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Shivam Autotech Ltd.

BSE: 532776 | NSE: SHIVAMAUTO |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE637H01024 | SECTOR: Auto Ancillaries

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BSE Live

Feb 24, 16:00
18.35 -0.60 (-3.17%)
Volume
AVERAGE VOLUME
5-Day
6,064
10-Day
5,149
30-Day
6,671
3,844
  • Prev. Close

    18.95

  • Open Price

    18.85

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    0.00 (0)

NSE Live

Feb 24, 15:48
18.45 -0.40 (-2.12%)
Volume
AVERAGE VOLUME
5-Day
82,154
10-Day
70,266
30-Day
85,256
46,649
  • Prev. Close

    18.85

  • Open Price

    18.90

  • Bid Price (Qty.)

    0.00 (0)

  • Offer Price (Qty.)

    18.45 (2241)

Annual Report

For Year :
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Director’s Report

The Company was incorporated on 29th July, 2005. During the year, the Binola unit (also known as Munjal Auto Components), a divisional of Munjal Auto Industries Limited was hived off into your Company effective from August 01, 2005. Therefore the first operational results of the Company have been prepared for a period of 8 months from 1st August, 2005 to 31st March, 2006. Your Directors have pleasure in presenting their First Report on the business and operations of your Company together with its Audited Accounts for the period ended March 31, 2006. Financial Results (Rs. In Lacs) For the period of 8 months ended March 31, 2006 Sales & Other Income 9702.64 Profit before Depreciation and Interest 2672.74 Depreciation 592.22 Interest 173.57 Profit before Taxation 1906.95 Provision for Taxation (Deferred & Current) 648.36 Profit after Taxation 1258.59 Prior Period Expenditure 0.00 Profit available for appropriations 1258.59 Appropriations Proposed Dividend on Equity Shares 250.00 Tax on Dividend 35.06 Profit after Appropriations 973.53 DEMERGER During the period, the Binola unit of Munjal Auto Industries Limited was hived off/demerged into the Company effective from August 01, 2005. The Honble High Courts of Gujarat and Delhi had sanctioned the Scheme of Arrangement vide their Orders dated 29th March, 2006 and 30 March, 2006 respectively. Consequently, the Authorized Share Capital of the Company has increased to Rs. 12.60 Crores from Rs. 10 Lacs and the Paid-up Share Capital increased by Rs. 10 Crores from Rs. 5 Lacs. All the shareholders of Munjal Auto Industries Limited as on Record Date i.e. May 24, 2006, were issued one equity share of Shivam Autotech Limited and one equity share of Munjal Auto Industries Limited. MANAGEMENT DISCUSSION AND ANALYSIS REPORT The Indian economy performed better than expectations in 2005-06, with GDP growing in excess of 8 per cent. At around five per cent, inflation growth was contained well within the range projected in projected by the RBI for 2005-06. and inflation expectations have remained firmly anchored. This has been reflected in the relative stability of long-term interest rates. Financial markets were generally stable during the year, adapting to the shift in liquidity conditions from surplus to deficit with considerable resilience. The improvement in industrial activity in 2005-06 was mainly due to acceleration of manufacturing growth from 8.1 per cent in the preceding year to 9.4 per cent. Sustained expansion in domestic as well as export demand, increased capacity utilisation, augmentation of capacities and positive business and consumer confidence underpinned the strength of the manufacturing sector. In urban India, lower taxes and good salary increments across sectors increased disposable income in the hands of consumers. A sizeable chunk of the GDP growth came from the service sector, which now contributes 54 per cent of the countrys GDP. More significantly, the fastest growing segment in the service sector information technology and IT enabled servicesis being driven by youth. This growing segment of the population offers a huge window of opportunity for the automobile industry, especially in emerging Tier 2 and Tier 3 cities spread over different corners of the country. Overall, the auto industry clocked a 14% growth over the previous year. Good times in the automobile industry as far as volumes are concerned have been continuing and there are no signs of let up at least in the near future, given the trend of rising consumer incomes and (relatively low penetration levels of automobiles. This feel-good factor pervading the automobile industry has prompted several automakers to line up fresh investments to ramp up their operational capacities. INDUSTRY STRUCTURE AND DEVELOPMENT The Indian Two-wheeler industry volumes rose 18.3% year to year on the back of 21.3% year to year increase in motorcycle volumes. Hero Honda Motors Limited (HHML)-our principal customer continued to lead the motorcycle segment with a over all market share of 48.1%, and a lead of more than one million over its nearest rival. The healthy growth of the two