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Munjal Showa

BSE: 520043|NSE: MUNJALSHOW|ISIN: INE577A01027|SECTOR: Auto Ancillaries
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Directors Report Year End : Mar '18    Mar 17

Dear Members,

The Directors have great pleasure in presenting the 33rd Annual Report together with the Audited Statement of Accounts for the financial year ended March 31, 2018.

FINANCIAL RESULTS AND APPROPRIATIONS

The salient features of the Company’s Financial Results for the year under review are as follows:

(Rs. In lakhs)

Year Ended

Year Ended

31.03.18

31.03.17

Sales and other Income (Net of Excise Duty and GST)

160,210.77

147,724.69

Profit before Interest, Depreciation & Tax

13,379.62

11,707.15

Financial Cost

14.93

5.40

Depreciation

2,824.46

2,906.20

Profit before Tax

10,540.23

8,795.55

Tax Expenses

Current tax

3,110.23

3,108.91

Deferred tax

(321.42)

(384.69)

Total Tax Exp

2,788.81

2,724.22

Profit after Tax

7,751.42

6,071.33

Other comprehensive income net of taxes

(130.52)

(205.23)

Adjustment to deferred tax liability

-

(89.79)

Total Comprehensive Income

7,620.90

5,776.31

Net Profit brought forward

24,559.05

18,782.74

Profit available for appropriation

32,179.95

24,559.05

Dividend payment

1,599.80

-

Dividend Tax

325.68

-

Transfer to General Reserve

2,000.00

-

Surplus Available

28,254.47

24,559.05

OPERATIONS & STATE OF THE COMPANY’S AFFAIRS

The Company has achieved a sales turnover, including other income (Net of Excise Duty), of Rs. 160,210.77 lakhs vis-a-vis Rs. 147,724.69 lakhs in the previous year. The profit before tax in the current year was at Rs. 10,540.23 Lakhs as compared to Rs. 8,795.55 lakhs in the previous year.

The State of affairs of the Company is detailed in the “Management Discussion & Analysis” section which forms part of this report.

CREDIT RATING

The Company’s financial discipline and prudence is reflected in the credit ratings ascribed by CRISIL rating agency as given below:

(In lakhs)

INR 6850 Long-Term Loans

AA/Stable (Reaffirmed)

INR 3000 Cash Credit

AA/Stable (Reaffirmed)

INR 4350 Letter of Credit

CRISIL A1

INR 225 Bank Guarantee

CRISIL A1

INR 600 Commercial Paper Programme

CRISIL A1

TRANSFER TO GENERAL RESERVE

The Board has transferred an amount of Rs. 2,000/- lakhs to General Reserve before recommending the final dividend. The balance amount of Rs. 28,254.47 lakhs (Previous year Rs. 24,559.05 lakhs) will be retained as surplus in the statement of Profit and Loss.

DIVIDEND

Your directors are pleased to recommend a dividend of 225 per cent (i.e. Rs. 4.5/- per equity share of Rs. 2/- each fully paid up) for the financial year ended March 31, 2018 amounting to Rs. 1,799.78 lakhs. Dividend will be tax free in the hands of shareholders, as the Company will bear the dividend distribution tax of Rs. 369.95 lakhs. The dividend, if approved, at the Annual General Meeting (hereinafter refer as “AGM”) shall be payable to the shareholders registered in the books of the Company and the beneficial owners whose names are furnished by the depositories, determined with reference to the book closure from Saturday, September 15, 2018 to Wednesday, September 26, 2018 (both days inclusive).

SHARE CAPITAL & DEBENTURES

The authorized share capital of the Company is Rs. 15,00,00,000 (Rupees Fifteen Crores only) divided into 7,50,00,000 (Seven Crores Fifty Lakh) equity shares of Rs. 2 (Rupees Two) each. The paid up Share Capital of the Company as on March 31, 2018 was Rs. 7,99,92,500 (Rupees Seven Crore Ninety Nine Lakhs Ninety Two Thousand Five Hundred only).

During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. The Company has not accepted or repaid any Debentures, Preference Share, Bond and Security during the financial year, and none of the Directors of the Company hold any shares or security of the Company. The Company does not have any Debentures, Preferential Shares as on March 31, 2018.

