Maintenance Organization, while Production Divisions that are exporting products and services were also certified to the National Aerospace Defence Contractors' Accreditation Program (NADCAP) with approvals from OEMs such as Airbus, Boeing, Turbomeca, and Rolls Royce. HAL Laboratories is accredited to IS17025 by the National Accreditation Board for Testing and Calibration Laboratories (NABL).

The Research & Design Centers of the Company continue to hold the Design Organization Approval from the Centre for Military Airworthiness & Certification (CEMILAC) and Recognition of in-house R&D from the Department of Scientific & Industrial Research (DSIR), Ministry of Science & Technology, Government of India. The R&D Centre engaged in the development of Software is certified to Capability Maturity Model Integration for Development Maturity Level 3 (CMMI MLS) by KPMG, USA.

Quality improvement through employees' participation is being encouraged by practicing concepts such as Quality

Circles, Quality Improvement Teams and Six Sigma Project Teams in the Divisions. Twenty six Quality Circle teams of 135 members, participated in the National Convention of Quality Circles (NCQC-2018) held at Gwalior in December, 2018.

Standardisation of QMS has been achieved in many areas through three additional Corporate Quality Assurance Guidelines. Of these, two guidelines are protected by the registration of copyright with the Registrar of Copyrights, New Delhi.

Five Inspection Agencies have been approved by the Company as Third Party Inspection Bodies to carry out inspections on behalf of the Company at the premises of the sub-contractors of Production Divisions and R&D Centres.

A Corporate Quality Digital Desk has been established for real time data management and monitoring of Quality related information and issues of all the divisions. The performance of all Divisions is being mapped and monitored on the basis of Quality Performance Indicators derived from Quality Rating Manual released by the DGAQA.

To enhance the knowledge level of Officers in Aircraft Accident Investigation, the IAF was approached to increase vacancies in the Aerospace Safety & Accident Investigation (AS&AI) course. Consequently, the course can now accommodate six Officers from the earlier two. The Company has conducted a Flight Safety and Accident Investigation capsule on 5th December, 2018 as part of the Post Graduate Diploma in Aviation Management course.

Acknowledgement

The Board places on record its sincere appreciation towards the Company's valued customers, in particular the Defence Services, for the support and confidence reposed by them in the Management of the Company, and look forward to the continuance of this mutually supportive relationship in the future.

Your Directors acknowledge with a deep sense of appreciation, the valuable support and cooperation received from the Government of India in particular the Ministry of Defence, Department of Defence Production, Defence Acquisition and Defence Finance as well as other Ministries of the Government of India in all the endeavours of the Company.

The Company wishes to place on record its appreciation for the cooperation extended and services provided by the Comptroller & Auditor General of India (C&AG), the Principal Director of Commercial Audit & Ex-officio Member, Audit Board, Statutory Auditors, Bankers, Collaborators, JV Partners and Suppliers.

Your Directors are also thankful to the shareholders for their faith and continued support in the endeavours of the Company.

Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company Executives, Staff and Workers for progress and prosperity of the Company.

For and on behalf of the Board of Directors

 

Hindustan Aeronautics Limited

 

(R. Madhavan)

 

Chairman & Managing Director

Place : Bengaluru

 

Date : 27th July, 2019

 

Annexure-I to Board's Report

Form No. AOC-2

(Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

Form for disclosure of particulars of contracts/arrangements entered into by the company with related parties referred to in sub-section (1) of section 188 of the Companies Act, 2013 including certain arms length transactions under third proviso thereto

1. Details of contracts or arrangement or transactions not at arm's length basis:

SI. No

Name (s) of the related party

Nature of relationship

Nature of contracts/ arrangements /transactions

Duration of the contracts; arrangements /transactions

Salient terms of the contracts or ' arrangements or transactions including the value, if any

Justification for entering into such contracts or arrangements or transactions

Date(s) of approval by the Board

Amount paid as advances, if any:

Date on which the special resolution was passed in General Meeting as required under first provision to Section 188

1

M/s. HALBIT Avionics Pvt Ltd, Bangalore

Joint Venture

Technical support at customer base on single tender basis

1 year

Provisioning & awarding Contract at a total value of Rs. 42.48 Lakhs for Onsite Technical Support for HAWK Training Aids at AFS Kalaikunda and INS Dega

As items were supplied & installed by OEM - M/s. HALBIT, technical support to be provided/availed by them only.

30th June 2018

 

 

2

M/s. Naini Aerospace Limited, Allahabad,

Subsidiary

Fabrication of ALH Looms, Manufacturing & Assembly of Sub- Assembly Bottom Structure and Transmission & Engine Deck and Mfg & Assy. of ALH Coupling Jig Work on Nomination basis

1 year

Fabrication of ALH Looms (5 Sets), Manufacturing & Assembly of Sub-Assembly (5 sets), Bottom Structure and Transmission & Engine Deck and Mfg & Assy. Of 6 sets of ALH Coupling Jig Work at a total value of Rs. 6.90 Crs for 41 ALH Program.

Development of Subsidiary as a source for fabrication/supply of looms, Jigs & Assemblies on Nomination basis as per DPR/Business plan approved by Board

13th August 2018

 

 

3

M/s. Naini Aerospace Limited, Allahabad

Subsidiary

Fabrication of ALH Looms on Nomination basis

1 year

Placement of purchase orders for fabrication of 3 types ALH Looms (5 sets each) at a total value of Rs. 0.48 Crs. for 41 ALH Program

Development of Subsidiary as a source for fabrication/supply of looms on Nomination basis as per DPR/Business plan approved by Board

8th January .2019

 

 

4

M/s. Naini Aerospace Limited, Allahabad

Subsidiary

Fabrication of LCA Looms on single developed source basis

2 year

Placement of purchase orders at a total value of Rs. 7.18 Crs. for manufacture and supply of 10 sets of Looms (344 types) for LCA Project

Development of Subsidiary as a source for fabrication/supply of looms on single developed source basis

18th March 2019

 

 

2. Details of material contracts or arrangements or transactions at arm's length basis.

SI No

Name(s) of the related party

Nature of relationship

Nature of con tracts/ arrangements / transactions

Duration of the contracts / arrangements / transactions

Salient terms of the contracts or arrangements or transactions including the value, if any

Date(s) of approval by the Board, if any

Amount paid as advances, if any:

Remarks

 

 

 

 

Nil

 

 

 

 

 

 

For and on behalf of Board of Directors

 

Hindustan Aeronautics Limited

Date : 27th July, 2019

(R. Madhavan)

Place: Bengaluru

Chairman & Managing Director

Annexure- II to Board's Report

REPORT ON THE FINANCIAL PERFORMANCE OF THE JOINT VENTURE AND SUBSIDIARY COMPANIES

(a) HAL has established 12 (twelve) commercial Joint Venture Companies (JVCs) in collaboration with leading international aviation and Indian Organizations and 2 (two) subsidiary Companies. Besides, the Company also formed 2 (two) Section-8 (non-profit) Companies.

