DIRECTORS REPORC Your Directors have pleasure in presenting the Sixty Ninth Annual Report for the year ended on March 31, 2015. Financial Performance The brief highlights of the Company's performance for the financial year ended March 31, 2015 are:- • Net Revenue of the Company for the Financial Year 2014-15 was Rs. 4046.48 Cr. • Profit Before Interest, Depreciation, Amortisation, Exceptional Items & Tax stood at Rs. 222.05 Cr • Profit Before Tax (PBT) stood at Rs. 68.25 Cr and Profit After Tax (PAT) stood at Rs. 74.71 Cr. Earnings per share is of Rs. 6.26 for the year under review. • Your Company sold 59779 tractors during the year under review. Management Discussion & Analysis Management Discussion & Analysis which forms an integral part of this Annual Report provides a detailed analysis on the performance of individual businesses and their outlook. Dividend Your Directors are pleased to recommend a Dividend of Rs. 1.20 per Equity Share (12%) on the face value of Rs. 10 each, aggregating Rs. 14.71 Cr (exclusive of tax on dividend) for the financial year ended March 31, 2015. The dividend payout is subject to the approval of members at the ensuing Annual General Meeting (AGM). The dividend, if approved at the ensuing AGM, will be paid to members whose names appear in the Register of Members as on Friday, September 4, 2015; in respect of shares held in dematerialised form, it will be paid to members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as at that date. The dividend payout for the period under review has been formulated in accordance with shareholders' aspirations and the Company's policy to pay sustainable dividend linked to long-term growth objectives of the Company to be met by internal cash accruals. Employee Stock Option Scheme The particulars with regard to the Employees Stock Options as on March 31, 2015 as required to be disclosed pursuant to the provisions of Clause 12 of SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, as amended, are enclosed at Annexure - A and forms an integral part of this Report. Directors In accordance with the provisions of Companies Act, 2013 and Articles of Association of the Company, Mr. Hardeep Singh, Director retires by rotation at the ensuing AGM and being eligible, offers himself for re-appointment. The Board of Directors, in their meeting held on January 16, 2015, co-opted Dr. Sutanu Behuria, Ms. Nitasha Nanda and Mr. G.B. Mathur as Additional Directors on the Board of the Company. They shall hold office of Director(s) upto date of ensuing AGM. Further, Ms. Nitasha Nanda, has been appointed as Whole-time Director for a period of 5 years w.e.f. January 16, 2015, liable to retire by rotation, subject to the approval of the shareholders in the ensuing AGM. Her appointment is appropriate and in the best interest of the Company. Pursuant to the provisions of Section 149 and other applicable provisions of the Companies Act, 2013, your Directors are seeking appointment of Dr. Sutanu Behuria as Independent Director for a period of 3 years. The Company has received requisite notices in writing from members proposing Dr. Sutanu Behuria, Ms. Nitasha Nanda and Mr. G.B. Mathur for appointment as Directors of the Company. The Company has received declarations from all the Independent Directors of the Company confirming that they meet with criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. The policy for selection of directors and determining directors independence is attached as Annexure - B and forms an integral part of this Report. The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the Non-Executive and Executive Directors. In accordance with the Policy, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors. The remuneration policy for directors, key managerial personnel and other employees is annexed as Annexure - C and forms an integral part of this Report. The brief resumes and other details relating to the Directors who are proposed to be appointed/ re-appointed, as required to be disclosed under Clause 49 of the Listing Agreement is given in the Annexure to the Notice of the 69th AGM. Your Directors recommend the appointment/ re-appointment of the above said Directors at the ensuing AGM. The details of programme for familarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company -www.escortsgroup.com Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are provided as Annexure - D and forms an integral part of this Report. Corporate Governance Your Company reaffirms its commitment to the good corporate governance practices and has adopted the Code of Conduct which has set out the systems, processes and policy conforming to international standards. Pursuant to Clause 49 of the Listing Agreement with the Stock Exchanges, Corporate Governance Report and Auditors' Certificate regarding compliance of conditions of Corporate Governance are enclosed as Annexure - E and forms an integral part of this Report. Corporate Social Responsibility During the financial year ended March 31, 2015, the Corporate Social Responsibility (CSR) Committee had been reconstituted by inducting