wheeler industry and in particular the continuing dominance of our principal customer HHML formed the backbone of your Companys impressive operational performance during the year. Your Company is confident that the current trends will are sustainable in the near term. COMPANY PERFORMANCE The Company is presently engaged in the manufacturing of Forging and Gear Components at its plants located at Binola near Gurgaon in Haryana. OPERATIONS The financial year 2005-06 was challenging for the Indian Automobile Industry. There was pressure on margins on the back of steep increases in commodity prices, especially steel and aluminum. During the period of 8 months, the Sales of the Company were Rs. 9658.99 Lacs. Operating Profit (PBDIT) of the company for the period under review was Rs. 2672.74 Lacs. The Profit Before Tax (PBT) was Rs. 1906.95 Lacs and Profit After Tax (PAT) was Rs. 1258.59 Lacs. OPPORTUNITIES AND THREATS Currently, your Company is heavily dependent on the prospects of growth of the two-wheeler industry and within that, the business of HHML. Any changes in the fotunes of HHML, therefore, could directly impact the prospects of your company. However, given HHMLs growth potential, a reversal of fortunes would seem unlikely at this juncture. Steel is the major raw material being used by your Company. The rise in steel prices could really prove to be a challenge to the Company and can exert pressure on the operating margins. Your Company can offset the price increase by increasing the production capacities and volumes, but in the face of a continual rise, the impact of scale economics could be limited. CAPACITY EXPANSION AND OUTLOOK The Company has planned an aggregate investment of Rs. 20.17 Crores for expanding the capacities of existing forging/gear components in order to cater to the increased demand of Hero Honda Motors Limited. These expansions are scheduled to be completed by September, 2006. Your Company has further stepped up its investment to enhance the operational capacities and to embrace the new and exciting opportunities for additional business within the focused segments of automobile industry. Ongoing efforts to improve in all areas of operations and greater focus on the core values of its business should augur well for the future of your Company. In other words, we expect that we would continue to grow, barring unforeseen contingencies, in the years ahead. RISKS AND CONCERNS Though guidelines and controls are in place to manage and mitigate downside business risks, the role played by external factors like inflation and high input costs cannot be underestimated. While your Company continues to derive benefit from the impressive growth and performance of its principal customer HHML, this also makes us more vulnerable to any adverse development or slow down in the growth of business of HHML. CAUTIONARY STATEMENT Statements in the Management Discussion and Analysis are forward looking in nature, based on certain assumptions and expectations of the future events that are subject to risks/uncertainties and unancipated travails. Therefore, the actual performance/results and trends may differ substantially from those expressed or implied. INTERNAL CONTROLS AND ADEQUACY Your Company has an adequate system of internal controls that commensurate with the size and nature of business of the Company. Attempts have been made to ensure adequate protection of the Companys resources, provision of accurate and speedy financial statement agencies, Bankers, our valued customers and our vendors. The Board wishes to place on record its sincere appreciation of the efforts put in by the Companys workers, staff and executives. Your Company has a balanced organization structure, well defined authority levels and set guidelines and rules for conducting business transactions and to promote ethical conduct. The Companys Internal Auditors conduct audit to ensure adequacy of internal control systems, adherence to management instructions and policies and compliance with laws and regulations of the country. The Internal Audit Reports are circulated to the Management which initiates action where necessary and the action taken reports of the management is considered and discussed by the Audit Committee. DIVIDEND The Directors are pleased to recommend a dividend of 25% on equity shares of the Company for the period ended 31st March, 2006. The dividend, if approved by the members in the forthcoming Annual General Meeting, would absorb Rs. 285.06 Lacs (inclusive of Corporate Dividend Tax of Rs. 35.06 Lacs) out of the profits available for the period. MATERIAL CHANGES AND COMMITMENTS No material changes and commitments affected the financial position of the Company between March 31, 2006 and the date in which this report has been signed. BOARD OF DIRECTORS Mr. Satyanand Munjal, Mr. Brijmohan Lall Munjal, Mr. Om Prakash Munjal, Mr. Vijay Munjal and Mr. Neeraj Munjal, First Directors of the Company, retire at the