During the year under review, the total turnover reported by the JVCs is Rs. 449.32 Crore, as per details given below:

SI No.

Name of the JVCs

HAL share holding (%)

( Turnover

(Amount in Rs. Crore) Profit Before Tax

i

BAeHAL Software Ltd.

49

16.09

(2.13)

ii

Indo Russian Aviation Ltd.

48

90.20

20.98

iii

Safran HAL Aircraft Engines Pvt. Ltd.

50

106.88

11.76

iv

Samtel HAL Display System Ltd.

40

17.41

(2.31)

V

HAL-Edgewood Technologies Pvt. Ltd.

50

0.63

(0.21)

vi

HALBIT Avionics Pvt. Ltd.

50

4.05

(9.20)

vii

Infotech HAL Ltd.

50

9.09

1.29

viii

HATSOFF Helicopter Training Pvt. Ltd.

50

38.96

(7.74)

ix

TATA-HAL Technologies Ltd.

50

5.53

0.17

X

International Aerospace Manufacturing Pvt. Ltd.

50

155.45

1.48

xi

Multi-RoleTransport Aircraft Ltd.**

50

0.00

(10.12)

xii

Aerospace & Aviation Sector Skill Council (AASSC) *

50

0.32

(0.56)

xiii

Helicopter Engines MRO Private Ltd.

50

0.68

(2.71)

xiv

Defence Innovation Organisation*

50

-

-

 

Name of the Subsidiaries

 

 

 

XV

Indo Russian Helicopters Limited**

50.5

-

(0.49)

xvi

Naini Aerospace Limited

100

4.03

(12.95)

 

TOTAL

 

449.32

(13.35)

Note: Figures in brackets 0 indicate loss * Section-8 (non-profit) Companies. ** Not commenced operation

(b) During the current financial year, 2 (two) JVCs viz. Indo Russian Aviation Ltd and International Aerospace Manufacturing Pvt Ltd. have together paid a dividend of Rs. 1.815 Crs. to HAL.

SI. No.

Name of JVCs

Rs. In Crs

1

Indo Russian Aviation Ltd

1.73

2

International Aerospace Manufacturing Pvt Ltd

0.085

 

Total

1.815

 

 

For and on behalf of Board of Directors

 

Hindustan Aeronautics Limited

Place : Bengaluru

(R. Madhavan)

Date : 27th July, 2019

Chairman & Managing Director

Annexure-lll to Board's Report

ANNUAL REPORT ON CORPORATE SOCIAL RESPONSIBILITY (CSR) ACTIVITIES FOR THE FINANCIAL YEAR 2018-19

1. A BRIEF OUTLINE OF THE COMPANY'S CSR POLICY, INCLUDING OVERVIEW OF PROJECTS OR PROGRAMS UNDERTAKEN AND A REFERENCE TO THE WEB-LINK TO THE CSR POLICY AND PROJECTS OR PROGRAMS

Brief outline of Company's CSR Policy:

In conformity with the provisions laid down under Section 135 of the Companies Act, 2013 and the Rules there under notified by the Ministry of Corporate Affairs on CSR, the CSR & SD Committee of the Board had redrafted / modified the CSR Policy which was approved by the Board of Directors of the Company at its 380* Meeting held on 27/11/14, which is amended from time to time. A brief outline of the CSR Policy is as follows:

> The Budget allocation for the CSR Projects will be two (2) percent of the Average Net Profits of the Company made during the three immediately preceding Financial Years. Average Net Profits shall be calculated in accordance with the provisions of Section 198 of the Companies Act, 2013.

> Preference is given to the local area and areas around the Divisions / Complexes where it operates, for spending the amount earmarked for Corporate Social Responsibility Projects / Activities.

> Conducting a base line survey is not a mandatory provision; accordingly, the Divisions / Complexes may opt for other methods, including use of its own in-house expertise and resources for need assessment studies. In this regard, it is to be noted that the Gram Sabhas and Panchayati Raj institutions at the village level are important and reliable sources for assessing the social, economic & environmental needs in rural areas. Therefore, as far as possible, they should be consulted in planning CSR Projects/Activities.

> The Divisions will choose CSR Projects / Activities, in line with the themes specified in Schedule VII of the Companies Act, 2013.

> The Divisions may take up long gestation Projects for reaping the maximum benefits and impact towards the Social, Economic & Environment status in the locations identified under CSR Projects. For easy implementation, long-term CSR plans should be broken down into medium-term & short-term plans.

> While implementing CSR Projects, it is mandatory to comply with the Rules / Regulations / Laws of the State. However, expenditure on such compliance / statutory measures will not be covered under CSR's financial component and would be considered as mainstream business spend / expenditure.

> Contribution of any amount directly or indirectly to any Political Party shall not be considered as a valid CSR Activity.

> The Divisions / Complexes will not take up Projects / Activities required to be implemented by the Government and / or for which Central / State Government Schemes have been sanctioned, as it could result in unnecessary duplication.

> The CSR Policy along with the CSR Projects / Activities to be undertaken is being displayed on the Company's Website, as per the particulars specified in the Act.

> The CSR Projects / Activities that benefit only the employees of the Company and their families will not be considered as a valid CSR Project / Activity.

> The surplus arising out of the CSR Projects / Activities shall not form part of the Business Profits of the Company.

Overview of the CSR Projects or Programmes undertaken during 2018-19:

The Projects were implemented with a view to bring in wholistic development, improve the quality of life of the socially & economically backward groups and marginalized & weaker Sections of the Society.

The Company has been taking up CSR Projects / Activities in the vicinity of the Divisions based on identified needs and availability of funds. An overview of some of the CSR Projects implemented during 2018-19 is indicated below:

a) Organic Waste Management Plant (Conversion of Municipal Waste & Food Waste to Bio Gas) at Nasik in line with the Swachh Bharat Mission:

The Organic Waste in and around the villages of Ojhar was dumped in pits, which was a breeding ground for mosquitoes and other insects. The area with foul smell was causing health hazards to the people living in the nearby villages. In order to overcome the problem and also to facilitate cleaner environment, recycle garbage and save energy, the Company undertook the Project of Organic Waste Management Plant under its CSR initiative. The main objective of the Project was to maintain high standards of hygiene / sanitation, environmental sustainability by way of disposal of Organic Waste under Swachh Bharat Mission, in and around the areas of Ojhar village, Niphad Taluk of Nasik District. The plant was inaugurated in November, 2018. It is one of the biggest Organic Waste Management Plants in the Taluk as on date.

