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The Directors are pleased to present before you, the 13th Annual Report on the business and operations of the Company together with the Audited Financial Statements of the Company for the Financial Year ended March 31, 2018.
The Company’s financial performance, for the year ended March 31, 2018 is summarized below:
Rupees (in Lacs)
For the year ended
March 31, 2018
March 31, 2017
Gross Sales & Other Income
Profit before Depreciation and Interest
Profit before Taxation
Provision for Taxation (Deferred & Current)
Profit after Taxation
State of Company’s Affairs and Future Outlook
During the financial year 2017-18, revenue from operations was Rs. 56,685.15 lacs as compared to Rs.48,565.87 lacs in 2016-17, registering an increase of 17%.
Operating profit of the Company has increased to Rs. 7940.33 lacs from Rs. 4798.08 lacs in 2016-17. The Company has achieved major milestones in setting up of two state of the art manufacturing facilities at Bengaluru and Rohtak, though the capex of these facilities has impacted the profitability of FY 17-18. However, these capex in new plants has widen the Company’s product portfolio and has enhanced further its capability as a niche auto components producer.
Your Company has taken measures to enhance operational efficiencies by focusing on improving yields, reducing rejections and enhancing capacity utilisation. The Company is taking necessary steps for improvements at all levels. Critical precise components by very nature call for near zero tolerance/ rejections approach at all stages of operations. Thorough quality check, standard operating procedures, top class tools usage and detailed training and awareness among all - from operator level to the senior manager level ensures prevalence of sound work culture and high level of productivity. Necessary POKAYOKE are being implemented in the processes to nib the problem in the bud and minimize rejections.
With the impressive, technology driven high end machineries installed in all its facilities, the Company is able to produce high volumes with impeccable quality required for complex, wide range of transmission and precision engineering components. With the state of art manufacturing facilities, the Company is functioning successively to strengthen its Customer Base. The Sales to other Customers like Bosch, Denso, INEL, Mitsuba, Yamaha, ZF, Hilti, Volvo Eicher and Maruti etc. has increased compared to last year, still Hero MotoCorp Limited (HMCL) being the major customer.
With the increase in growth rate of Customers, the Company is expecting to maintain a healthy growth in its scale of operations and widen its geographical reach. It is also expected to add new customers in the upcoming financial years. Cutting edge technology on a sustained basis is the touch stone of the manufacturing excellence of the Company.
The Company is working meticulously towards mitigating its concentration risk by diluting the percentage of the concentration by increasing sales to other customers or entering new markets which is principally the focus area. The Company is successively clearing the major audits of its Customers in all plants and working towards entering into new verticals with the set-up of world class facilities at Bengaluru and Rohtak plant.
Awards & Accolades
The Company is proud recipient of the following Awards as shown in Awards & Accolades Section:
1. Certificate of Appreciation from Maruti Suzuki for recognition of superior performance in the field of 2 Wheeler Cost Down in the year 2017-18.
2. Certificate of Excellence from SEG Automotive for recognition in Ramp up Support for year 2017-18
3. Awarded for Ramp Up Support Award by SEG Automotive in Business Partner Meet 2018
4. Green Merit Award for recognition in Green Initiative of Waste Paper Recycling through Green-O-Tech India in year 2017
Transfer to General Reserve
During the year under review, the Company has not transferred any amount to General Reserves. The closing balance amount of Reserves and Surplus of Rs. 17,094.78 Lacs (Previous year Rs. 17,201.72 lacs) will be retained as surplus in the Statement of Profit and Loss.
The Board of Directors have not recommended any dividend for the financial year 2017-18.
The Register of Members and Share Transfer Books shall remain closed from Saturday, September 22, 2018 to Saturday, September 29, 2018 (both days inclusive).
The promoters of the Company i.e. Dayanand Munjal Investments Private Limited (DMIPL) hold 74,795,950 equity shares of Rs. 2/- each which represents 74.80% of the paid up equity capital of the Company.
Your company continues to be a subsidiary company of DMIPL.
Subsidiary Companies, Joint Ventures Or Associate Companies
The Company neither has any Subsidiaries, joint ventures or associate companies nor any company have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year under review.
Management Discussion and Analysis report
A detailed discussion on the business performance and future outlook forms part of Management Discussion and Analysis Report, which is separately attached as Annexure A to this Board’s Report.