FINANCE

Cash and cash equivalent as at March 31, 2018 was Rs. 1912 lakhs. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The company has neither given any guarantee nor provided any security covered under the provision of Section 186 of the Companies Act, 2013. The Company has made investments in Mutual funds and given loan/advance to its vendors during ordinary course of business. Please refer note numbers 5A and 5B to the financial statements. As per policy of loans to employees of the Company, during the year the Company provided an interest free loan amounting to Rs. 40,000/- to Mr. Saurabh Agrawal-Company Secretary & Key Managerial Person of the Company.

CORPORATE GOVERNANCE

Report on Corporate Governance and Management Discussion & Analysis Report along with Certificate of the Auditors of your Company pursuant to SEBI (LODR) Regulations, 2015, have been included in this Report as Annexure-A. Your Company has been practicing the principles of good Corporate Governance over the years.

In terms of regulation 17(8) of SEBI (LODR) Regulations, 2015, Certificate of CEO/CFO is also enclosed as a part of the Report.

The Board of Directors has laid down a Code of Conduct to be followed by all the Directors and members of Senior Management of your Company. The Board of Directors supports the broad principles of Corporate Governance. In addition to the basic governance issues, the Board also lays strong emphasis on transparency, accountability and integrity.

TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND

During the Financial Year under review, your Company has transferred unpaid/ unclaimed dividend, amounting to Rs. 4.89 Lakhs for FY 2009-10 to the Investor Education and Protection Fund (IEPF) of the Central Government of India.

AUDITORS

At 32nd AGM of the Company, the members of the Company appointed M/s Deloitte Haskins & Sells LLP as a statutory auditor of the Company for the period of 5 years, who hold office up to the conclusion of the 37th AGM of the Company. In compliance with the applicable provisions of the Companies Act, 2013 and the rules made thereunder read with the statutory modification(s) or re-enactment(s) thereof, for the time being force, the Board recommends for ratification of the appointment of M/s Deloitte Haskins & Sells LLP as the Statutory Auditors of the Company. The Statutory Auditors have consented for the said ratification of appointment and confirmed their eligibility under Sections 139 and 141 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014.

The Report given by the Auditors, M/s Deloitte Haskins & Sells LLP, Chartered Accountants, Gurugram, on the financial statements of the Company for the financial year 2017-18, is part of the Annual Report. There are no qualifications, reservation, adverse remark, observations, comments or disclaimer given by the Auditors in their Report.

Further, with regard to section 134(3)(ca) of the Companies Act, 2013, no frauds have been reported by the auditors under section 143(12) of the said Act.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Satyender Kumar & Associates, a proprietorship firm of Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as Annexure B. There are no qualifications, reservation, adverse remark, observations, comments or disclaimer given by the Auditors in their Report except two e-forms were filled with additional fees due to administrative reason with Ministry of Corporate Affair.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pursuant to Section 134(3)(m) of the Companies Act, 2013 and the rules made thereunder regarding Conservation of Energy, Technology Absorption and Foreign Exchange earnings & outgo are given in Annexure-C which forms part of Board’s Report.

EXTRACT OF ANNUAL RETURN

The extract of annual return in Form MGT 9 as required under Section 92(3) and Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as an Annexure-D to this Report.

PARTICULARS OF EMPLOYEES

The statement of particulars of employees as per Section 197 of the Companies Act, 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, for the year ended March 31, 2018, is annexed hereto and forms part of this Report. Annexure-E

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

In terms of provisions of Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014, the Corporate Social Responsibility (hereinafter referred as ‘CSR’) Committee has formulated a CSR Policy indicating the activities to be undertaken by the Company. The constitution of CSR Committee is disclosed in Corporate Governance Report.

The CSR policy may be accessed on the Company’s website i.e. http://www.munjalshowa.net/wp-content/ uploads/2015/05/Corporate-Social-Responsibility-Policy1.pdf.

As part of its initiatives under CSR, the Company has undertaken projects in the areas of Education, Livelihood, Health, Water and Sanitation. These projects are largely in accordance with Schedule VII of the Companies Act, 2013 and CSR Policy of the Company. The annual report on CSR activities as required under the Companies (CSR Policy) Rules,

2014 is set out as Annexure-F to Board’s Report.

Munjal Showa Limited considers social responsibility as an integral part of its business activities and endeavours to utilize the allocated CSR budget for the benefit of the society.