The Plant is having a capacity to convert 5 Tonnes of Organic Waste per day. The waste collected from the areas in and around Ojhar village is being brought to a centralized location and segregated into pre-cooking and post cooking waste. The said waste after processing in the plant produces Bio gas, which in turn generates electricity. The electricity generated is re-used to run the plant. The excess electricity generated is distributed through Grid for Street Lights. As on date, the said Project is running at its peak capacity.

b) SAI-HAL Sports Training Centre - Koraput, Odisha State:

In its endeavour to identify and nurture tribal / local Rural Sports talent, the SAI-HAL Sports Training Centre is established at HAL, Koraput Division with technical support and posting of Coaches from the Sports Authority of India (SAI) [MoU with the Sports Authority of India (SAI) was signed during 2010, under its CSR initiatives]. Koraput Division had provided free training in Archery, Football & Athletics to 48 tribal students of undivided Kalahandi Balangir & Koraput (KBK) region, during 2018-19.

One of the Athletes, Shri Surendra Khora had bagged Gold Medal in 600 meter race in the 30th East Zone Athletic Championship held at Patna in September 2018. He had also bagged Gold Medal in 800 meter race in the Under-16 age group category in the 66th State Athletic Meet held at Cuttack, Odisha during December, 2018.

The Division had successfully conducted the 7th State level Archery Prize Money Championship during the year. HAL, Koraput Division has also undertaken construction of a 400 meters, 8 lane athletic track at the Training Centre.

c) Installation of Water ATMs and Hand Pumps for Safe Drinking Water

In order to provide safe drinking water to the public who are coming to the City from nearby areas. Transport Aircraft Division (TAD), Kanpur of the Company had undertaken the Project of setting up of water ATMs at a cost of around Rs. 45 Lakhs in Public Places of Kanpur.

The Division has also installed 40 Hand Pumps at various nearby villages which not only benefitted the general public but also the poor and the needy.

d) Healthcare:

HAL Koraput Division had been providing inpatient and outpatient Healthcare facilities to the inhabitants of adopted villages. Medical/Health camps were organized in the vicinity of most of the Divisions of HAL. Regular Ambulance visits to the villages is an ongoing activity in some of the Divisions.

e) Kumudavathi River Rejuvenation Programme (Development of 4 Mini Watersheds at Mahadevpura,Torehosapalya, Motaganahalli & Kavalpalya Taluk, Bengaluru Rural District), Karnataka:

During 2014-15, the International Association for Human Values (IAHV), a sister Organization of the Art of Living Foundation, a Non-profit NGO, Bengaluru had approached HAL to support in rejuvenating the dried up River Basin of Kumudavathi. They had prepared an Action Plan to rejuvenate the River by using satellite remote sensing data with integrated thematic map analysis. Keeping in view the benefit which would accrue to a large population of the society, the Company had decided to associate in the Project for revival of the dried up natural water resource, during 2014-15.

7 Mini Watersheds out of the total 18 were implemented from 2014-15 to 2017-18. 4 Mini Watersheds were constructed during 2018-19. The cost incurred towards the construction of 11 Mini Watersheds was Rs. 14.39 Crores. Remaining 7 Water sheds have been completed by other Organisations at a cost of Rs. 7.04 Crores. The Project was completed by March, 2019.

The outcome of this rejuvenation project has been the revival of defunct bore wells, increase in the ground water level and irrigation tanks. This has resulted in various agri-horticulture developments in the region and a significant increase in natural vegetation and biodiversity. The Project would benefit a population of around 73,000.

f) Construction of Toilets in Public Places / Schools under Swachh Bharat Mission:

In line with the Government Policy on Swachh Bharat Mission, the Company had taken up construction of Toilets in Government Schools in the vicinity of its Units. The Company had constructed around 460 Toilets during the year 2018-19. 333 Toilets, 224 Urinals & 218 Washbasins were constructed in Bangalore itself in the past 5 years, benefiting more than 11,000 Students in various Government Schools, at a cost of Rs. 6.32 crores.

SHE Toilets:

Avionics Division, Hyderabad of the Company in association with the Greater Hyderabad Municipal Corporation (GHMC) had taken up a unique initiative of construction of SHE Toilets which would also benefit the Self Help Groups (SHGs). Salient features of the Project are as given below:

> GHMC formed Women Self Help Groups and they would manage the facility;

> SHE Toilets are also having facility for differently abled women and also facility/room for baby feeding;

> SHE Toilets not only serves its basic purpose but also helps in employment and revenue generation for Self Help Group Members in terms of sale of products in the adjoining facility/stall.

Tata Nest Toilets:

The Tata Nest Toilets, a non-profit organisation is empanelled with Ministry of Urban Development, Government of India. Based on the request received from the Zonal Commissioner (CSR), Greater Hyderabad Municipal Corporation (GHMC), West Zone, Cyberabad, Avionics Division, Hyderabad had installed Tata Nest Toilets in two Government Schools at a cost of Rs.5 lakhs, benefiting about 580 students, as part of Swachh Vidyalaya under Swachh Bharat Mission.

g) Clean Cooking Solutions (Livelihood Enhancement Project) -

Avionics Division, Korwa of the Company, as part of its CSR Projects / Activities in Barauliya Village which is at a distance of 10 Kms from the Division, had formed a Self Help Group (SHG), viz., Jai Matadi Urja for introducing clean cooking solutions for livelihood enhancement. Under the project, agricultural waste is collected and shredded in a machine. The shredded pieces are recycled into fuel pellets with the help of a Fuel Pellet Making Machine. These bio-degradable fuel pellets are used in specially designed stoves for cooking which do not generate any smoke. The stove has a rechargeable battery to drive a fan which helps in combustion.

The Division has installed one Fuel Pellet Making Machine with a Shredder at a cost of Rs. 5.55 Lakhs. Around 400 stoves (each costing Rs. 1900/-) have been distributed to Below Poverty Line households, in coordination with the Village Pradhan.

The salient features of the Project are:-

> Recycling of agricultural waste, like dried leaves and branches;

> Generation of Smoke Free Fuel Pellets;

> Smokeless Stoves have helped the health of the villagers;

> Generation of employment to the rural youth by way of selling the Fuel Pellets.

h) HAL Football Academy, Bangalore:

HAL Sports Club Bangalore, a pioneer in promoting sports had produced national level Football players in the past who had kept the HAL flag flying high. HAL team had participated in the prestigious l-League also.

To bring back the past glory, HAL as part of Corporate Social Responsibility (CSR) had started a Football Academy at Bangalore to spot / identify and nurture young talent in Football through professional tie-ups. The Academy for 'Under-15' was inaugurated in February 2016 and 'Under-18' coaching had commenced from August 2016. Efforts are also underway to form a National Football Academy in collaboration with the Sports Authority of India & AII India Football Federation.

