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The Hi-Tech Gears Ltd.

BSE: 522073 | NSE: HITECHGEAR |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE127B01011 | SECTOR: Auto Ancillaries

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Annual Report

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

Director’s Report

Dear Members,

The Directors have great pleasure in presenting the 30th Annual Report of your Company, together with the audited statement of accounts for the financial year ended 31st March, 2016.

Financial Results

The highlights of the financial performance of the Company are as under:-

(Rs. in lacs)

Particulars

2015-2016

2014-15

Sales (net of excise duty)

44,997.29

43,192.84

Other Income

227.63

266.46

Total Income

45,224.92

43,459.30

Profit before Depreciation, Interest & Taxes (PBDIT)

5,882.30

5,509.05

Depreciation

2,273.09

2,510.86

Profit before Interest & Taxes (PBIT)

3,609.21

2,998.19

Financial Charges

249.27

368.63

Profit before Taxes (PBT)

3,359.94

2,629.56

Provision for Taxes

1,243.52

787.85

Profit after tax (PAT)

2,116.42

1,841.71

Balance of profit brought forward

10,309.05

9,863.70

Balance available for appropriation

12,425.48

11,705.42

Dividend

563.04

469.20

Tax on dividend

116.77

93.81

Transfer to General Reserve

100.00

100.00

Balance Surplus in P & L Account

11,645.67

10,309.05

Paid-up Equity Share Capital

1,876.80

1,876.80

Earnings Per Share (EPS)

11.28

9.81

General Information

India topped the World Bank''s growth outlooks for 2015-16 for the first time with the economy having grown 7.6% in 2015-16 and is expected to grow at 7-7.75% during FY 2016-17, despite the uncertainties in the global market according to IMF World Economic Outlooks.

After seeing challenging times, the Indian automobile industry finally in growth mode from few years. Although, the revival is good for the industry, Manufacturing Sector & Economy as such, but the pace of growth is still to go very far. It is heartening to inform that all the vehicle categories, be it commercial vehicle or two vehicle saw the positive territory. The overall production of vehicle stood at 23,960,940 Vehicles compared to 23,358,047

Indian auto component industry registered a growth of 8.8% in 201516 with overall turnover of Rs. 2,55,600 crores (USD 39.0 billion). While overall exports from India witnessed de-growth of 9.58%, however the Indian auto component industry exports grew by 3.5% reaching to Rs. 709,00 crores (USD 10.8 billion). ACMA President predicted that with the signs of recovery in India based auto market and prospects of a better monsoon, the component sector is expected to witness growth in double digits this year.

International Monetary Fund (IMF) earlier projected the global growth at 3.5%. However, due to moderate and uneven reasons, it remained at 3.1% for 2015 and is projected to grow at 3.2% in 2016, the same level 2015. Weak trade growth, sluggish investment, subdued wages and slower activity in key emerging markets will all contribute to modest global GDP growth and is expected to improve only to 3.5% in 2017. This reflects a combination of subdued aggregate demand, poor underlying supply-side developments, with weak investment, trade and productivity growth, and diminished reform momentum.

Operations

Detailed information on the operations of the Company and details on the state of affairs of the Company are covered in the Management Discussion & Analysis Report, forming part of this report. Further with regard to the financials, this year also growth of your Company has been satisfactory and up to the expectation. During the FY 2015-16, total revenue from operations (net of excise) stood at Rs.449.97 crores as compared to Rs.431.92 crores in FY 2014-15, registering an increase of 4.18%. The profit before tax stood at Rs 33.60 crores as compared to Rs 26.30 crores in previous year. Similarly, the Net profit after tax of the Company also grew by 14.91% i.e. from Rs 18.42 crores to Rs 21.16 crores.

At the export front, the Company also did well and recorded an export turnover of Rs. 107.84 crores compare to Rs. 93.17 crores in the previous year, thereby recorded an increase of 15.75% compared to 12% during the same period in previous year. The total exports are now 23.85% of the total turnover.

Your Company expects to benefit over the next period from its good business linkage with OEMs, due to its healthy operating efficiencies. In view of this, the tong term prospects of your Company are bright.

Share Capital

The paid up Equity Share Capital as on 31st March 2016 was Rs. 18,76,80,000. During the year under review, the Company has not issued shares or granted stock options or sweat equity.

Dividend

During the year under review, an interim dividend of 15 % i.e. Rs. 1.50 per equity share amounting to Rs. 281.52 lacs was declared and paid, the same is being confirmed at the forthcoming AGM. The Directors have now recommended to the shareholders a final dividend of 15% i.e. Rs. 1.50 per equity share, resulting in an another payout of Rs. 281.52 lacs. The total dividend payout stands at Rs 563.04 Lacs (Previous year Rs 469.20 Lacs) & tax on dividend comes to Rs 116.77 Lacs (Previous year 93.81 Lacs). Additionally, an amount of Rs. 1.00 Crore is transferred to General Reserve.

