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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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Annual Report

For Year :
2018 2016 2015 2014 2013 2012 2011 2010 2009

Director’s Report

To

The Members,

The Directors have the pleasure in presenting their 11th Annual Report on the business and operations of the Company together with the Audited Statement of Accounts for the financial year ended March 31, 2016.

Financial Highlights

During the year under review, performance of your Company is as under:

(Rs. In Lacs)

Particulars

Year ended March 31, 2016

Year ended March 31, 2015

Gross Sales & Other Income

44,785.80

47,005.58

Profit before Depreciation and Interest

7079.68

8,329.40

Depreciation

2784.75

2,745.27

Interest

2146.90

1,997.13

Profit before Taxation

2148.03

3,587.00

Provision for Taxation (Deferred & Current)

224.17

773.43

Profit after Taxation

1923.86

2813.57

Profit available for appropriations

1923.86

2813.57

Appropriations

Amount transferred to General Reserve

300.00

300.00

Proposed Dividend on Equity Shares

400.00

450.00

Tax on Dividend

81.43

122.14

Profit after Appropriations

1142.43

1791.42

State of Company’s Affairs and Future Outlook

During the year under review, your Company has taken measures to enhance operational efficiencies by focusing on improving yields, reducing rejections and enhancing capacity utilisation.

The total sales of the Company have declined by 4.72% from Rs. 47,005.58 lacs in 2014-15 to Rs. 44785.80 lacs in 2015-16. Operating profit (PBDIT) of the company has declined by 15% from Rs. 8329.40 lacs in 2014-15 to Rs. 7079.68 lacs in 2015-16.

The Company is at the tail-end of the major expansion of setting up two major state of the art manufacturing facilities. Out of these two, Bengaluru plant has commenced operations in April 2016 while Rohtak plant is expected to go on stream in the last quarter of FY 16-17. The effect of these major capex will impact the profitability in FY 16-17. However, going forward these capex in new plants will widen Company’s product portfolio, enhance further its capability as a niche auto components producer and start contributing substantially to the operation from FY17-18 and beyond.

Business Overview

The Directors are pleased to inform that the production from the Bengaluru plant has already started in order to meet the ever-increasing demand of the Customers and to substitute the import of indigenised products. The Bengaluru plant of the Company is working towards the PM’s Make in India deliberation as the production from this plant will help in import substitution of indigenised products. The Company is planning to make the Rohtak plant operational in H2 of FY 16-17.

Hero MotoCorp Limited (HMCL) is the major customer of the Company and continues to maintain its growth at a constant rate. Other customers of the Company like BOSCH, DENSO etc. have increased their sales/business share marginally as compared to last year. To cater to the requirements of the customers, the company is utilizing its available resources to achieve a satisfactory growth rate. 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. There is pressure on the EBITDA margin, due to competitive pricing and increase in employees cost.

Awards & Accolades

The Company is proud recipient of the following Awards in the year 2015-16 as shown in Awards & Accolades Section:

1. Award for Supplier of the year by Mando Automotive India Pvt Limited.

2. Certificate of Supplier Quality awarded for fulfilling Quality Assurance Compliance by Hyundai Motor India Limited.

3. Certificate of Appreciation for superior performance in the field of Development by Maruti Suzuki India Limited.

4. Award for Outstanding performance in Quality by Denso India Limited.

5. Certificate of Appreciation for Outstanding Performance in the category of Quality by Denso India Limited.

6. Award for excellence in running SAP operations.

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.

Transfer to General Reserve

The Board proposes to transfer an amount of Rs.300 lacs to General Reserve. The balance amount of Rs. 11,846.25 lacs (Previous year Rs. 11,703.83 lacs) will be retained as surplus in the statement of Profit and Loss Account.

Dividend

Your directors are pleased to recommend a final dividend of 20% i.e. Rs. 0.40 per equity share of the face value of Rs. 2/- each for the year ended March 31, 2016 which is provided for in the accounts absorbing a sum of Rs. 4 crore, if approved by the members in the ensuing Annual

General Meeting. Dividend will be tax free in the hands of shareholders, as the Company will bear the dividend distribution tax of Rs. 81.43 lacs (Previous year Rs. 122.14 lacs). The dividend paid during the previous year was 60% (Rs. 1.20 per share).