The aim is to spot talent at a young age and develop players of exceptional calibre and prepare them for tough domestic and International tournaments. In addition to professional grooming, emphasis is also given on holistic Personality Development for the young players. Carefully selected players are being provided professional coaching.

Proper Infrastructure is one of the fundamental requirements in this regard. Keeping this in mind, HAL has developed two (2) FIFA standard football grounds, one with Artificial Turf and another with Natural Turf at Bangalore, which would help in development of individual skills. A third party agency is being finalised for running the Football Academy. The grounds can be used for training of other team(s), also. These grounds are also expected to be used by various top teams for training like l-League and Foreign teams when they visit Bangalore for tournaments or exhibition matches

The Academy is formed with aim to develop a pool of talent with the infrastructure developed by HAL. In the long run, the Academy would become a 'Centre of Excellence' in Football.

i) HAL CARES:

A Compendium of CSR Activities HAL CARES was published during the year. 'HAL CARES' is derived from the Company's enduring values of Compassion, Assistance, Respect, Ethics &Sustainability. These values drive the CSR activities that benefit thousands of individuals in various parts of the Country. The Compendium is focussed on important issues that afflict the Society today, viz.. Water Conservation, Cleanliness, Environment Protection, Healthcare etc. HAL is actively participating in the Sustainable Development of the Society by taking up projects aimed at rejuvenating the natural resources -Kumudavathi River Rejuvenation Project; environment protection - Installation of Solar Street Lights/Solar Power Projects (grid connected / off-grid) &Wind Power Projects. By focussing on sustainable projects, the Company is not only addressing the needs of today but also on securing a legacy for tomorrow. Change demands a call for action and this Compendium illustrates the significant steps that the Company has taken towards fulfilling commitment to the sustained growth of the nation.

The Compendium also brings out various CSR Projects taken up by the Company in spheres like Rural Infrastructure Development, Education, Skill Development, Healthcare, Sanitation & Toilets under Swachh Bharat Abhiyan, Sports Development etc.

2. COMPOSITION OF THE CSR & SD COMMITTEE AS ON 31st MARCH 2019 WAS AS UNDER:

Smt. Dipali Khanna, Independent Director, Member& Chairperson;

Shri V M Chamola, Director (HR), Member;

Shri Sunil Kumar, Director (Operations), Member;

Shri C B Ananthkrishnan, Director (Finance), Member;

Shri G V Sesha Reddy, Company Secretary, Secretary;

3

AVERAGE NET PROFIT OF THE COMPANY FOR THE LAST THREE FINANCIAL YEAR (2015-16, 2016-17 & 2017-18):

Rs. 3371.00 Crs

4

(a) PRESCRIBED CSR EXPENDITURE (2% OF THE AMOUNT AS IN ITEM 3 ABOVE :

Rs. 67.42 Crs

 

(b) Revenue generated during 2017- 18 from the Wind Power Plant of 6.3 MW established at Davanagere, Karnataka utilizing CSR Funds, which was commissioned in 2015-16 under CSR:

Rs. 9.32 Crs

 

(c) Total Budget (a+b) :

Rs. 76.74 Crs

5

DETAILS OF CSR SPENT DURING THE FINANCIAL YEAR :

Rs. 72.46 Crs

 

Total amount to be spent during the Financial Year :

Rs. 76.74 Crs

 

Amount unspent, if any :

Rs. 4.28 Crs

Manner in which the amount was spent during the Financial Year is detailed in Appendix-A

6. IN CASE THE COMPANY HAS FAILED TO SPEND THE TWO PER CENT OF THE AVERAGE NET PROFIT OF THE LAST THREE YEARS OR ANY PART THEREOF, THE COMPANY SHALL PROVIDE THE REASONS FOR NOT SPENDING THE AMOUNT IN ITS BOARD'S REPORT

There was a shortfall in expenditure of Rs. 4.28 crores against the actual CSR Budget of Rs. 76.74 Crores. Reasons for the shortfall are given below:

a) Establishment of a Centralized Kitchen at Semiliguda, Koraput District, Odisha for feeding 25000 children in Govt. and Govt. aided Schools under the Mid-Day Meal programme at a Budgeted amount of Rs. 9.80 crores could not be commenced during the year due to delay in finalization of the MoU, sanction of land from State Govt., finalizing the Tripartite Agreement between State Govt. of Odisha, Akshaya Patra Foundation & HAL, delay in obtaining approvals etc. The project will commence during the year 2019-20.

b) Construction of Skill Development Centre cum Multipurpose Halls in Nasik and Dhule Districts of Maharashtra at a Budgeted amount of Rs. 7.00 Crores could not progress as per the schedule (commenced in the month of March 2019) due to delay in obtaining approvals / clearances from the concerned Authorities.

7. RESPONSIBILITY STATEMENT:

The Responsibility Statement of the CSR&SD Committee of the Board of Directors of the Company is reproduced below: The Implementation & Monitoring of the CSR Policy is in compliance with the CSR Objectives and Policy of the Company.

(V.M. Chamola)

(Dipali Khanna)

Director (HR)

Chairperson, CSR & SD Committee

Appendix A

CSR ANNUAL REPORT 2018-19

 

 

 

 

 

 

 

 

 

Rs.in Lakhs

Name of the Division/ Office

SI. No.

CSR Project / Activity Identified

Sector in which the project is covered

Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken

Amount Outlay (Budget) Project or Programe-wise

Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes

Administrative overhead Expenditure

Cumulative expenditure up to the reporting period

Mode of Implementation ( Direct or through implementing Agencies)

Corporate Office

1

Establishment of HAL -IISc Skill Development Centre

II

IISc New Campus at Challakere, Chitradurga Dist, Karnataka

1970.00

1638.00

0.00

1638.00

IISc, Bangalore

 

2

Sponsorship of 5 M.Tech Students of CTARA, IIT- Bombay

II

IIT Bombay

40.00

36.24

0.00

36.24

IIT-Bombay

 

3

Expenditure incurred towards training of Apprentice Trainees over and above the minimun statutory limit of 2.5% upto 10% of the total strength of the establishment including the Contractual Staff.

 

Divisions of HAL

1100.00

1807.16

0.00

1807.16

Direct

 

4

Administrative Expenses

_

Bangalore, Karnataka

51.29

0.00

51.29

51.29

Direct

 

 

Sub Total

 

 

3161.29

3481.40

51.29

3532.69

 

TTI, Bangalore

1

Centre of Excellence [Carry Forward Project of 2017-18 expenditure incurred in 2018-19]

II

TTI-Bangalore, Karnataka

195.62

195.62

0.00

195.62

Direct

 

 

Sub Total

 

 

195.62

195.62

0.00

195.62

 

FMD, Bangalore

1

21 Toilets under Swachh Vidyalaya for Govt. Schools in Chikkaballapura Dist.

I

Chikkaballapura District, Karnataka

110.00

51.99

0.00

51.99

Direct

 

2

30Toilets under Swachh Vidyalaya for Govt. Schools in Doddaballapura Dist.