ensuing Annual General Meeting. All of them, being eligible, offer themselves for re-appointment. Mr. Sunil Kant Munjal, Mr. Bhagwan Dass Narang, Mr. Surrinder Lal Kapur and Dr. Vinayshil Gautam were appointed as Additional Directors of the Company with effect from February, 14, 2006. They hold office upto the date of the forthcoming Annual General Meeting. The Board of Directors of your company in its meeting held on August 3, 2006, subject to the approval of Members of the Company, appointed Mr. Neeraj Munjal as Managing Director of the Company for a period of 5 (five) years commencing from 1st April, 2006. Mr. Neeraj Munjal is spearheading the operations of the Binola unit. He successfully handled the operations that have brought the Company to this level. He brings with himself experience of 18 years in auto components sector. Directors feel his appointment as Managing Director is desirable and hence commend his appointment for a term of 5 (five) years. An appropriate resolution to that end is set out at item no. 13 of the accompanying Notice of the Annual General Meeting. DIRECTORS RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by them, your directors make the following statement in terms of Section 217(2AA) of the Companies Act, 1956: (i) that in the preparation of the account for the period ended March 31, 2006, the applicable accounting standards have been followed; (ii) 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, 2006 and of the profit of the Company for the period ended on that date; (iii) that proper and sufficient care has been taken to maintain adequate accounting standards in accordance with the provisions of the Companies Act, 1956 so that the assets of the Company are safeguarded and frauds and other irregularies are detected or prevented. (iv) that the accounts for the period ended March 31, 2006 have been prepared on a going concern basis. CORPORATE GOVERNANCE Your Company is committed to benchmark itself with the highest standards in all areas including appropriate standards for good Corporate Governance. Your Company has put a structure of Corporate Governance in place, which ensures that the provisions and Guidelines contained in Clause 49 of the Listing Agreement with Stock Exchanges are duly complied with. A report on Corporate Governance is alongwith the Auditors Certificate on its compliance annexed hereto as ANNEXURE-I. AWARDS AND RECOGNITIONS The Board places on record its deep appreciation for the distinguished civilian honour-Life Time Achievement Award-bestowed upon Mr. Brijmohan Lall Munjal, Hero Group Chairman and Member of the Board of your Company by the Institute of Company Secretaries of India, New Delhi in recognition for excellence in Corporate Governance in the Indian Industry. This honour is a recognition of the achievements of the entire Hero Group of which your company is a member. FIXED DEPOSITS The Company has not accepted any deposit under Section 58A and Section 58AA of the Companies Act, 1956 read with Companies (Acceptance of Deposits) Rules, 1975. AUDITORS M/s. S. S. Kothari Mehta & Co., Chartered Accountants, New Delhi, Statutory Auditors of the Company will retire at the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. AUDITORS REPORT As for the Auditors Report, the respective notes to the accounts are self-explanatory and therefore do not call for any comments. LISTING After the Scheme of Demerger, your company has issued 1,00,00,000 equity shares of Rs. 10/- each to the shareholders of Munjal Auto Industries Limited (MAIL) as on Record Date i.e. 24 May, 2006 and these shares are to be listed on The Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of India Limited (NSE) where the shares of MAIL are listed. In view of this, your company has made application to The Bombay Stock Exchange Limited (BSE) and The National Stock Exchange of India Limited (NSE) for getting its shares listed and approval from both the Stock Exchanges is awaited. QUALITY Your Company has been certified for its quality standards as per ISO/TS 16949:2002. Efforts have been made to improve, qualitative aspects of all operational areas by adopting the tools like KAIZEN-for Continuous Improvement, Total Productive Maintenance (TPM)-for improving overall equipment effectiveness, 5 S-for work place management, Six Sigma approach for reducing the manufacturing process variation and GEMBA KAIZEN-a systematic approach by cross functional teams for improvements in plants. Your Company was recognized as a Direct on Line supplier by Hero Honda Motors Limited-a major customer. This reflects the commitment of your company towards achieving the highest quality standards. Continuing with these high quality standards, your company also received the Excellence in Performance award from MICO-BOSCH, another important customer. ENVIRONMENT Your Company is committed to maintain the highest standards of environment compliances and has adopted a systematic approach