BOARD'S REPORT TO THE MEMBERS, The Directors present the 56th Annual Report, together with the Audited Financial Statements for the Financial Year ended on 31st March 2015. 2. State of Company's Affairs and Future Outlook The business of the Company has grown steadily. Vans and Tractors produced by the Company have achieved improved sales and market shares. Systematic and detailed efforts have improved distribution and service network of the Company which has yielded good results, both for Vans and Tractors. The Company has been preparing for the change in the regulatory environment arising from new emission norms, revised requirements for School Buses and Ambulances, and also specifically taking into account customer requirements for the type of vehicles the Company produces. The Company's plants have shown good improvement in productivity and quality. Rationalization of procurement policies and focus on cost saving has also yielded benefits. Thus, product development, manufacturing, material procurement and sales promotion activities of the Company, have all contributed to the steady progress. The establishment of engine manufacturing factory as a dedicated factory for BMW India Pvt. Ltd. At Chennai and the project to establish a new engine and axle production facility for Mercedes Benz at Chakan near Pune, has enabled the Company to participate in the rapidly growing high performance luxury vehicles market in India, by working together with companies with leadership positions. It is expected that these businesses will also develop and grow rapidly. Besides the Pithampur Plant, which is Company's main plant producing Traveller and Trax range of vehicles and having its own facilities for production of engines, transmissions etc., the Company has now separate factories in Chennai and Pune for producing engines and transmissions, as stated above for leading luxurious carmakers. The Akurdi factory of the Company focuses mainly on the production of tractors. The R&D activities, the production engineering and the tool manufacturing activities are located at Akurdi and have been expanded and modernized to tackle future challenges. 3. Change in Nature of Business, if any During the year, there is no change in the nature of business of the Company. 4. Dividend The Board of Directors has recommended a dividend of Rs. 5 per share on 1,31,76,262 equity shares of Rs. 10 each fully paid up. 5. Share Capital The paid up equity share capital as on 31st March 2015 was Rs. 13.17 crore. During the period under review, the Company has not issued any shares with differential voting rights or granted stock options or sweat equity. 6. Extract of Annual Return The extract of Annual Return as on 31stMarch 2015, pursuant to the provisions of Section 92 of the Act and Rules framed there under, in the prescribed form is annexed to this report. 7. Meetings of the Board of Directors During the Financial Year 2014-15, the Meetings of the Board of Directors of the Company were held on 29th April 2014, 24th May 2014, 26th July 2014, 30th July 2014, 11th August 2014, 20th September 2014, 18th October2014,16th January 2015,26th February 2015and12th March2015. 8. Particulars of Loans, Guarantees or Investments The Company has not given loans, guarantees or made investments under Section 186 of the Act during the year under report. Particulars of investments made upto the previous financial year by the Company are provided in the Financial Statement attached to this report. 9. Particulars of Contracts or Arrangements with Related Party All Related Party Transactions (RPTs) entered during the year were on arm's length basis. There were no material related party contract(s)or arrangement(s)or transaction(s) during the year as defined under Clause 49 of the Listing Agreement and there are no details in this regard to be disclosed in Form AOC-2. During the year 2014-15, pursuant to Section 177 of the Act and Clause 49 of the Listing Agreement, all RPTs were placed before Audit Committee for its required approval. The policy on RPTs as approved by the Board is uploaded on the Company's website www.forcemotors.com and can be accessed at weblink: <http://www.forcemotors.com/page/index/> shareholders_in formation. 10. Explanation / Comments on any Qualification of Auditors There were no qualifications, reservations or adverse remarks made by either the Auditors or by the Company Secretary in Practice in their respective reports. 11. Material Changes and Commitments There were no material changes and commitments affecting the financial position of the Company which occurred between the end of the Financial Year i.e. 31st March 2015 and the date of Report. 12. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo Conservation of Energy Several steps are taken such as - • Power factor is maintained to "UNITY" • Auto switch off facility is installed for shop floor lighting during lunch and recess • Machines are switched off when not in use • Increasing use of transparent sheets for roofing, to cater for natural lighting • Strong effort on controlling air leakages and equipment maintenance to minimize losses • LED lighting for street lights for the Company's plants are now increasingly being installed • Increased use ofwell waterfor select consumption Technology Absorption Company has been focusing on developing extremely light weight vans. The T-2 family of Traveller vehicles has a self weight which is approximately 1000 kg less than most competitive vehicles. Similar effort is under way to develop light weight options for other seating capacities. This development has called for strong effort in engineering including product and process development as also material selection. The Company has completed the development aspect of a full range of Common rail engines which will be highly fuel efficient enabling a low carbon foot print. The Company has developed a new family of transmissions with higher efficiency, low friction and high reliability, using light weight materials. All these weight reduction activities and development of new engines and transmissions have called for significant technology development and absorption activity. The expenditure on Research & Development for new products, including the expenditure on Projects and Tool Engineering, was 2.69 % of the operational turnover of the Company for the year under report. The Company continues to maintain its emphasis on Research, Development and Tool Engineering activities. Foreign Exchange Earnings and Outgo The foreign exchange outgo, arising out of the import of raw materials, components and capital goods, is as per the details mentioned in the Notes to Financial Statements. 13. Subsidiary Company Tempo Finance (West) Private Limited is the subsidiary of the Company. The Board of Directors of the Company has reviewed the affairs of the Subsidiary Company. As per Section 129 of the Act, the Company has prepared the Consolidated Financial Statements of the Company and the Subsidiary Company, which form a part of the Annual Report. A statement containing the salient features of the Financial Statement of the Subsidiary Company in the prescribed formatAOC-1 forms part of the Audited Financial Statement of the Company. A copy of the Audited Financial Statements of Subsidiary Company will be made available to the Members of the Company, seeking such information. The Audited Financial Statements of Subsidiary Company will be kept for inspection by any Member at its Registered Office during business hours. The same is placed on the Company's website and can be accessed at weblink: <http://www.forcemotors.com/page/index/> shareholders_information. 14. Risk Management The Company has deployed a comprehensive Risk Management framework - to identify, monitor, review and take all necessary steps towards mitigation of various risk elements which can impact the existence of the Company, on a periodic basis. All the identified risks are managed through continuous review of business parameters by the Management, and the Board of Directors are also informed of the risks and concerns. 15. Directors and Key Managerial Personnel Mr. Vinay Kothari, Director of the Company, retires by rotation and being eligible offers himself for reappointment. All necessary information regarding the Director retiring by rotation is a part of the Statement attached to Notice dated 31st July 2015 and/or Report on Corporate Governance. Mr. L. Lakshman, Mrs. Anita Ramachandran, Mr. Atul Chordia, Mr. S. A. Gundecha and Mr. R. B. Bhandari have ceased to be Directors of the Company, by resignation during the year under report. Board places on record its appreciation for the services rendered by them in their capacity as Directors. Mr. Nitin Desai and Dr. Indira Parikh were appointed as Additional Directors of the Company during the year under report. Mr. Desai and Dr. Parikh were appointed as Independent Directors by the Members of the Company in their Meeting held on 20th September 2014. Mr. Prashant V. Inamdar was appointed as an Additional Director of the Company w.e.f. 16th January 2015, designated as Executive Director (Operations) subject to the Members' approval atthe ensuing Annual General Meeting. Mr. Sanjay Bohra, was appointed as the Chief Financial Officer and Key Managerial Personnel, of the Company w.e.f. 16th January 2015. Mr. Pradeep Dhadiwal was the Chief Financial Officer from 26th July 2014 till 16th January 2015, who continues to head the Controlling and ITfunctions. 16. Declaration of Independent Directors, Terms of Appointment & Disclosure ofAppointment The five Independent Directors - Mr. Pratap Pawar, Mr. S. Padmanabhan, Mr. Arun Sheth, Mr. Nitin Desai and Dr. Indira Parikh, have been appointed by the Members of the Company as Independent Directors for a period of 3 years w.e.f. 20th September 2014. The terms of their appointment are posted on the Company's websiteatwww.forcemotors.com and can be accessed atweblink: <http://www.forcemotors.com/> page/index/shareholders_information. The Independent Directors have submitted their disclosures to the Board that they fulfill all the requirements as stipulated in Section 149(6) of the Act so as to qualify themselves to be continued as Independent Directors under the provisions of the Act and the relevant Rules. 17. Details of Significant and Material Orders Passed by the Regulators or Court or Tribunal There were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operation in future for the year under Report. As reported earlier, petition challenging the decision of the Hon'ble High Court of Judicature at Bombay, in respect of change in the name of the Company is still under consideration of the Hon'ble Supreme Court of India. 