 

Doddaballapura District, Karnataka

 

3

Development of Kumudavathi River Rejuvenation Project (on going Project) 4 Mini Watersheds . [The expenditure incurred in 2018-19 is inclusive of the Carry Forward Budget of 2017-18]

IV

Bangalore Rural District, Karnataka

400.00

257.16

0.00

257.16

International Association Human Values (IAHV) a Sister Organization of Art of Living

 

4

Foot Ball Academy at Bangalore

VII

Bangalore Urban District, Karnataka

30.00

35.08

0.00

35.08

Direct

 

5

Gallery in Football Ground [The expenditure incurred in 2018-19 is inclusive of the Carry Forward Budget of 2017-18]

VII

Bangalore Urban District, Karnataka

150.00

304.30

0.00

304.30

Direct

 

6

Administrative Expenses

_

Bangalore, Karnataka

30.05

0.00

30.05

30.05

Direct

 

7

Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)

-

Chikkaballapura District, Doddaballapura District, Bangalore Rural & Urban District, Karnataka

44.91

44.91

0.00

44.91

Direct

 

 

Sub Total

 

 

764.96

693.44

30.05

723.49

 

 

Name of the Division/ Office

SI. No.

CSR Project / Activity Identified

Sector in which the project is covered

Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken

Amount Outlay (Budget) Project or Programe-wise

Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes

Administrative overhead Expenditure

Cumulative expenditure up to the reporting period

Mode of Implementation ( Direct or through implementing Agencies)

Barrackpore

1

Development of Orphanage Home/Old age Home

III

24 Parganas (North), West Bengal

3.50

3.50

0.00

3.50

Apnapan Orphanage /Old Age Home, Barrackpore

 

2

Construction of low cost Household Toilets for BPL under Swachha Bharat Mission

X

24 Parganas (South), West Bengal

5.33

5.32

0.00

5.32

Gram Panchayat

 

3

Rural Development - Development of Self Help groups (SHG) by constructing cottage with water facility & furniture for running Community Based Tourism for Livelihood

X

24 Parganas (South), West Bengal

15.42

8.04

0.00

8.04

Gram Panchayat

 

4

Promoting special education for the differently abled Children

III

24 Parganas (North), West Bengal

0.50

0.50

0.00

0.50

Anandapuri Hindu Primary School, Barrackpore

 

5

Providing Training on Community Based Tourism to SHG for running the Cottage for livelihood

III

24 Parganas (South), West Bengal

0.25

0.25

0.00

0.25

Gram Panchayat

 

6

Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)

-

24 Parganas, West Bengal

11.83

11.83

0.00

11.83

Direct

 

 

Sub Total

 

 

36.83

29.44

0.00

29.44

 

Lucknow

1

Rural Development Projects

(Roads / Multipurpose Shed, Water Supply etc. In villages)

X

Barabanki / Lucknow District, Uttar Pradesh

49.00

36.14

0.00

36.14

Direct

 

2

Construction Work / Renovation Work at Schools

II&X

Barabanki / Lucknow District, Uttar Pradesh

169.00

119.41

0.00

119.41

Direct

 

3

Medical Camps & Services

I

Barabanki / Lucknow District, Uttar Pradesh

20.00

18.50

0.00

18.50

Direct

 

4

Skill Development Project

II

Barabanki / Lucknow District, Uttar Pradesh

52.00

44.01

0.00

44.01

Direct

 

5

Administrative Expenses

_

Lucknow District, Uttar Pradesh

54.58

0.00

54.58

54.58

Direct

 

6

Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)

-

Barabanki / Lucknow District, Uttar Pradesh

62.06

62.06

0.00

62.06

Direct

 

 

Sub Total

 

 

406.64

280.12

54.58

334.70

_

 

Name of the Division/ Office

SI. No.

CSR Project / Activity Identified

Sector in which the project is covered

Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken

Amount Outlay (Budget) Project or Programe-wise

Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes

Administrative overhead Expenditure

Cumulative expenditure up to the reporting period

Mode of Implementation ( Direct or through implementing Agencies)

Hyderabad

1

Construction of Class Rooms to GUPS

II

Kasargod District, Kerala

20.00

20.00

0.00

20.00

District Administration Kasaragod

 

2

Indoor Stadium for trainings promotion of Kabaddi & Badminton

VII

Kasargod District, Kerala

23.00

23.00

0.00

23.00

District Administration Kasaragod

 

3

Public Toilets at Kanhangad

I

Kasaragod District, Kerala

7.00

7.00

0.00

7.00

District Administration Kasaragod

 

4

Construction of Kitchen Block (88 Sq. mtrs) at ZPHS. Siddapur

II

RR District, Telangana

8.00

8.00

0.00

8.00

District Administration Ranga Reddy

 

5

Construction of Toilets (75 Sq. mtrs) at ZPHS, Siddapur

I

RR District, Telangana

10.00

10.00

0.00

10.00

District Administration Ranga Reddy

 

6

Construction of Stage (185 Sq. mtrs.) in ZPHS, Siddapur

II

RR District, Telangana

12.00

12.00

0.00

12.00

District Administration Ranga Reddy

 

7

Construction of underground sump in ZPHS, Siddapur

II

RR District, Telangana

0.85

0.85

0.00

0.85

District Administration Ranga Reddy

 

8

Construction of site works in ZPHS, Siddapur

II

RR District, Telangana

3.00

3.00

0.00

3.00

District Administration Ranga Reddy

 

9

Construction of Bus Shelter at Devunibanda Thanda

X

RR District, Telangana

2.56

1.63

0.00

1.63

District Administration Ranga Reddy

 

10

Construction of UPS School Dinning Hall cum Kitchen at Gantlavelly

II

RR District, Telangana

12.29

7.99

0.00

7.99

District Administration Ranga Reddy

 

11

Construction of Compound wall to crematorium at Gantlavelly

X

RR District, Telangana

2.00

1.30

0.00

1.30

District Administration Ranga Reddy

 

12

Construction of Compound wall to dumping yard at Gantlavelly

X

RR District, Telangana

4.00

2.60

0.00

2.60

District Administration Ranga Reddy

 

13

Construction of Compound Wall to Anganwadi Building at Gantlavelly

X

RR District, Telangana

4.00

2.60

0.00

2.60

District Administration Ranga Reddy

 

14

Construction of Compound wall to Primary School Building at Devunibanda Tanda

II

RR District, Telangana

5.60

3.64

0.00

3.64

District Administration Ranga Reddy

 

Name of the Division/ Office

SI. No.