If the final dividend on the shares as, recommended by the Board of Directors, is approved by the shareholders in their 30th Annual General Meeting, payment of such dividend will be made to those members whose names appear in the Register of Members as per Book closure dates mentioned in the shareholder’s information.

Directors Responsibility Statement

In terms of section 134(3) (c) & 134 (5) of the Companies Act, 2013, and to the best of their knowledge and belief, and according to the information and explanations provided to them, your Directors hereby make the following statements:

(a) that in preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any,

(b) that such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2016 and of the profit of the Company for the year ended on that date,

(c) that proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities,

(d) that the annual financial statements have been prepared on going concern basis,

(e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively, and

(f) that the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively.

Details of Internal Financial Controls with reference to the Financial Statement

In view of the requirement of the Companies Act, 2013, the Company has successfully documented its Internal Financial Controls (IFC). This ensures orderly and efficient conduct of its business, including adherence to Company policies, safeguarding of its assets, accuracy prevention of errors & completeness of the accounting records and the timely preparation of reliable financial information.

The Internal Financial Controls with reference to the Financial Statements were adequate and operating effectively

Details of Subsidiary/Joint Ventures/Associate Companies

The Company has neither any Subsidiary, Joint Venture nor an Associate Company within the meaning of Companies Act, 2013. However, the Company is evaluating various options to tap the business opportunities in South India as well as in overseas through itself/entity(ies).

Directors and KMP''s appointment/ reappointment

The Board is duly constituted with proper balance of Executive Directors, Non-Executive Directors, Independent Directors & Whole Time Directors. The other information is as under:

a. Retire by Rotation

Independent Directors are not liable to retire by rotation. Mr. Anuj Kapuria, Whole Time Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible offer himself for re-appointment.

b. Additional Director

Mr. Bidadi Anjani Kumar was appointed as a Non- Executive and Additional Director of the Company who holds the office till the date of ensuing Annual General Meeting. His appointment is being confirmed at the ensuing Annual General Meeting subject to your approval.

c. Re-appointment of Managerial Personal

Last appointment of Mr. Deep Kapuria as the Executive Chairman and Whole Time Director was made for 5 Years with effect from January 01, 2012 up to December 31, 2016 and his tenure is coming to an end on December 31, 2016. The Board of Directors upon the recommendation of Nomination and Remuneration Committee has re-appointed them for another period of five (5) years, subject to your approval.

d. Key Managerial Personnel''s

All Whole Time Directors such as Mr. Deep Kapuria, Executive Chairman, Mr. Pranav Kapuria, Managing Director and Mr. Anuj Kapuria, Executive Director are regarded as KMPs, in addition to Chief Financial Officer (C.F.O.) and Company Secretary (C.S.).

Necessary Resolutions for the appointment/reappointment of Directors/Whole Time Directors pursuant to provisions of the Companies Act, 2013 & Rules made there under and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 are being included in the notice for the ensuing Annual General Meeting for the approval of shareholders.

During the year, Mr. PC. Mathew an Independent director of the Company resigned and Mr. Bidadi Anjani Kumar has joined the Board as Non-Executive Director. Detailed information regarding directors is provided in the Corporate Governance Report.

Meetings of the Board

Necessary Board Meetings transacted to conduct the operations of the Company. The details are given in the Corporate Governance Report, which forms part of this Annual Report. It is confirmed that the gap between two consecutive meetings was not more than one hundred and twenty days as provided in section 173 of the Act.

Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and the corporate governance requirements as prescribed by SEBI ( Listing Obligations and Disclosure Requirements) 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 working of its Committees.

Declaration of Independent Director(s)

The Independent Directors have submitted their declarations of independence, as required pursuant to provisions of section 149(7) of the Act, stating that they meet the criteria of independence as provided in sub-section (6).

Auditors

a) Statutory Auditors

M/s Gupta Vigg & Company, Chartered Accountants, (Firm Registration No. 001393N) Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. Pursuant to provisions of section 139 of the Act and the Rules made there under, the Board upon the recommendation of Audit Committee proposes to reappoint M/s Gupta Vigg & Company Chartered Accountants as Statutory Auditors of the Company till the conclusion of the next Annual General Meeting. They have furnished a certificate confirming the eligibility under section 141 of the Act and Rules made there under.