The Company has incurred the CSR expenditure of Rs. 112.67 lakhs during the current financial year being about 61.04 % of Rs. 184.59 Lakh, to be spent during the year. The shortfall of Rs. 71.92 Lakh, being 38.96% of the required expenditure on CSR was due to non-identification of appropriate projects / activities / programmes in line with the CSR policy of the Company. The CSR activities of the Company are approved by the Board and few new initiatives have been proposed that may be considered in future. For the subsequent years, the Company endeavours to spend the budgeted CSR expenditure in accordance with the statutory requirements.

MATERIAL CHANGES AND COMMITMENTS

There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report.

ENVIRONMENT COMPLIANCE

We believe that “waste is a precious resource kept in a wrong place”. We further believe that “there is no waste as per the law of the nature”. Hence from the solid waste like Iron & Steel from old scrap machines, we are collecting the raw material and we are manufacturing “Lean and Low cost” machines with a philosophy of Easy to run, Easy to maintain, Easy to clean and Zero accident by meeting all the quality and productivity standard. Everything is done in-house starting from design up to finishing of the machine. This concept of reuse of metallic waste is highly appreciated by CII, ACMA and international experts of our Japanese Collaborator. By Regular training for workers and staff to prevent accident related to mechanical, electrical, chemical, physiological and psychological safety the Company has made “Zero incidents” as acceptable standard. Hazard Identification and Risk Assessment (HIRA) is our primary focus to mitigate and prevent the abnormalities. Because of our dedicated and committed efforts in continual improvement of Safety, Health and Environment area, we had received two National Awards from Ministry of Labour and Employment, Government of India for safety. The Company is a regular member of Haryana Environment Management Society.

The Company has started Green Vendor Development Programme (GVDP) since 2009-10. The aim of the project is to conserve water and energy, Minimize generation of waste, terminate hazardous chemicals with non-hazardous chemicals, minimize carbon foot print and generate pollution prevention awareness throughout the plant and to achieve 100 per cent legal compliance. The Company is rigorously improving to create a better place for our next generation.

TOTAL PRODUCTIVE MAINTENANCE

The Company has taken up the journey of Total Productive Maintenance (TPM) with the help of JIPM (Japan Institute of Plant Maintenance) Japan and CII, TPM Club India. Major objectives of TPM are to increase (PQCDSME) Productivity, to improve Quality, to reduce Costs, to ensure in time Delivery, to increase Safety, to increase profitability, to build Morale and to protect environment by formation of small cross functional work groups and to improve overall Plant efficiency. The other objectives are to procure and install maintenance free plant and machinery; and to achieve zero defects, zero break down, zero losses and zero accidents. In nutshell, TPM is to identify 21 types of Losses & converts them into Profit. We are able to reduce Repair & Maintenance Cost.

We have achieved TPM Excellency Award “Category A” for Gurugram and Manesar Plants in the years 2008 and 2010 respectively from Japan Institute of Plant Maintenance. We have been awarded by JIPM TPM Excellence Consistency Award for both Gurugram & Manesar Plants in the year 2013. Now we have started TPM Journey in our Haridwar Plant also & we had TPM Kick-Off Ceremony in November 2015.

Lean TPM Activities:

We have clubbed TPM with lean manufacturing system. Thru Lean we are able to focus & control 7 types of wastes. Our Company has conducted Lean Manufacturing System (Value Stream Mapping) Work Shop through JMAC Japan. We have converted huge & complicated machines by using TPM & Lean Concepts. These machines consume very less Electricity, occupy less space, take very less inputs like consumables, manpower, tools, oils, compressed air, less set-up time, less cycle time, etc. These machines are 10S Machines (Safe, Simple, Small, Slim, Speed, Smart, Sturdy, Superb, Sushil & Sunder and help us in reducing Cost of manufacturing. So far we are able to manufacture more than 750 machines In-House with Lean TPM Concept inclusive of many CNC Machines.

ISO/TS 16949 ACCREDITATION

Your Company’s manufacturing facilities are located at Gurugram, Haridwar and Manesar and we continue to maintain and uphold the prestigious ISO/TS 16949:2009, ISO 14001:2004 and OHSAS 18001: 2007 (Occupational Health & Safety Assessment Series) certifications from reputed leading Indian and International Certification Institutions. These certifications help in continuous improvements, besides emphasis being laid on prevention of defects, reduction of wastes, prevention of rear misses and to ensure maximized customer delight.

LISTING

The shares of your Company are listed at The National Stock Exchange of India Limited and BSE Limited, and pursuant to clause C (9) (d) of Schedule V of SEBI (LODR) Regulations, 2015, the Annual Listing fees for the year 2018-19 has been paid to them well before the due date i.e. April 30, 2018. Annual Custody/Issuer fee for the year 2018-19 has also been paid by the Company to NSDL and CDSL.