CSR Project / Activity Identified

Sector in which the project is covered

Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken

Amount Outlay (Budget) Project or Programe-wise

Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes

Administrative overhead Expenditure

Cumulative expenditure up to the reporting period

Mode of Implementation ( Direct or through implementing Agencies)

 

15

Construction of Compound wall to veterinary building at Gantlavelly

X

RR District, Telangana

5.00

3.25

0.00

3.25

District Administration Ranga Reddy

 

16

Construction of Community Hall at Gantlavelly

X

RR District, Telangana

15.00

9.75

0.00

9.75

District Administration Ranga Reddy

 

17

Construction of SchoolToilet Blocks for Boys and Girls in Upper Primary School at Gantlavelly

I

RR District, Telangana

12.00

7.80

0.00

7.80

District Administration Ranga Reddy

 

18

Sports kits / material to UPS at Gantlavelly

VII

RR District, Telangana

1.00

0.65

0.00

0.65

District Administration Ranga Reddy

 

19

(60) Dual Desks in UPS Gantlavely and Devunibanda Tanda

II

RR District, Telangana

2.50

1.63

0.00

1.63

District Administration Ranga Reddy

 

20

Digitalization of 7 Class Rooms at Gantlavelly

II

RR District, Telangana

2.00

1.30

0.00

1.30

District Administration Ranga Reddy

 

21

Constructions of additional class rooms in ZPHS at Chinchalpet

II

Vikarabad District, Telangana

25.00

16.25

0.00

16.25

District Administration Ranga Reddy

 

22

LCD Projectors (3 nos.) and S-type chairs (330) to EWRC Training Centre Skill Development

II

RR District, Telangana

10.00

10.00

0.00

10.00

District Administration Ranga Reddy

 

23

Imparting Police Recruitment (Physical Fitness & Mental Ability) training to under privileged youth

II

RR District, Telangana

15.00

9.75

0.00

9.75

District Administration Ranga Reddy

 

24

Organic Waste Composting Machine-Bio Mechanisation

I

Cyberabad, Hyderabad Telangana

24.76

24.76

0.00

24.76

Zonal Commissioner, GHMC

 

25

SHE Toilets at West Zone, Cyberabad area of GHMC

I

Cyberabad, Hyderabad/ Telangana

10.44

10.44

0.00

10.44

Zonal Commissioner, GHMC

 

26

Tata Nest Toilets

I

West Zone Hyderabad / Telangana

5.00

5.00

0.00

5.00

Zonal Commissioner, GHMC

 

27

Construction of 8 Nos. Class Rooms &Two Toilets in ZPHS Kothapet

II

Medchal District, Telangana

60.00

18.00

0.00

18.00

District Administration Medchal

Two unitsToilets in ZPHS Kothapet

 

 

 

28

Administrative Expences

 

Hyderabad, Telangana

16.41

0.00

16.41

16.41

Direct

 

 

Sub Total

 

 

318.41

222.19

16.41

238.60

 

 

Name of the Division/ Office

SI. No.

CSR Project / Activity Identified

Sector in which the project is covered

Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken

Amount Outlay (Budget) Project or Programe-wise

Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes

Administrative overhead Expenditure

Cumulative expenditure up to the reporting period

Mode of Implementation ( Direct or through implementing Agencies)

Kanpur

1

Adopt ion of wild animals /birds of Kanpur Zoological Park

IV

Kanpur District, Uttar Pradesh

10.00

10.00

0.00

10.00

Kanpur Zoo

 

2

Wholesome development (Toilets for Ladies & Gents, Community Centre, Renovation of School Building, Drinking Water, Roads, Medical Camps etc.) of villages nearby to HAL TAD Kanpur

X

Kanpur District, Uttar Pradesh

30.00

28.59

0.00

28.59

Direct

 

3

Swachh Bharat Action Plan - Provisioning and Construction of Toilets in Govt. Schools, Public places and nearby Areas of HAL Kanpur

 

Kanpur District, Uttar Pradesh

50.00

37.27

0.00

37.27

Direct

 

4

Procurement of Artificial Limbs &Tools for Differently Abled persons registered with V R C (Govt. of India) Kanpur through ALIMCO

 

VRC (Govt, of India) Kanpur & ALIMCO, Kanpur, Kanpur District Uttar Pradesh.

15.00

13.53

0.00

13.53

VRC Kanpur

 

5

Skill Development: Imparting vocational training & distribution of tool kits to the needy people to help them become self reliant [Through Institute of Entrepreneurship Development (IED), Govt. of U.P.]

 

Kanpur District, Uttar Pradesh

20.00

19.81

0.00

19.81

IED, Lucknow

 

6

Installation of Water ATMs at Public Places in Kanpur Nagar

I

Kanpur District, Uttar Pradesh

45.00

21.83

0.00

21.83

Direct

 

7

Renovation Work at Public Library including provisioning of Books, Rack Facilities, etc.,

V

Kanpur District, Uttar Pradesh

15.00

13.27

0.00

13.27

Direct

 

8

Renovation and other allied works (i.e., Solar Power Plant of 5 KW) at Govt. Orphanage for Girls

III

Kanpur District, Uttar Pradesh

20.00

18.42

0.00

18.42

Direct

 

9

Restoration of historical site and beautification of Sher Shah Suri Pond adjacent to TAD-Kanpur

V

Kanpur District, Uttar Pradesh

10.00

11.63

0.00

11.63

Direct /Kanpur Nagar Nigam

 

10

Development of Play Ground and Conduct of Sports in Rural Village near HAL Kanpur

VII

Kanpur District, Uttar Pradesh

10.00

13.22

0.00

13.22

Direct

 

11

Administrative Expenses

_

Kanpur District, Uttar Pradesh

16.00

_

16.00

16.00

Direct

 

12

Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)

-

Kanpur District, Uttar Pradesh

75.00

130.96

0.00

130.96

Direct

 

 

Sub Total

 

 

316.00

318.53

16.00

334.53

 

 

Name of the Division/ Office

SI. No.