Board of Directors
a) Meeting of Board of Directors
A calendar of Meetings is prepared and circulated in advance to the Directors. During the Financial Year 2017-18, 4 (four) meetings of the Board of Directors of the Company were held on May 30, 2017, August 10, 2017, November 13, 2017 and February 14, 2018. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as “SEBI LODR, 2015”). For details of the meetings of the board, please refer to the Corporate Governance report, which forms part of this Annual Report.
b) Details of Directors and Key Managerial Personnel
Mrs. Charu Munjal and Dr. Anil Kumar Gupta, Whole Time Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Brief profile of the Director(s), as required by the SEBI LODR, 2015, is given in the Notice / Corporate Governance Report forming part of this Annual Report.
The appointment/re-appointments form part of the Notice of the Thirteenth Annual General Meeting and the relevant Resolutions are recommended for your approval.
c) Declaration by Independent Director
The Company has received necessary declaration from each Independent Director under Section 149 (7) of the Companies Act, 2013 that he/she meets the criteria of Independence laid down in Section 149(6) of Companies Act, 2013 and SEBI LODR, 2015.
d) Board Evaluation
Pursuant to the provisions of the Companies Act, 2013 and the Corporate Governance requirements as prescribed by Securities and Exchange Board of India (“SEBI”) under the SEBI LODR, 2015, the Board is required to carry out an Annual Evaluation of its own performance, Board’s committees and Individual Directors.
The performance of the Board as a whole, it’s Committee(s) and Individual Directors including the Chairman of the Board, was evaluated by a questionnaire formulated by the Company.
The questionnaire was formulated based on the following criteria:
- The Board composition and structure,
- Effectiveness of board processes,
- Information and functioning,
- The composition of committees,
- Effectiveness of committee meetings,
- The contribution of the individual director to the Board and committee meetings
- Preparedness of Directors on the issues to be discussed,
- Meaningful and constructive contribution of Directors and their inputs in meetings
e) Separate Meeting of Independent Directors
In terms of requirements under Schedule IV of the Companies Act 2013 and SEBI LODR, 2015, a separate meeting of Independent Directors was held on February 14, 2018. In a separate meeting of independent Directors, performance of nonindependent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed.
f) Policy on Directors’ remuneration and other details
The Company’s policy on Directors’ remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of the Board’s report.
NSBP & Co., Chartered Accountants, New Delhi (Firm Registration No. 001075N) were appointed as the Statutory Auditors of the Company for a term of five years as per the provisions of Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, who will hold the office upto the conclusion of the 17th Annual General Meeting. They have confirmed that they are not disqualified from continuing as Auditors of the Company.
The Report given by the Auditors, NSBP & Co., Chartered Accountants, New Delhi, 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.
Explanation to Auditors’ Remarks
The comments on statement of accounts referred to in the report of the auditors are self-explanatory.
During the year under review, the Issued, Subscribed and Paid-up Equity Share Capital as on March 31, 2018 was 10 Crores equity shares of Rs. 2/- each amounting to Rs. 20 Crore.
a) Your Company has not issued shares with differential voting rights nor granted employee stock options nor sweat equity. And also the Company has not accepted or repaid any Debentures, Preference Share Capital and any Bond & 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.
b) Your company has not made any provisions of money for purchase of its own shares by employees or by trustees for the benefit of employees during the year under review.
During the year, the Company has not accepted any fixed deposit.
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 Satyender Kumar & Associates, a proprietorship firm of Company Secretaries to undertake the Secretarial Audit of the Company. Secretarial Audit Report in prescribed format MR-3 is annexed as Annexure-D to this Board’s Report.
Explanation to Secretarial Audit Report
Due to technical issues faced by the Registrar and Transfer Agents of the Company with Depository, the shares were transferred beyond the prescribed date.
The Company is taking effective steps that all statutory forms are filed within the prescribed time limit.
The Audit Committee comprises mainly of Independent Directors and the composition is as under:
Mr. Surrinder Lal Kapur - Chairman
Mr. Bhagwan Dass Narang - Member
Dr. Vinayshil Gautam - Member
Mr. Sunil Kant Munjal - Member
Dr. Anil Kumar Gupta - Member
The terms of reference of the Audit Committee are wide enough to cover the matters specified for the Audit Committee under SEBI LODR, 2015 as well as Section 177 of the Companies Act, 2013; the detailed terms of reference are as mentioned in the Annexure B to this Board’s Report. During the year, the Board has accepted all recommendation of Audit Committee and accordingly no disclosure is required to be made in respect of non-acceptance of the recommendation of the Audit Committee by the Board.