towards environment management. Your Company has been certified for its environmental management system as per ISO 14001:2004. Your Company has also been accredited with Occupational Health and Safety Assessment Series (OHSAS 18001:1999). Your Company has complied with the applicable environmental regulations and all effluents and wastes are treated properly and monitored before safely disposing them off in conformity with the environmental regulations prescribed by statutory authorities. Further, the Company has been following all procedural requirements and has been granted all necessary clearances/consents by the State Pollution Control Board. The Company maintains all its pollution control facilities in good condition and upgrades them from time to time in line with the enhanced volume of discharge. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO Information required under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given as per ANNEXURE-II and forms an integral part of this Report. PARTICULARS OF EMPLOYEES A statement showing Particulars of Employees as required under Section 217(2A) of the Companies Act, 1956, read with Companies (Particulars of Employees) Rules, 1975 is given as per ANNEXURE-III and forms an integral part of this Report. HUMAN RESOURCES/INDUSTRIAL RELATIONS Our employees are future, and the organization continues to develop the internal capabilities of its people through various training and development initiatives. During the period under review, Company continued with initiatives to develop its employees at professional and personal levels. A sizeable number of employees have undergone training that accord an opportunity to shrpen their skills, improve their performance and widen their perspective. Company has also put in place a system of performance appraisal to ensure a direct link between employees performance and their variable pay as well as training needs. Company has a strong belief to attract, retain and nurture the optimal talent, effective management of human capital is imperative and to that end, it consistently strives toward improvement in the standards of improvement, occupational health and safety of all its employees as well as at the work place. This not only improves productivity but also provides a safe and healthy environment and an atmosphere of congeniality. Industrial relations have remained cordial in the Company. HEALTH AND SAFETY Your Company is committed towards the safety of every employee and other persons who may be affected by its operations. We believe that the safe working practices lead to motivated workforce and higher productivity. We strive to eliminate accidents at our factory. We have a safety culture in the organization by: * Integrating safety and health in all our activities * Ensuring compliance with all applicable legislative requirements. * Encouraging employees to ensure safety at their workplace. * Continuous improvement in safety performance through precautions besides participation and training of employees. ACKNOWLEDGEMENTS Your Directors acknowledge with sincere gratitude the co-operation and assistance extended by the Customs and Excise Departments, the State Government and other Government agencies, Bankers, our valued customers and our vendors. The Board wishes to place on record its sincere appreciation of the efforts put in by the Companys workers, staff and executives. For and on behalf of the Board Place : New Delhi Sunil Kant Munjal August 3, 2006 Chairman ANNEXURE `II TO THE DIRECTORS REPORT Information as per Section 217(1)(e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the Report of the Board of Directors) Rules, 1988 1. Conservation of Energy Considerable emphasis is put on energy conservation especially for hard core manufacturing processes of the Company, Optimal utilization of various energy resources like power, fuel and oil is ensured through a series of ongoing measures. 2. Technology Absorption, Adaptation and innovation The Engineering Departments of the Company is continuously working on development of components and also development of alternate processes to enhance quality and to reduce cost. The following measures were adopted by the Company during the period under review: * Development of Gear Primary Driven-a new product, produced through forging, machining and broaching route against CKD route of sintered earlier adopted by HHML resulting in indigenization and cost reduction of the above said component. * Establishment of sate-of-the-art Metrological Laboratory with 3D Co-ordinate Measuring Machine-3D CMM is in process * Automation at CNC Machining process through introduction of imported machines has been started for productivity enhancement and quality improvement. 3. Foreign Exchange Earnings and outgo (Rs. In Lacs) For the period of 8 months ending on March 31, 2006 (a) Total Foreign Exchange Earnings - (b) Total Foreign Exchange Outgo 978.45

Director’s Report