The Register of Members and Share Transfer Books will remain closed from Thursday, September 22, 2016 to Thursday, September 29, 2016 (both days inclusive).

Share Capital

(a) Issue of Bonus Shares: In the Board Meeting held on May 18, 2015, the Board has recommended Bonus Issue of Shares to the existing Equity Shares holders of the Company, in the proportion of 1(One) Equity Share for every 1 (One) Equity Share held by them, which was approved by the shareholders in the Annual General Meeting held on September 09, 2015.

(b) The paid up Equity Share Capital as on March 31, 2016 was Rs. 20 Crore. During the year under review, the Company has not issued shares with differential voting rights nor granted 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, 2016.

(c) 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.

Extract of Annual Return

The extract of Annual Return, in format MGT-9, for the Financial Year 2015-16 is enclosed as Annexure - C to this report.

Meeting of Board of Directors

A calendar of Meetings is prepared and circulated in advance to the Directors. During the Financial Year 2015-16, 6 (Six) meetings of the Board of Directors of the company were held on 18-May-2015, 04-Aug-2015, 9-Sep-2015, 16-Oct-2015, 02-Nov-2015 and 12-Feb-2016. 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 report.

Particulars of Loan, Guarantees and Investments under Section 186 of the Companies Act, 2013

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

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 Accounting Standards (AS18) has been made in the notes to the Financial Statements.

Statutory Auditors

M/s. S. S. Kothari Mehta & Co., Chartered Accountants, existing Statutory Auditors’ will retire at the conclusion of the ensuing Annual General Meeting and seek reappointment as Statutory Auditors of the Company at the ensuing Annual General Meeting.

The Company has received letters from them to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment.

The Board of Directors recommends to the shareholders the re-appointment of M/s. S.S. Kothari Mehta & Co. as Statutory Auditors of the Company for the financial year 2016-17.

Explanation to Auditors’ Remarks

The comments on statement of accounts referred to in the report of the auditors are self explanatory.

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 2015-16.

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 - D to this Report.

Holding Company

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.

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, 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 Eleventh Annual General Meeting and the relevant Resolutions are recommended for your approval.

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.

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.

Deposits

During the year, the Company has not accepted any fixed deposit.

Receipt of any commission by MD / WTD from a Company

Details of commission received by Mrs. Charu Munjal, Whole Time Director is as follows:

(Rs. in Lacs)

Mrs. Charu Munjal, Whole Time Director

Commission

7.00

The details of Commission paid to Independent Directors forms the part of the Corporate Governance.

Secretarial Audit

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. Secretarial Audit Report in prescribed format MR-3 is annexed as Annexure - E to this Board’s Report.

Explanation to Secretarial Audit Report

The explanations to the observations / remarks / qualifications of the report of the Secretarial Auditor are as follows:

1. The process for Issuance of Duplicate Shares has been regularized by the Company during the FY 2016-17.

2. The Company was under an impression that the implementation has the meaning of initiation of process and not the completion.

3. The Company shall initiate the process for transfer of unclaimed shares to Unclaimed Suspense Account as per requirements of Regulation 39(4) read with Schedule VI of SEBI LODR, 2015 during the FY 2016-17.

4. The observation is self-explanatory.

Corporate Social Responsibility (CSR) Policy

The Corporate Social Responsibility Committee comprise of the following members:

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 - F to this report.

Audit Committee

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 of the 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

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 of the 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 a risk management committee, the constitution and the terms of reference of the same are mentioned in the Annexure B of the Board’s Report.

Board Evaluation

The Board of Directors has carried out an annual evaluation of its own performance, Board’s committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed under SEBI LODR, 2015.

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. The Board and the Nomination and Remuneration Committee (“NRC”) reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

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 March 31, 2016. In a separate meeting of independent Directors, performance of non-independent 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.