The Auditors'' Report does not contain any qualification, reservation or adverse remark and do not call for any further explanation/ clarification by the Board of Directors as provided under Section 134 of the Act. With respect to the point no. (VII) (b) in Annexure to Auditors'' Report with regard to non deposit of disputed taxes. the Board wishes to inform that those matters are related to non-admission of service tax input by the Excise Department, & regular income tax matters for which the Company has preferred appeal to Appellate Authorities. The rest of report by the Statutory Auditors is self explanatory Please refer to the Notes to Accounts, wherever necessary.

b) Cost Auditors

As per Section 148 and all other applicable provisions of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the Board of Directors have on the recommendation of the Audit Committee, approved the reappointment of M/s. Kabra & Associates, Cost Accountants as the Cost Auditors of the Company for the year ending 31st March, 2017. The remuneration proposed to be paid to them requires ratification of the shareholders of the Company. In view of this, your approval for payment of remuneration to Cost Auditors is being sought at the ensuing Annual General Meeting. Accordingly, a resolution seeking approval by members for the remuneration payable to M/s Kabra & Associates is included in the Notice convening 30th Annual General Meeting.

c) Secretarial Auditor

Section 204 of the Companies Act, 2013 inter-alia requires every listed company to annex with its Board''s report, a Secretarial Audit Report provided by a Company Secretary in Practice, in the prescribed form. The Board of Directors appointed M/s Grover Ahuja & Associates, Practicing Company Secretaries as Secretarial Auditor to conduct Secretarial Audit of the Company and their report is annexed to this Board report (Annexure I). The Secretarial Audit Report does not contain any qualification, reservation or adverse remark and do not call for any further explanation/ clarification by the Board of Directors under the Act.

Internal Control Systems and its Adequacy

The Company has internal control systems commensurate with the size, scale and complexity of its business operations. The scope and functions of Internal Auditors are defined and reviewed by the Audit committee. Internal Auditors present their quarterly report to the Audit Committee, highlighting various observations, system and procedure related lapses, if any and corrective actions being taken to address them.

Extract of Annual Return

As required pursuant to section 92(3) & 134 (3) (a) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in MGT 9 as a part of this Annual Report as Annexure II.

The Conservation of Energy, Technology Absorption, Foreign Exchange earnings and outgo.

Details of Energy Conservation, Technology Absorption, Research & Development activities undertaken by the Company and foreign exchange earnings and outgo of the Company and other information in accordance with the provisions of Section 134(3) (m) of the Companies Act, 2013, read with the Companies (Disclosure of Particulars in the Report of Board of Directors), Rules, 1988, are given in Annexure III, to this Report.

Report on Corporate Governance

The Report on Corporate Governance is given separately and forming part of this report and the certificate from the Statutory Auditors confirming compliance with the provisions of Corporate Governance as stipulated in Regulation 15 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is also attached to the report.

Management discussion & analysis report

The Management Discussion & Analysis Report is given separately and forming part of this report.

Risk Management Policy

Pursuant to Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, provisions of constituting Risk Management Policy are not applicable to the Company.

Corporate Social Responsibility

Pursuant to the provisions of Section 135 and other applicable provisions of the Companies Act, 2013 and Rules made there under the brief of the Corporate Social Responsibility is provided in Annexure IV

Particulars of contracts or arrangements with related parties

All transactions entered by the Company with the parties, which may be regarded with related parties, were considered to be in the ordinary course of business and on the arm''s length basis. As provided under section 134(3)(h) of the Act and Rules made there under disclosure of particulars of material transactions with related parties entered into by the Company with related parties in the prescribed format annexed to this report as Annexure V. Disclosures on related party transactions are also set out in Note No. 31 to the financial statements. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Company''s website at the link: http://www.hitechgears.com/images/RPT.pdf.

Electronic Clearing Services (ECS)

As per the circular issued by Securities & Exchange Board of India (SEBI), companies should mandatorily use the facility of Electronic Clearing Services (ECS), for distribution of dividends to its members. This facility provides to the members an opportunity to receive dividend amount directly in their bank accounts. For availing this facility, members holding shares in physical form may send their duly filled ECS mandate form to the Company''s Registrar and Share Transfer Agent (RTA). Members are holding shares in dematerialized form may kindly note that their bank account details as furnished to their depositories will be taken for the purpose of ECS and the Company.

Postal Ballot

During the financial year 2015-16, no Resolution was required to be passed through postal ballot. Similarly, at the forthcoming Annual General Meeting, there is no item for approval through Postal Ballot is being placed.

Code of Conduct of Insider Trading

The Company has adopted a Code of Conduct to regulate, monitor and report trading by insiders. This Code of Conduct is intended to prevent misuse of Unpublished Price Sensitive Information (“UPSI”) by designated persons.

In accordance with such Code of Conduct, the Company closes its trading window for Designated Persons from time to time. The trading window is also closed during and after occurrence of price sensitive events as per the said Code of Conduct.