Nomination and Remuneration Committee
The Nomination and Remuneration Committee (NRC) has been constituted according to Section 178(5) of the Companies Act, 2013 and the composition is as under:
Dr. Vinayshil Gautam - Chairman
Mr. Bhagwan Dass Narang - Member
Mr. Surrinder Lal Kapur - Member
Mr. Sunil Kant Munjal - Member
The detailed terms of reference are as mentioned in the Annexure B to this Board’s Report.
Corporate Social Responsibility (CSR) Policy
The Corporate Social Responsibility Committee has been constituted as per the provisions of Section 135 of the Companies Act, 2013 and the composition is as under:
Mr. Bhagwan Dass Narang - Chairman
Dr. Anil Kumar Gupta - Member
Mrs. Charu Munjal - Member
The details about the policy indicating the activities to be undertaken by the Company, activities implemented by the company and the amount spent on CSR activities as per the provisions of Companies (Corporate Social Responsibility Policy) Rules, 2014, is annexed as Annexure - E to this Board’s Report.
Risk Management Policy
In order to mitigate the risks, the Company has adopted the implementation of the risk management policy focusing on the elements of risks which in the opinion of the Board may threaten the existence of the company.
The Company has constituted a risk management committee, the constitution and the terms of reference of the same are mentioned in the Annexure B to this Board’s Report.
Disclosure on Establishment of a Vigil Mechanism
The Company has adopted a policy on vigil mechanism for directors and employees to report their genuine concerns or grievance to be the Vigilance and Ethics Officer. The policy is available on the company’s website www.shivamautotech. com.
Material Changes Affecting the Financial Position of the Company
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 on the date of this report.
Your Company was able to raise the short-term/long term funds needed for its working capital related requirements & term loans for new capital expenditure at reasonable rates. By efficient management of working capital, the Company has been able to reduce some interest cost. The Company continues to focus on judicious management of its working capital. During the year under review, the financial position of the Company was satisfactory.
Significant or Material Orders passed by the Regulators
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.
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.
Extract of Annual Return
The weblink for extract of Annual Return, in format MGT-9, for the Financial Year 2017-18 is as follows: http://www. shivamautotech.com/cpage.aspx?mpgid=15&pgidtrail=40
Particulars of Loan, Guarantees and Investments under Section 186 of the Companies Act, 2013
The Company has neither given any loans/guarantees / provided security and nor any investments have been made by the Company.
Particulars of Contracts or Arrangements with Related Parties
All contracts /arrangements/transactions entered by the Company during the financial year with the related parties were in the ordinary course of business and on arm’s length basis and do not attract the provisions of Section 188 of the Companies Act, 2013. During the year, the Company had not entered into any contracts /arrangements/transactions with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Suitable disclosure as required by the IND AS 24 has been made in the notes to the Financial Statements.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The Company continues to use the latest technologies for improving the productivity and quality of its products and components. The details of Energy, Technology, Absorption, Foreign Exchange Earnings and Outgo are attached as Annexure - C to this Board’s Report.
Statement in Respect of Adequacy of Internal Financial Control with Reference to the Financial Statements
Your company has adequate internal control for its business processes across departments to ensure efficient operations, compliance with internal policies, applicable laws and regulations. The internal controls are complemented, on an on-going basis, by an extensive program of internal audits being implemented throughout the year. The internal controls are designed to ensure that the financial and other records of the company are reliable for preparing financial statement and other data for maintaining the accountability of assets in conformity with established accounting principles and that the assets of the company are adequately safe-guarded against any significant misuse or loss.
The Company also has an internal audit system which is conducted by an independent firm of Chartered Accountants. A summary of Internal audit report and observations thereon are reviewed by the Audit Committee on regular basis and have been found to be adequate.
The shares of your Company are listed at The National Stock Exchange of India Limited and The BSE Limited, and pursuant to the SEBI LODR, 2015, the Annual Listing fees for the year 2018-19 have been paid to them well before the due date i.e. April 30, 2018. The Company has also paid the annual custodian fees for the year 2018-19 in respect of Shares held in dematerialized mode to National Securities Depository Limited (NSDL) & Central Depository Services Limited (CDSL).
The Company has complied with the requirements of Corporate Governance as stipulated under the SEBI (LODR) Regulations, 2015, as applicable.
Your Company is committed to follow the highest standards and principles of Corporate Governance with all integrity and fairness. The Company always places major thrust on managing its affairs with diligence, transparency, responsibility and accountability thereby upholding the important dictum that an organisation’s corporate governance philosophy is directly linked to high performance.
A certificate from the Practising Company Secretary regarding the compliance of the conditions of Corporate Governance by the Company stipulated under SEBI LODR, 2015 is also attached to this Report.