Policy on directors’ appointment and remuneration and other details

The Company’s policy on directors’ appointment and remuneration and other matters provided in Section 178(3) of the Companies Act, 2013 has been disclosed in the corporate governance report, which forms part of the 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.

Listing

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 2015-16 have been paid to them well before the due date i.e. April 30, 2015. The Company has also paid the annual custodian fees for the year 201516 in respect of Shares held in dematerialized mode to National Securities Depository Limited (NSDL) & Central Depository Services Limited (CDSL).

The Company has executed new Listing Agreement(s) with The National Stock Exchange of India Limited and The BSE Limited on February 12, 2016. The Company has complied with the requirements of Corporate Governance as stipulated under Clause 49 of the erstwhile Listing Agreements and those specified under the SEBI LODR, 2015 as applicable.

Corporate Governance

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 M/s Satyender Kumar & Associates, Company Secretaries 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 2015-16 is attached to this report.

Managerial Remuneration

The information required under Section 197 of the Companies Act, 2013 read with Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is attached as Annexure - G to this Report.

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 adopted the policy for prevention of sexual harassment at workplace. An appropriate complaint mechanism in the form of “Complaints Committee” has been created in the Company for time-bound redressal of the complaint made by the victim.

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 accounts for the financial year ended March 31, 2016, 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, 2016 and of the profits of the Company for the financial year ended March 31, 2016;

(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.

Environment, Health & Safety

The Company is very keen on its responsibilities with respect to the clean environment. Company’s Health and Safety Policy commits to provide a healthy and safe work environment to all employees.

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 assistances is provided to its employees. The Company has an internal plant dispensary which operates round the clock and is managed by the qualified doctors supported by staff who are available for addressing health issues of employees.

Human Resource Development

The Company continues its focus on retention through employee engagement initiatives and provides a holistic environment where employees get opportunities to realize their potential. The Company believes that its human capital is the most valuable asset that helps it remain competitive. The Company’s policy not only meets all applicable statutory requirements but also focuses on motivation, learning and training of employees. Human resources being one of the most important factors of production, the Company is initiating measures towards competence and overall development of people at all levels to be future ready. The Company arranges training sessions for its employees to empower and upgrade them to achieve business motives and help them build their career.

The Company encourages long-term commitment by rewarding its people for the opportunities they create through KAIZEN activities and the value generated for customers and shareholders. The Company’s progressive workforce policies and benefits, various employee engagement and welfare initiatives program, have addressed stress management, promoted work life balance and helped the Company maintain a low attrition rate. The Directors are pleased to record their appreciation for the services rendered by the employees and staff at all levels.

Policies

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:

Policy

Web link

Code of Conduct

http://www.shivamautotech.com/Uploads/

imageZ34imguf_SHIVAMCodeofConductforBM.pdf

Prohibition of Insider Trading

http://www.shivamautotech.com/Uploads/

image/38imguf_insidertradingshivam.pdf

Payment to Non- Executive Directors

http://www.shivamautotech.com/Uploads/

image/33imguf_PaymenttoNED.pdf

Board Diversity Policy

http://www.shivamautotech.com/pdf/Board_Diversity_

Policy.pdf

Records and Archives Policy

http://www.shivamautotech.com/pdf/records_and_

archives_policy.pdf

Related Party Transaction Policy

http://www.shivamautotech.com/pdf/RPT_policy.pdf

Anti-Harassment Policy

http://www.shivamautotech.com/pdf/Anti_harassment_

Policy.pdf

Corporate Social Responsibility Policy

http://www.shivamautotech.com/pdf/CSR_POLICYpdf

Risk Management Policy

http://www.shivamautotech.com/pdf/Risk_Management_

Policy.pdf

Whistle Blower Policy

http://www.shivamautotech.com/pdf/Whistle_Blower_

Policy.pdf

Acknowledgments

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

Sd/- Sd/-

Neeraj Munjal Dr. Anil Kumar Gupta

Managing Director Whole Time Director

DIN: 00037792 DIN: 02643623

Place: Bengaluru Date: August 13, 2016

Director’s Report