CSR Project / Activity Identified

Sector in which the project is covered

Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken

Amount Outlay (Budget) Project or Programe-wise

Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes

Administrative overhead Expenditure

Cumulative expenditure up to the reporting period

Mode of Implementation (Direct or through implementing Agencies)

Korwa

1

Construction / Repairing / resurfacing of roads in nearby villages [The expenditure incurred in 2018-19 is inclusive of the Carry Forward Budget of 2017-18]

X

Amethi District, Uttar Pradesh

45.00

50.40

0.00

50.40

Direct

 

2

Construction of Community Centre [The expenditure incurred in 2018-19 is inclusive of the Carry Forward Budget of 2017-18]

X

Amethi District, Uttar Pradesh

80.00

73.63

0.00

73.63

Direct

 

3(a)

School renovation works - Civil works [The expenditure incurred in 2018-19 is inclusive of the Carry Forward Budget of 2017-18]

 

Amethi District, Uttar Pradesh

25.00

27.61

0.00

27.61

Direct

 

3(b)

School Renovation -provision of school furniture, where renovation works undertaken in previous years

II

Amethi District, Uttar Pradesh

10.00

29.46

0.00

29.46

Direct

 

4

Literacy, livelihood projects, safe drinking water, etc. through external agency [The expenditure incurred in 2018-19 is inclusive of the Carry Forward Budget of 2017-18]

 

Amethi District, Uttar Pradesh

40.00

20.94

0.00

20.94

Direct

 

5

Construction of Rural Markets (Sabji & Non-veg) in the nearby villages

X

Amethi District, Uttar Pradesh

20.00

14.02

0.00

14.02

Direct

 

6

Administrative Expenses

_

Amethi District, Uttar Pradesh

25.00

_

24.07

24.07

Direct

 

7

Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)

-

Amethi District, Uttar Pradesh

40.45

40.45

0.00

40.45

Direct

 

 

Sub Total

 

 

285.45

256.51

24.07

280.58

 

 

Name of the Division/ Office

SI. No.

CSR Project / Activity Identified

Sector in which the project is covered

Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken

Amount Outlay (Budget) Project or Programe-wise

Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes

Administrative overhead Expenditure

Cumulative expenditure up to the reporting period

Mode of Implementation (Direct or through implementing Agencies)

Nasik

1

Repairs to Service Road from NH3 to Sakora Village

X

Nasik District, Maharashtra

112.00

47.23

0.00

47.23

Direct

 

2

Construction of toilets near Fruit Market, Ojhar

X

Nasik District, Maharashtra

40.00

13.93

0.00

13.93

Direct

 

3

Construction of ZP school Building at Kokangaon

X

Nasik District, Maharashtra

50.00

69.71

0.00

69.71

Direct

 

4

Providing medical facilities to nearby tribal villages

'

Nasik District, Maharashtra

30.00

2.62

0.00

2.62

Direct

 

5

Skill Development ITI, Kalwan

II

Nasik District, Maharashtra

78.00

21.18

0.00

21.18

Direct

 

6

Provision of Infrastructure facility to ZP Schools

X

Nasik District, Maharashtra

10.00

7.63

0.00

7.63

Direct

 

7

Provision of Computer, Projectors to ZP schools

II

Nasik District, Maharashtra

5.00

5.48

0.00

5.48

Direct

 

8

Repairs of Check Dams in Nasik District

II

Nasik District, Maharashtra

25.00

15.08

0.00

15.08

Direct

 

9

Construction of Skill Development Centre cum Multipurpose Hall in Dhuliya & Nasik District

II

Dhulia District, Maharashtra

500.00

252.00

0.00

252.00

Direct

 

10

Construction of skill development centre cum multipurpose hall in Nasik

II

Nasik District, Maharashtra

200.00

103.00

0.00

103.00

Direct

 

11

Administrative Expenses

_

Nasik District, Maharashtra

60.00

0.00

60.00

60.00

Direct

 

12

Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)

-

Nasik District, Maharashtra

150.00

92.83

0.00

92.83

Direct

 

 

Sub Total

 

 

1260.00

630.69

60.00

690.69

 

Koraput

1

Imparting Education to poor children in and around Sunabeda, Koraput in Schools

II

Koraput District, Odisha

500.00

500.00

0.00

500.00

Direct

 

2

SAI-HAL Sports Training Centre at Koraput

VII

Koraput District, Odisha

60.00

56.89

0.00

56.89

Direct

 

3

Development of 400 Meters Athletics Track at SAI-HAL Sports Training Centre, Sunabeda

VII

Koraput District, Odisha

150.00

48.52

0.00

48.52

Direct

 

4

Organizing village Sports tournaments and supply of Sports / Fitness equipment to adopted villages

VII

Koraput District, Odisha

10.00

6.52

0.00

6.52

Direct

 

5

Providing Health care facilities to the inhabitants of Adopted Villages and health camps in the surrounding villages

I

Koraput District, Odisha

40.00

42.29

0.00

42.29

Direct

 

Name of the Division/ Office

SI. No.

CSR Project / Activity Identified

Sector in which the project is covered

Projects or Programmes 1) Local area or other 2)Specify the State and District where Projects or Programs were undertaken

Amount Outlay (Budget) Project or Programe-wise

Amount Spent on the Projects or Programmes Direct Expenditure on Projects or Programmes

Administrative overhead Expenditure

Cumulative expenditure up to the reporting period

Mode of Implementation (Direct or through implementing Agencies)

 

6

Skill Development /Vocational Training through CIPET or any other Institutions

II

Koraput District, Odisha

45.00

42.19

0.00

42.19

CIPET Bhubaneswar & Balalsore

 

7

Construction of Internal village CC Road with Drain in Dumuriput Village under Swachh Bharat Mission

I&X

Koraput District, Odisha

62.00

41.45

0.00

41.45

Direct

 

8

Construction of internal village CC road with drain and cleaning of natural stream based pond & its development at Sanabadigaon village under Swachh Bharat Mssion

I&X

Koraput District, Odisha

52.00

39.16

0.00

39.16

Direct

 

9

Rural Development Projects in the surrounding villages viz Construction of Community hall, School building, Dining Room, Toilets, development of play ground, open well etc

X

Koraput District, Odisha

62.00

25.46

0.00

25.46

Direct

 

10

Plantation of 45000 Fruit bearing and ornamental saplings in the surrounding villages

IV

Koraput District, Odisha

10.00

7.82

0.00

7.82

Direct

 

11

Promotion of tribal arts and culture of Koraput District by supporting District Administration, Koraput in organizing State Level Tribal Fair PARAB.

V

Koraput District, Odisha

10.00

10.00

0.00

10.00

Direct

 

12

Empowering women through promotion of Self Help Groups

III

Koraput District, Odisha

5.00

1.05

0.00

1.05

Direct

 

13

Assistance to differently abled schools like MANAS, Orphanage school, Old age Home and administrative overheads

III

Koraput District, Odisha

7.00

2.23

0.00

2.23

Direct

 

14

Administrative Expenses

_

Koraput District, Odisha

41.09

_

41.09

41.09

Direct

 

15

Carry Forward Projects of 2017-18 (expenditure incurred in 2018-19)

-

Koraput District, Odisha

20.29

20.29

0.00

20.29

Direct

 

 

Sub Total

 

 

1074.38

843.87

41.09

884.96

 

 

 

Grand Total

 

 

7819.58

6951.81

293.49

7245.30

_

Annexure- IV to Board's Report

FORM MR-3

SECRETARIAL AUDIT REPORT FOR THE FINANCIAL YEAR ENDED ON 31st MARCH, 2019

[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No.9 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014]

To,

The Members,

HINDUSTAN AERONAUTICS LIMITED

15/1, CUBBON ROAD, BANGALORE - 560001

I have conducted the Secretarial Audit of the compliance of applicable statutory provisions and the adherence to good corporate practices by HINDUSTAN AERONAUTICS LIMITED

(CIN:L35301KA1963GOI001622) (hereinafter called the Company). Secretarial Audit was conducted in a manner that provided me a reasonable basis for evaluating the corporate conducts/statutory compliances and expressing my opinion thereon.