HUMAN RESOURCES

Promoting Human Resources management is the strength of our Company and over a period of time, we have changed our vision of employees from “Human Resources Management” to “Human Capital Management”.

Your Company believes that employees form the fulcrum of growth and differentiation for the organization. The Company recognizes that people are its principal assets and that its continued growth is dependent upon the Company’s ability to attract and retain quality people. The total headcounts were 3302 at the end of the year as compared to 3058 of the previous year. The Company encourages long-term commitment to the Company by rewarding its people for the opportunities they create and the value generated for customers and shareholders. The Company conducts several employee engagement and training programmes to upgrade the skills of the workforce and generate specialist in quality, maintenance and manufacturing. As desired by the Govt. of India we have started NEEM Scheme and NAPS Scheme in order to enhance the technical skill level of our unemployed youths.

Many initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes which have helped the organization achieve higher productivity levels. A significant effort has also been undertaken to develop leadership as well as technical/ functional capabilities in order to meet future talent requirement.

BUSINESS RISK MANAGEMENT

The Company has a Risk Management Policy to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company’s competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting.

The Company regularly conducts a study to develop a comprehensive 360° view on the opportunities, risks and threats to the business. These include areas such as market trends, new competition, changing customer preferences, disruptions in supplies, product development, talent management etc.

The Board has identified following risks:-

Intensifying Competition, Declining margins, Imposition of strict environmental / safety /
regulatory regulations, Increase in raw material/component prices , Dependence on Collaborators , Over dependence on limited user segment base, Economic downturn, Risk of natural or manmade disasters, Product liability / recall, Single vendor dependence for critical components , Investment risks in expansion projects, Sales Catering only to Domestic Market, Over Dependence on few customers base, Retention & development of personnel and Inappropriate addressing of customer grievances. We through qualitative products and brand image, import only in case of cost advantage, regular improvement in productivity, controls over overhead and labour cost through a robust control of approvals, internal audit of environmental safety and regulatory compliance, localization of components, insurance, TS 16949 certification, TPM certification, regular development of alternate vendors where only single source, capturing customer complaints and response to them, have effective risk mitigating plans.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism policy to deal with instance of fraud and mismanagement, if any. The details of the Policy is explained in the Corporate Governance Report and also posted on the website of the Company.

The website link is given below:

http://www.munjalshowa.net/wp-content/uploads/2015/05/Vigil-Mechanism-Whistle-Blower-Policy2.pdf RECOMMENDATION OF THE AUDIT COMMITTEE

During the year, all the recommendations of the Audit Committee were accepted by the Board.

CHANGES IN THE NATURE OF BUSINESS

There is no change in the nature of the business of the Company during the Financial Year 2017-18.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Mr. Masanao Matsui ceased to be a director of the Company w.e.f. May 19, 2017.

During the period 2017-18, Mr. Ashok Kumar Munjal was the director liable to retire by rotation and being eligible, he had offered himself for re-appointment before the shareholder at 32nd AGM of the Company. The shareholder confirmed his appointment at the 32nd AGM of the Company.

At the 32nd Annual General Meeting of the Company, the members confirmed the appointment of Mr. Kobayashi as Joint Managing Director of the Company.

Mr. Teruyoshi Sato was appointed as an additional director of the Company w.e.f. May 19, 2017. Further, he was appointed as a Non-Executive Director of the Company, liable to retire by rotation u/s 152 of the Companies Act, 2013, at the 32nd AGM of the Company.

At the 32nd AGM of the Company, the members approved the variation in the terms of appointment of Mr. Yogesh Chander Munjal and Mr. Shigeki Kobayashi w.e.f. September 01, 2017.

The Board of Directors in its meeting held on May 30, 2018, after considering the recommendation of Nomination and Remuneration Committee, recommended to the shareholders to approve the variation in the terms of appointment of Mr. Yogesh Chander Munjal, Managing Director and Mr. Shigeki Kobayashi, Joint Managing Director of the Company w.e.f. September 1, 2018.

Mr. Yogesh Chander Munjal and Mrs. Charu Munjal are liable to retire by rotation at the ensuing AGM. And being eligible they offered themselves for re-appointment.