Code of Conduct

Your Company has adopted a Code of Conduct for its Board Members and Senior Management personnel. The code of conduct has also been posted on the official website of the Company.

The Declaration by the Managing Director of the Company regarding compliance with the Code of Conduct for Board Members and Senior Management is annexed with the Corporate Governance Report.

Reconciliation of Share Capital Audit

M/s Grover Ahuja & Associates, practicing Company Secretary carried out the Secretarial Audit on quarterly basis to reconcile the total issued and listed share capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). The Board of Directors confirms that the total issued and paid up capital as on 31st March, 2016 is reconciled with the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL. The Reconciliation of Share Capital Audit Certificate is being submitted every quarter to the Stock Exchanges and is also placed before the Board Meeting.

Listing of Shares

With a view to provide easy liquidity in the shares of the Company the equity shares of your Company are presently listed on the premier stock exchanges viz., the National Stock Exchange of India Limited (NSE) and the Bombay Stock Exchange India Limited (BSE) Mumbai. Pursuant to Regulation 14 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the annual listing fees for the year 2016-2017 has been paid within the prescribed time period.

Fixed Deposits

During the year under review your Company neither invited nor accepted any deposit within the meaning of Section 73 of the Companies Act, 2013, and rules made there under.

Dematerialization of the equity shares

99.32 % of the total equity shares of the Company are held in dematerialized form with the participants of National Securities Depository Limited (NSDL) and Central Depository Securities (India) Limited as on the date of this report.

Keeping in view the benefits of dematerialization, your directors urge the shareholders holding shares in physical form to get their shares dematerialized.

Change of Name

The name of the Company has been changed by prefixing “The” before the existing name of the Company, making it “The Hi-Tech Gears Limited” which was approved by the members in 29th Annual General Meeting of the Company. The fresh Certificate of Incorporation in this regard has been issued by Registrar of Companies, Jaipur (‘ROC'') dated October 08, 2015.

Remuneration Policy

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 Remuneration Policy is stated in the Corporate Governance Report.

Audit Committee

Company has duly constituted Audit Committee, which meets on regular intervals for the business required to be transacted thereat. The recommendations made by such committee are accepted by the Board.

As per Companies Act, 2013, the Company has reconstituted and revised the roles, responsibilities & powers of the Audit Committee. A synopsis is described in the Corporate Governance report.

Vigil Mechanism Policy

The Company has a vigil mechanism policy to deal with any instance of fraud and mismanagement. The employees of the Company are free to report violations of any laws, rules, regulations and concerns about unethical conduct to the Audit Committee under this policy The policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination with any person for a genuinely raised concern. The policy may be accessed on the

Company''s website at the link: http://www.hitechgears.com/images/ Vigil_Mechanism_Poficy.pdf

Obligation of Company under the Sexual Harassment Of Women At Workplace (Prevention, Prohibition And Redressal) Act, 2013

Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said poficy. During the year Company has not received any complaint of harassment.

Particulars of Toans given, Investments made, Guarantees given and Securities provided

The company has not given any toans or guarantees covered under the provisions of section 186 of the Companies Act, 2013.

The details of the investments made by company are given in the notes to the financial statements.

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 to which the financial statements relate and the date of the report.

Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company''s operations in future

There is no significant and/or material order passed by the regulators or courts or tribunals impacting the going concern status of the Company.

Particulars of Employees

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure VI.

Business Responsibility Reporting

As per Regulation 34 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 of Business Responsibility

Reporting is not applicable.

Personnel

The Board of Directors place on record their appreciation of the untiring efforts of the employees of the organization at every level. The efforts to create a family like atmosphere continued throughout the year. Like the many years gone-by, this year also witnessed increased cohesion among all levels of employees, which is evident from the performance of the Company. Training and Development of employees provided further impetus and have contributed towards the all round improved performance of your company. The Company encourages by rewarding & recognizing employees for their tong term commitment as & when the opportunity arise.

Trade Relations

The Board of Directors place on record their appreciation for the co-operation and valuable support extended by the customers, the suppliers and all other persons directly or indirectly associated with the Company. Your Company regards them as partners and shares with them a common vision of growth in the future.

Acknowledgement

Your directors place on record their sincere appreciation for the assistance, cooperation and valuable support provided to the Company by Customers, Vendors, Banks & Financial Institutions and hope to continue to receive the same in future. Your Directors also record their appreciation for the commitment and dedication of the employees of the Company at all levels.

The Board of Directors also place on record their gratitude to the shareholders of the Company for their continued support to and confidence in the management of the Company

By Order of the Board

For The Hi-Tech Gears Limited

Sd/-

Place : New Delhi Deep Kapuria

Dated: 11/08/2016 Chairman

Director’s Report