Mr. G.B. Mathur and Mrs. Vibha Paul Rishi as members of the Committee w.e.f. January 16, 2015. The CSR Committee comprises of following Directors: 1. Mr. Rajan Nanda (Chairman) 2. Mr. Nikhil Nanda 3. Mr. Hardeep Singh 4. Mr. S.C. Bhargava 5. Mrs. Vibha Paul Rishi 6. Mr. G.B. Mathur The said committee has been entrusted with the responsibility of formulating and recommending to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, monitoring the implementation of the framework of CSR Policy and recommending the amount to be spent on CSR activities. The key philosophy of all CSR initiatives of the Company is to make CSR a key business process for sustainable development of the society. The initiatives aim at enhancing welfare measures of the society based on the immediate and long term social and environmental consequence of its activities. The Company intends to undertake other need based initiatives in compliance with Schedule VII of the Act. The CSR Policy may be accessed on the Company's website www.escortsgroup.com under Investors Information Section. During the year, the Company has spent Rs. 0.78 Cr. (0.48% of the average net profits of last three financial years) on CSR activities. Since being the first year of the CSR Committee, the Company under the guidance and directions of the Committee is formulating its initiatives for undertaking activities as identified in the CSR Policy. The full impact of the CSR spend shall be felt in the financial year 2015-16. The Annual Report on CSR activities is enclosed as Annexure - F and forms an integral part of this Report. Consolidated Financial Statements The Consolidated Financial Statements in accordance with the Companies Act, 2013 and Accounting Standard (AS) - 21 applicable to the Consolidated Financial Statements read with AS-23 on Accounting for Investments in Associates and AS-27 on Financial Reporting of Interests in Joint Ventures issued by The Institute of Chartered Accountants of India have been prepared. The Audited Consolidated Financial Statements along with the Auditors' Report thereon are annexed with this Report. Subsidiaries, Joint Ventures and Associate Companies The statement containing salient features of financial statements of subsidiaries, associate and joint venture companies prepared in accordance with Section 129 of the Companies Act, 2013 read with Rule 5 of Companies (Accounts) Rules, 2014, forms an integral part of this Report. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiaries, associate and joint venture companies. The Company will make available the Annual Accounts of its subsidiaries, associate and joint venture companies and related information to the members of the Company who may be interested in obtaining the same. The annual accounts of its subsidiaries, associate and joint venture companies will also be kept open for inspection at the Registered Office of the Company. Contracts and Arrangements with Related Parties All contract/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on the materiality of related party transactions. The particulars of contracts and arrangement with related parties under Section 188(1) of the Act in Form AOC-2 is enclosed as Annexure - G. 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 www.escortsgroup.com under Investors Information Section. Your Directors draw attention of the members to Note 46 to the financial statement which sets out related party disclosures. Auditors and Auditors' Report Statutory Auditors M/s. S.N. Dhawan & Co., Chartered Accountants, Delhi (Firm Registration No. 000050N) Statutory Auditors of the Company, hold office till the conclusion of the ensuing AGM and are eligible for re-appointment. The Company has received letter of confirmation from M/s. S.N. Dhawan & Co., Chartered Accountants to the effect that their appointment, if made, would be within the prescribed limits under Section 139 of the Companies Act, 2013 and that they are not disqualified for such appointment within the meaning of Section 141 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014. The observations and comments given by the Statutory Auditors in their report read together with notes to Accounts are self-explanatory and hence, do not call for any further comments under Section 134 of the Companies Act, 2013. Cost Auditors The Board of Directors of the Company has re-appointed M/s. Ramanath Iyer and Co., Cost Accountants, New Delhi (Firm Registration No. 000019), Cost Auditors of the Company under Section 148 of the Companies Act, 2013 for conducting the audit of cost records for the financial year 2015-16. The due date of filing the Cost Audit Report for the eighteen months period ended on March 31, 2014 was September 30, 2014 and the same has been filed on September 22, 2014. Secretarial Auditors The Board of Directors of the Company has appointed M/s. Jayant Gupta and Associates, Practicing Company Secretary to conduct secretarial audit of the Company for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is enclosed as Annexure - H and forms an integral part of this Report. The observations and comments