Separate detailed chapters on Corporate Governance, Additional Shareholder information and Management Discussion and Analysis are attached herewith and form part of this Report. Declaration by CEO/CFO that the Board Members and Senior Management Personnel have complied with the Code of Conduct for the Financial Year 2017-18 is annexed with this report.
Disclosures for Maintenance of Cost Records
Your company is not covered under subsection (1) of Section 148 of Companies Act, 2013 for maintenance of Cost records and accordingly such accounts and records are not required to be made and maintained.
Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013
Your Company is committed to provide work environment that ensures every employee is treated with dignity and respect and afforded equitable treatment. The Company has complied with the provisions relating to the Constitution of Internal complaints Committee under the Sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
The Company has adopted the policy for prevention of sexual harassment at workplace. No Complaints has been received for the year 2017-18. The annual report has been duly submitted to the District Officer of Department of Women and Child Development stating that no complaints have been received by the Company.
Directors’ Responsibility Statement
Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013, as amended, with respect to the directors’ responsibility statement, it is hereby confirmed:
(i) That in preparation of annual accounts for the financial year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to the material departures;
(ii) That the directors’ of the company have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent, so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the losses of the Company for the financial year ended March 31, 2018;
(iii) That the directors’ of the company have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and
(iv) That the directors’ of the company have prepared the annual accounts on a going concern basis.
(v) That the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
(vi) That the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
The details required pursuant to Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel), Rules, 2014 are provided in Corporate Governance Report attached as Annexure - B to this Board’s Report.
Particulars of Employees
The information required under Section 197 of the Act read with Rule 5(2) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is attached as Annexure - F to this Board’s Report.
Environment, Health & Safety
The Company has taken an initiative top reserve environment by indulging in paper recycling activity. The paper recycling pertains to the processes of reprocessing waste paper for reuse. Recycling paper preserves trees and forests. Every ton of recycled paper saves about 17 trees. Recycled paper serves as an environmental friendly resource for paper manufacturers, saving costs and energy. The Company has recycled approx. 7320 kgs of waste paper till March 31, 2018, contributing in saving 124 nos. of trees.
During the year, the Company focused on incident reporting. Use of mobile phones was identified as one of the major distractions, especially while working inside manufacturing plants. The Company took proactive steps to address this risk by limiting smartphone usage during working hours.
The Company is committed to adhere to the highest standards of health and safety. It strives to provide its employees with a safe and healthy workplace. The Company continuous to focus on deploying behaviour based safety programmes and global safety standards across its locations. The Company regularly conducts counselling and safety review meetings for the employees to appraise and educate them on the adoption of safety measures and avoidance of unsafe practices. Safe operating procedures, standards and systems have been laid down at all manufacturing locations. Prompt medical assistance are provided to its employees.
Human Resource Development
Your Directors place on record their appreciation for the significant contribution made by all employees, who through their competence, dedication, hard work, cooperation and support have enabled the Company to cross new milestones on a continual basis.
The Company strives to provide a work environment that attracts, develops and retains the best talent, promotes a values-driven, high-performance culture embedding diversity and transformation.
Your Company treats its “human resources” as one of its most important assets. Your Company continuously invests in attraction, retention and development of talent on an ongoing basis. The Company’s thrust is on the promotion of talent internally through job rotation and job enlargement.
The SEBI LODR, 2015 mandated the formulation of certain policies for all listed companies. All our corporate governance policies are available on our website www.shivamautotech.com.
Following are the policies adopted by the company with their web links:
Code of Conduct
Prohibition of Insider Trading
Payment to Non- Executive Directors
Board Diversity Policy
Records and Archives Policy
Related Party Transaction Policy
Corporate Social Responsibility Policy
Risk Management Policy
Whistle Blower Policy
During the year under review, your Company had complied with all the applicable Secretarial Standards. Acknowledgments
Your Company’s organisational culture upholds professionalism, integrity and continuous improvement across all functions as well as efficient utilisation of the Company’s resources for sustainable and profitable growth.
The Directors express their appreciation for the sincere co-operation and assistance of Central and State Government Authorities, Bankers, Customers, Suppliers and Business Associates. Your Directors also wish to place on record their deep sense of appreciation for the committed services by your Company’s employees. Your Directors acknowledge with gratitude the encouragement and support extended by our valued shareholders.
For and on behalf of the Board For and on behalf of the Board
Neeraj Munjal Dr. Anil Kumar Gupta
Place: New Delhi Managing Director Whole Time Director
Date: August 13, 2018 DIN: 00037792 DIN: 02643623