The Board of Directors in its meeting held on May 30, 2018, after considering the recommendation of Nomination and Remuneration Committee, recommended to the shareholders, the re-appointment of Mr. Devi Singh, Mr. Vinod Kumar Agrawal, Mr. Nand Lal Dhamejaand Mr. Surinder Kumar Mehta as Independent Directors of the Company for a second term of 5 (five) consecutive years on the Board of the Company w.e.f. April 01, 2019 to March 31, 2024, as special resolution at the ensuing AGM.

Further Mr. Yasuhiro Yamamoto has been appointed as an additional director of the Company w.e.f May 30, 2018. The Board, after considering the recommendations of Nomination and Remuneration Committee, recommends his appointment as a Non-Executive Director of the Company, liable to retire by rotation u/s 152 of the Companies Act, 2013, before the shareholder at the 33rd AGM of the Company.

Pursuant to the provisions of the SEBI (LODR) Regulations, 2015 and the Companies Act, 2013, the profiles of all the directors, seeking appointment or reappointment at the ensuing AGM, have been provided in the Notice of 33rd AGM.

Mr. Teruyoshi Sato has resigned as Director of the Company w.e.f May 30, 2018. The Board placed its appreciation for the valuable services rendered by Mr. Teruyoshi Sato during his tenure as Director of the Company.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

The following employees were designated as whole-time key managerial personnel of the Company:

a. Mr. Yogesh Chander Munjal- Managing Director

b. Mr. Shigeki Kobayashi- Joint Managing Director

c. Mr. Pankaj Gupta- Chief Financial Officer.

d. Mr. Saurabh Agrawal- Company Secretary

The information under rule 5(1) of Companies (Appointment & Remuneration) Rules 2014 is given in Annexure D-1

The Company appreciates the dedicated and valuable guidance given by all the Directors of the Company. COMMITTEES OF THE BOARD

Currently, the Board has five committees: the Audit Committee, the Nomination and Remuneration Committee, the Corporate Social Responsibility Committee, the Share Transfer/ Stakeholders Relationship Committee and the Risk Management Committee (non-mandatory committee). A detailed note on the composition of the Board and its committees is provided in the corporate governance report, which forms a part of the Board Report.

SUBSIDIARY COMPANIES, JOINT VENTURES OR ASSOCIATE COMPANIES

During the financial year 2017-18, the Company neither has any subsidiary, joint venture or associate company, nor has any company become or ceased to be its subsidiary, joint venture or associate company.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the other committees of the Board i.e. Audit Committee, Nomination & Remuneration Committee and Share Transfer/ Stakeholders Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

REMUNERATION POLICY AND REMUNERATION TO THE DIRECTORS

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The silent feature of the Nomination and Remuneration Policy has been provided in this Report as Annexure-G. During the Financial Year 2017-18, no changes or amendments were made in such policy. The Nomination and Remuneration Policy is available on our website at http://www.munjalshowa.net/wp-content/uploads/2015/05/Nomination-And-Remuneration-Policy1.pdf.

The details of remuneration, sitting fee etc. paid to directors are given in Corporate Governance Report. (Please refer point no. IV of Corporate Governance Report)

BOARD DIVERSITY POLICY

The Company recognizes and embraces the importance of a diverse board in its success. We believe that a truly diverse board will leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical background, age, ethnicity, race and gender, which will help us retain our competitive advantage. The Board has adopted the Board Diversity Policy which sets out the approach to diversity of the Board of Directors.

The Board Diversity Polic

is available on our website

Web-link: http://www.munjalshowa.net/wp-content/uploads/2016/02/Boards-Diversity-Policy.pdf MEETINGS

A calendar of Meetings is prepared and circulated in advance to the Directors. During the year four Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. (Please refer point no. I & II of Corporate Governance Report)

DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors make the following statement in terms of Section 134(3)(c) & (5) of the Act, which is to the best of their knowledge and belief and according to the information and explanations obtained by them:

a. that in the preparation of the annual accounts for the Financial Year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b. that appropriate accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the State of Affairs as at March 31, 2018 and of the Profit of your Company for the Financial Year ended March 31, 2018;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

d. that the annual accounts for the Financial Year ended March 31, 2018 have been prepared on a going concern basis;

e. that the Directors have laid down Internal Financial Controls which were followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and

f. that the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

RELATED PARTY TRANSACTIONS

All transactions except the loan to Mr. Saurabh Agrawal, entered into with Related Parties as defined under the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 during the financial year were in the ordinary course of business and on an arm’s length pricing basis and do not attract the provisions of Section 188 of the Companies Act, 2013. Hence, requirement of Form AOC-2 as required under section 188(1) of the Companies Act, 2013 is not applicable to the Company for all the transactions except the loan provided to Company Secretary.