18. Adequacy of Internal Financial Controls M/s. Capri Assurance & Advisory Services, Chennai & M/s. Jugal S. Rathi, Chartered Accountants, Pune are appointed as the Internal Auditors of the Company. The internal financial controls are adequate with reference to the Financial Statement and size and operations of the Company. 20. SecretarialAudit Report Mr. I. U. Thakur, Company Secretary in Practice having Membership no. FCS 2298, was appointed to conduct the secretarial audit of the Company for the Financial Year 2014-15, as required under Section 204 of the Act and Rules made there under. The Secretarial Audit Report, in the prescribed Form MR-3, for the Financial Year 2014-15 is annexed to thisreport. 21. Corporate Social Responsibility (CSR) The Annual Report on the CSR activities of the Company, pursuant to Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014, is annexed to this report. 22. Audit Committee The Audit Committee consists of Mr. Pratap Pawar, Mr. S. Padmanabhan, Mr. Arun Sheth and Mr. Vinay Kothari. The above composition of the Audit Committee consists of Independent Directors viz., Mr. Pratap Pawar, Mr. S. Padmanabhan and Mr. Arun Sheth who form themajority. The Company has established a vigil mechanism, formulated a Whistleblower Policy, and the Committee would oversee the genuine concerns expressed by the employees and other Directors. The Company has also provided adequate safeguards against victimization of employees and Directors who express their concerns. The mechanism provides direct access to the Chairman of the Audit Committee in exceptional cases. The details of the mechanism/ policy are disclosed on the website of the Company www.forcemotors.com 23. Policy on DirectorsAppointment and Criteria The Company's Policy relating to appointment of Directors, payment of Managerial remuneration, Directors' qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Act is available on the website of the Company www.forcemotors.com 24. Formal Annual Evaluation of the Performance of Board/Committees and Directors Information on the manner in which formal annual evaluation has been made by the Board of its own performance and the directors is given in the Report on Corporate Governance. 25. Corporate Governance The Company has taken all necessary steps to implement the provisions of the Listing Agreement, and a detailed report on the various issues, including the Auditors' Report on Corporate Governance is attached tothisreport. 26. Details of Directors and Employees' Remuneration The information required pursuant to Section 197 of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and the Accounts are being sent to the Members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company upto the date of ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard. 27. Disclosure on Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 The Company has in place an Anti Sexual Harassment Policy, in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment. All employees are covered under this policy. There are no complaints received during the year under report. 28. Details of Frauds Reported by Auditors There are no such frauds against the Company reported by the Auditors for the period underreport. 29. Directors' Responsibility Statement To the best of our knowledge and belief and according to the information and explanations obtained by us, your Directors make the following statements in terms of Section 134(3) (c) of the Act: a) in the preparation of the Annual Financial Statements for the year ended 31st March 2015, the applicable accounting standards have been followed along with proper explanation relating to material departures; b) for the Financial Year ended 31st March 2015 such accounting policies as mentioned in the Notes to the Financial Statements have been 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 of the Company and of the profit and loss of the Company for the year ended 31st March 2015; c) that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the annual Financial Statements have been prepared on a going concern basis; e) that proper internal financial controls were followed by the Company and that such internal financial controls are adequate and were operating effectively; f) that proper systems to ensure compliance with the provisions of all applicable laws were in place and that such systems were adequate and operating effectively. 30. You are requested to appoint Auditors for the current year and fix their remuneration. M/s. P. G. Bhagwat, Chartered Accountants, Pune, Auditors to the Company, who retire at the ensuing Annual General Meeting, areeligible for reappointment. 31. The Company appointed M/s. Joshi Apte & Associates, Cost Accountants, Pune, for verification and review of the Cost Records of the Company, for the Financial Year2014-15. 32. The industrial relations at the Pithampur Plant continued to be cordial. The litigation connected with recognition of labour union at the Company's Akurdi, Pune Plant, is still pending before the Hon'ble Supreme Court of India. 33. The Directors express their grateful thanks to the Dealers, Suppliers and Banks for their support, and express their warm appreciation of the sincere co-operation and dedicated work by a majority of the employees of the Company. For and on behalf of the Board of Directors ABHAYKUMAR FIRODIA Chairman DIN:00025179 Date : 31st July 2015. Place : Pune - 411 035 |