given by the Secretarial Auditors in their report are self-explanatory and hence, do not call for any further comments under Section 204(3) of the Companies Act, 2013. Risk Management During the year, your directors have constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) overseeing and approving the Company's enterprise wide risk management framework; and (b) Overseeing that all the risks that the organisation faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The Risk Management Policy was reviewed and approved by the Committee. Internal Financial Controls The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weakness in the design or operation was observed. Disclosures Meetings of the Board Five meetings of the Board of Directors were held during the year. For further details, please refer Report on Corporate Governance annexed as Annexure - E to this Report. Audit Committee The Audit Committee comprises of the following Non-Executive Directors: 1. Dr. S.A. Dave - Independent Director (Chairman) 2. Mr. S.C. Bhargava - Independent Director 3. Mr. Hardeep Singh - Non-Independent Director All the recommendations made by the Audit Committee were accepted by the Board. Extracts of Annual Return In terms of provisions of Section 92 of the Companies Act, 2013 read with the Companies (Management and Administration) Rules, 2014, the extracts of Annual Return in Form MGT-9 is enclosed as Annexure - I and forms an integral part of this Report. Vigil Mechanism The Company has a vigil mechanism for Directors and Employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company's Code of Conduct. The mechanism provides for adequate safeguards against victimisation of Director(s) and Employee(s) who avail of the mechanism. In exceptional cases, Directors and Employees have direct access to the Chairman of the Audit Committee. The Whistle Blower Policy is available on Company's website. Particulars of Loans given, Investments made, Guarantees given and Securities provided Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient has been given elsewhere in the Annual Report and forms an integral part of this Report. Particulars of Employees and related disclosures In terms of provisions of Section 197(12) of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the prescribed limits are available with the Company Secretary. Having regard to the provisions of Section 136(1) of the said Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company and the same will be furnished on request. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure - J and forms an integral part of this Report. Public Deposits The Company has not accepted/ renewed any Fixed Deposit during the financial year. All Fixed Deposits which were due and claimed by the deposit holders have been paid on time. Transfer to Investor Education and Protection Fund Pursuant to the provisions of Section 205A(5) of the Companies Act, 1956, the dividend which remained unclaimed or unpaid for a period of seven years has been transferred by the Company, from time to time on due dates to the Investor Education and Protection Fund. As on March 31, 2015, 136 unclaimed deposits for the period of seven years aggregating to Rs. 26.45 lacs were transferred to Investor Education and Protection Fund. Directors' Responsibility Statement Pursuant to the requirement under Section 134(5) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, your Directors hereby state that: (i) in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed alongwith proper explanation relating to material departures; (ii) the Directors 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, 2015 and of the profit and loss of the Company for the year ended on that date; (iii) the Directors 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; (iv) the Directors have prepared the annual accounts for financial year ended March 31, 2015 on a 'going concern' basis; (v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and (vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. General Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Details relating to deposits covered under Chapter V of the Act. 2. Issue of equity shares with differential rights as to dividend, voting or otherwise. 3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report. 4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries. 5. 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. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Acknowledgement Your Directors would like to express their sincere appreciation of the positive co-operation received from the Central Government, the Government of Haryana and Uttaranchal, Financial Institutions and the Company's Bankers, Customers and Dealers. The Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers, workers and staff of the Company resulting in the successful performance of the Company during the year. The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders. For and on behalf of the Board of Directors RAJAN NANDA Chairman & Managing Director Date: July 10, 2015 Place: Faridabad |