BOARD'S REPORT TO THE MEMBERS, Your Directors have the pleasure in presenting the 35th Annual Report on the business and operations of the Company together with the Audited Statements of Accounts for the financial period ended 31st March 2016: DIVIDEND Your Directors are pleased to recommend a Dividend of Rs. 5.50 per equity share of face value of Rs. 10/- each for the period ended 31st March 2016 aggregating to Rs. 83.12 million, excluding Dividend Distribution Tax. The Dividend, subject to the approval of Members at the Annual General Meeting to be held on 12th August 2016, will be paid within 30 days from the date of declaration of dividend to the Members whose names appear in the Register of Members, as on the date of book closure, i.e. from 10th August 2016 to 12th August 2016 (both days inclusive). In terms of the provisions of the Companies Act, a sum of Rs. 304,635/- of unpaid/unclaimed dividends was transferred during the year to the Investor Education and Protection Fund. PERFORMANCE OF THE COMPANY The Sales and other income for the financial period (12 months) under review was Rs. 10,875.44 Million as against Rs. 4,617.03 Million for the previous financial year (6 months). The Profit before tax (PBT) of Rs. 515.24 Million and the Profit after tax (PAT) of Rs. 347.74 Million for the financial period under review, as against Rs. 164.82 Million and Rs. 105.42 Million respectively for the previous financial year. The Company in its journey towards world class manufacturing has further improved the quality standards towards Zero Chips, Oil & Coolant (COC) initiatives implemented last financial year in all plants, to make it clean from Chips, Oil and Coolant on floor. Further, to improve the standards of Organisation Health and Safety, your organisation implemented OHSAS 18001 and was certified for OHSAS 18001 2007 which is valid for three years. BOARD OF DIRECTORS Ms.Sudhasri.A resigned from the Board due to other pressing engagements effective 10th February 2016. The Board places its appreciation for her valuable contributions made during her tenure. Pursuant to Sections 149 and 152 of the Companies Act, 2013 and in terms of Regulation 17 of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Board of Directors has at its meeting held on 10th February 2016, appointed Ms.Supriti Bhandary as an additional director, who is being proposed to be appointed as an Independent Director with effect from the date of ensuing Annual General Meeting. The requisite resolution for approval of her appointment as Independent Director is being proposed in the notice of the meeting for the approval of the members. In terms of the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. Joseph A Plomin, Non-Executive Director of the Company retires by rotation at the ensuing Annual General Meeting and, being eligible, offers himself for re-appointment. The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under sub-section (6) of Section 149 of the Companies Act, 2013. FIXED DEPOSITS Your Company has not accepted any Public Deposits under Chapter V of Companies Act, 2013, during the year. POLICY ON NOMINATION & REMUNERATION OF DIRECTORS, KEY ANAGERIAL PERSONNEL (KMP) & OTHER EMPLOYEES The Company has framed a policy on Nomination & Remuneration of Directors, KMP & other employees as per the requirement of the Companies Act, 2013 which formulates the criteria for determining qualifications, positive attributes & independence of a director and their remuneration. The Nomination and Remuneration Policy is annexed herewith as Annexure - A to this report. AUDITORS & AUDITORS' REPORT The report given by the Statutory Auditors on the financial statements of the Company is part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report. M/s. Deloitte Haskins & Sells (Chennai), Bengaluru were appointed as Statutory Auditors of your Company in the Annual General Meeting held on 5th February 2015 for a term of three consecutive years. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Auditors is required to be ratified by Members at every Annual General Meeting. No frauds have been reported by the Auditors in their reports. The Secretarial Audit Report for 2015-16 in form MR-3 is annexed to this Report under Annexure - B Explanation for observations made by the Company Secretary in Practice : The compliances under Secretarial Standards on meetings of the Board of Directors have been largely met with but for certain minor improvements which would be complied henceforth. Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Rules made there under and based on the recommendation from the Audit Committee, CS. Pracheta M, Practicing Company Secretary has been appointed by the Board to conduct the secretarial audit of Company's secretarial and related records for the financial year 2016-17. CORPORATE GOVERNANCE Your Company is renowned for exemplary governance standards since inception and continues to lay a strong emphasis on transparency, accountability and integrity. The Companies Act, 2013 and the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 (LODR Regulations) have strengthened the governance regime in the Country. Your Company is in compliance with the governance requirements provided under the new law and has proactively adopted many provisions of the new law, ahead of time. Your Company is committed to embrace the new law in letter and spirit. In line with the requirements of new law, your Company has constituted Board Committees. Your Company has in place all the statutory committees required under the law. Details of Board Committees along with their terms of reference, composition and meetings of the Board and Board Committees held during the year, are provided in the Corporate Governance Report. A Certificate from an Independent Practicing Company Secretary confirming compliance with the conditions of Corporate Governance as stipulated under the aforesaid Regulation 34(3) (Schedule V(E)) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 is attached to the Corporate Governance Report. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND 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 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014 are provided as Annexure - C to this report. ANNUAL RETURN 2015-16 The extract of annual return in MGT - 9 is annexed under Annexure - D RELATED PARTY TRANSACTIONS (RPT) In line with the requirements of the Companies Act, 2013 and LODR Regulations, your Company has formulated a Policy on Related Party Transactions which is also available on Company's website at www.autoaxle.com/Policy.aspx This Policy specifically deals with the review and approval of Material Related Party Transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. All Related Party Transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is obtained for Related Party Transactions on annual basis for transactions which are of repetitive nature and / or entered in the ordinary course of business and are at Arm's Length. All Related Party Transactions entered during the year were in ordinary course of the business and on arm's length basis. The particulars on RPTs in AOC 2 is annexed to the Report as Annexure E CORPORATE SOCIAL RESPONSIBILITY (CSR) Disclosure on CSR has been annexed to the Report under Annexure F PARTICULARS OF REMUNERATION OF DIRECTORS & CERTAIN SPECIFIED EMPLOYEES In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) of Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014, the names and other particulars of certain employees, who are covered by the said rules, are set out in the Annexure G to the Report. DIRECTORS' RESPONSIBILITY STATEMENT Pursuant to the requirements under Section 134(5) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, it is hereby confirmed that: (a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures; (b) we have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit and loss of the Company for that period; (c) we have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; (d) we have prepared the annual accounts on a going concern basis; and (e) we have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively. (f) we have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. RISK MANAGEMENT SYSTEM AND ITS POLICY Your Company introduced the Risk Management System almost a decade back and it has attained the maturity whereby the Enterprise-wise Risk-log-cum-register is being maintained by the departmental head and is being periodically reviewed for adequacy and effectiveness by the Audit Committee and the Board. The Company's Risk Management Committee is being assisted by Chief Risk-Coordinator. The Risk Management policy developed by the Company aims to cover all the business and other risks, which are revisited at reasonable intervals. The Board level Committee on Risk Management is formed with the following directors as its members: (a) Mr. B C Prabhakar, Chairman (b) Dr. N Muthukumar, Member MANAGEMENT DISCUSSION AND ANALYSIS REPORT In accordance with Regulation 34(2)(e) of LODR Regulations, the Management Discussion and Analysis Report is presented in a separate section forming part of the Annual Report. BOARD ANNUAL EVALUATION The Nomination & Remuneration Committee arranges for a performance evaluation of the Board, its Committees and its individual Directors on an annual basis. The Committee will conduct an annual review of the role of the Board, assess the performance of the Board over the previous 12 months and examine ways of assisting the Board in performing its duties more effectively. The review will include: (a) comparing the performance of the Board with the requirements of the Act; (b) examination of the Board's interaction with management; (c) the nature of information provided to the Board by management; and (d) management's performance in assisting the Board to meet its objectives. A similar review will be conducted for each Committee by the Board with the aim of assessing the performance of each Committee and identifying areas where improvements can be made. The Nomination & Remuneration Committee will oversee the performance evaluation of the Senior Management Team. This evaluation is based on specific criteria, including the business performance of the Company, whether strategic objectives are being achieved and the development of management personnel. ACKNOWLEDGEMENTS Your Directors would like to express their sincere appreciation of the positive co-operation received from the Central Government, the Government of Karnataka, Financial Institutions and the Bankers. 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. Your Directors wish to place on record their appreciation for the continued co-operation and support received from the Kalyani Group, Pune, and Meritor Inc., USA For and on behalf of the Board of Directors Dr. B.N. Kalyani Chairman Date: 10th May 2016 Place: Pune |