I have examined the books, minute books, forms and returns filed and other records maintained by the Company for the financial year ended, 31st March, 2019 made available to me.

Based on my verification of the Company's books, papers, minute books, forms and returns filed and other records maintained by the Company and also the information provided by the Company, its officers, agents and authorized representatives during the conduct of Secretarial Audit, I hereby report that, in my opinion, the Company has, during the audit period covering the financial year ended 31st March, 2019, complied with the statutory provisions listed hereunder and also that the Company has proper Board-processes and compliance-mechanism in place to the extent, in the manner and subject to the reporting made hereinafter:

(i) The Companies Act, 2013 (the Act) and the Rules made thereunder;

(ii) The Securities Contracts (Regulation) Act, 1956 ('SCRA') and the Rules made thereunder;- From the date the said Act and Rules are applicable to the Company.

(iii) The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;- The Company has demated the entire shares and has complied with the provisions of the Act and Regulations.

(iv) Foreign Exchange Management Act, 1999 and the Rules and Regulations made thereunder to the extent of Foreign Direct Investment, Overseas Direct Investment and External Commercial Borrowings, wherever applicable.

(v) The following Regulations and Guidelines prescribed under the Securities and Exchange Board of India Act, 1992 (SEBI) from the date the said Act and Regulations and Guidelines are applicable to the Company.

a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and Take overs) Regulations, 2011 -Nil

b) The Securities and Exchange Board of India (Prohibition of Insider Trading) Regulations, 2015

c) The Securities and Exchange Board of India (Share based Employee benefit) Regulations, 2014

d) The Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015

I have also reviewed the systems and mechanisms established by the Company for ensuring compliances under other applicable Acts, Laws, Rules, Regulations, Guidelines applicable to the Company and categorized under the following major heads/ groups:

1. Industrial (Development and Regulation) Act, 1951 as amended I(D&R)ACT

2. Foreign Trade (Development and Regulation) Act, 1992, Foreign Trade Policy (2015-2020) and Foreign Trade (Exemption from Application of Rules in Certain cases) Order 1993.

3. Defence Procurement Procedure, 2016

4. The Aircraft Act, 1934 and the Aircraft Rules, 1937

5. Arms Act,1959 and Arms Rules 1962

6. Explosives Act, 1884

7. Prevention of Corruption Act, 1988

8. Official Secrets Act, 1923

9. Intellectual Property Laws

10. The Legal Metrology Act, 2009

11. The Legal Metrology (Approval of Models)Rules, 2011

12. Trade Marks Act, 1999

13. The Patents Act, 1970

14. Indian Copyright Act, 1957 and Copyright Rules, 1957

15. The Design Act, 2000

16. Environmental Laws

a) The Environment (Protection Act), 1986

b) The Air ( Prevention & Control of Pollution) Act, 1981

c) The Water (Preventions Control of Pollution) Act, 1974

d) The Water (Prevention & Control of Pollution) Cess Act, 1977

e) The Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016

f) Manufacture, Storage and Import of Hazardous Chemical Rules, 1989

g) The Noise Pollution (Regulation & Control) Rules, 2000 h) Public Liability Insurance Act, 1991

i) Other applicable statues imposed by Centre or the State Government from time to time.

17. Labour Laws, Rules and Regulations applicable to the employees of the Company, including Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

18. Indian Contracts Act, 1872.

I have also examined compliance with the applicable clauses of the Secretarial Standards issued by the Institute of Company Secretaries of India.

I Report that during the period under review, the Company has complied with the provisions of the applicable Other Acts, Rules, Regulations, Guidelines and Secretarial Standards, etc. mentioned above.

I have not examined compliance by the Company with applicable financial laws, like direct and indirect tax laws and maintenance of financial records and books of accounts, since the same are subject to review by statutory financial audit, CAG Audit and Internal Audit.

I further report that the Board of Directors of the Company is duly constituted with proper balance of Executive Directors, Non-Executive Directors, Independent Directors and Women Directors.

The Company has constituted following Statutory Committees.

1) Audit Committee

2) CSR & Sustainable Development Committee

3) Stakeholders Relationship Committee

4) Nomination and Remuneration Committee

5) Risk Management Committee

Adequate notice is given to all Directors to schedule the Board Meetings, agenda and detailed notes on agenda are sent in 7 days in advance, and a system exists for seeking and obtaining further information and clarifications on the agenda items before the meeting and for meaningful participation at the meeting.

The Minutes of Meetings of the Board and its Sub Committees and of Shareholders are maintained properly.

I further report that there are adequate systems and processes in the Company commensurate with the size and operations of the Company to monitor and ensure compliance with other applicable laws, rules, regulations and guidelines.

 

S.Viswanathan

 

Practicing Company Secretary

 

ACS No: 5284

 

CP No: 5284

Place: Bengaluru

 

Date: 4th May, 2019

 

Encl: Annexure A

 

Annexure A

To

The Members

HINDUSTAN AERONAUTICS LIMITED

My report of even date is to be read along with this letter.

1) Maintenance of secretarial record is the responsibility of the management of the Company. My responsibility is to express an opinion on these secretarial records based on my audit.

2) I have followed the audit practices and process to obtain reasonable assurance about the correctness of the contents of the secretarial records. The verification was done on test basis to ensure that correct facts are reflected in secretarial records. I believe that the process and practices, I followed provide a reasonable basis for my opinion.

3) I have not verified the correctness and appropriateness of financial records and Books of Accounts of the Company.

4) Wherever required, I have obtained the Management representation about the compliance of laws, rules and regulations and happening of events, etc.

5) The compliance of the Corporate and other applicable laws, rules, regulations, standards is the responsibility of management. My examination was limited to the verification of procedure on test basis.

6) The Secretarial Audit report is neither an assurance as to the future viability of the Company nor of the efficacy or effectiveness with which the management has conducted the affairs of the Company.

 

S. Viswanathan

 

Practicing Company Secretary

 

ACS No: 5284

 

CP No: 5284

Place: Bengaluru

 

Date: 4th May, 2019

 

 

Director’s Report