The Company generally provided interest free loan to all its permanent employees and workers. As per the same, the Company has provided interest free loan of Rs. 40000 to Mr. Saurabh Agrawal, KMP of the Company. The form AOC-2 in respect of such transaction has been provided as Annexure H.

All transactions with related parties were placed before Audit Committee and Audit committee has given omnibus approval for repetitive and foreseen transactions. The Board also noted these transactions on quarterly basis. The details of related party transactions are given in note number 32 of Financial Statements.

The Company has developed a policy on Related Party Transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website. And the link of such policy is given below:

http://www.munjalshowa.net/wp-content/uploads/2016/02/Related-Party-Policy-of-MSL.pdf

None of the Independent Directors has any pecuniary relationships with the Company.

EXPLANATIONS OR COMMENTS BY THE BOARD ON QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE

The observations of the Auditors in their report read with the notes to accounts are self-explanatory and do not require any specific comments. However as pointed out by the Auditors in annexure to their report at point number vii(a), the slight delay in payment of undisputed statutory dues in few cases was on account of finalization of accounts beyond the due date of statutory dues and the same were paid with interest.

There is no other qualification, reservation or adverse remark, comment, observation or disclaimer made by the auditor in his report and the company secretary in practice in his secretarial audit report except two e-forms were filled with additional fee to ROC due to administrative reason.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has a comprehensive system of internal control to safeguard the Company’s assets against any loss from unauthorized use and ensure proper authorization of financial transactions.

The Company has internal control systems commensurate with the size and nature of the business and has experienced personnel positioned adequately in the organization to ensure internal control processes and compliances. The Company takes abundant care in designing, reviewing and monitoring regularly the working of internal control systems and their compliances for all important financial internal control processes. The Audit findings are reported on quarterly basis to the Audit Committee of the Board headed by a Non-executive Independent Director.

The Company has robust ERP systems based on SAP platform. This ensures high degree of systems based checks and controls.

The Company maintains a system of internal controls designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the reliability of financial controls and compliance with laws and regulations.

The Companies Act, 2013 has introduced under Section 143(3)(i) stating that the statutory auditors of the Company shall include in his audit report whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls in addition to the reporting by Board of Directors in director’s responsibility statement. The concept of reporting on internal financial controls is still new in India. This new reporting requirement has thrown up many challenges. The Company has developed the internal financial control processes and that was vetted by the internal auditors during the year. The same has also been verified by the statutory auditors and who have reported that all the material Internal financial controls exist during the financial year 2017-18.

The Company, with the help of reputed professionals has developed a compliance tool for the purpose of legal compliance of all the applicable Acts to the Company.

COMPLIANCE OF THE SECRETARIAL STANDARDS

The Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future.

SEXUAL HARASSMENT POLICY

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this policy.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Various workshops or awareness programme w.r.t. sexual harassment has been carried out during the FY 2017-18. ACKNOWLEDGEMENT

Your Directors place on record their appreciation of the co-operation and support extended to the Company by Government of India, State Governments of Haryana and Uttarakhand, other local authorities, bankers, suppliers, customers and other stakeholders whose continued support has been a source of strength to the Company. The continued dedication and sense of commitment shown by the employees at all levels during the year deserve special mention.

The Directors also place on record their appreciation for the valuable assistance and guidance extended to the Company by Showa Corporation, Japan and for the encouragement and assurance, which our collaborator has provided from time to time for the growth and development of the Company.

The Directors also take this opportunity to express their deep gratitude for the continued co-operation and support received from its valued shareholders.

POLICIES

We seek to promote and follow the highest level of ethical standards in all our business transactions guided by our value system. The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandated the formulation of certain policies for all listed companies. All our corporate governance policies are available on our website i.e. http://www.munjalshowa.net/

For and on behalf of the Board

Place: Gurugram Yogesh Chander Munjal Vinod Kumar Agrawal

Date: May 30, 2018 (Chairman & Managing Director) (Director)

(DIN 00003491) (DIN 00004463)

B-175, Greater Kailash,

Part I, A-224 Ist Floor,

Defence Colony

New Delhi, 110048

New Delhi 110024

Source : Dion Global Solutions Limited
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