DIRECTORS REPORT Your Directors hereby present the 72nd Annual Report and Audited Accounts for the year ended 31st March 2016 as under: PERFORMANCE The consolidated turnover of your Company's Group including Income from Operations (Gross) and other Income during the year ended 31st March 2016 stood at Rs. 1778.60 Crs. compared to Rs. 1507.58 Crs. in the previous year. Loss before tax for the Group was Rs. 27.44 Crs. compared to Profit before tax of Rs. 22.16 Crs. in the previous year. On standalone basis, turnover including income from operations (gross) and other Income for the year under review stood at Rs. 338.31 Crs. vis-a-vis Rs. 348.64 Crs. in the previous year. The Company incurred a loss of Rs. 66.02 Crs. vis-a-vis Rs. 29.01 Crs. in the previous year. Tractors India Private Limited: Tractors India Private Limited, the Wholly Owned Subsidiary Company in India, achieved a turnover including income from operations (gross) and other Income of Rs. 1422.44 Crs. compared to Rs. 1147.24 Crs. in the previous year. Profit before tax stood at Rs. 41.40 Crs. compared to Rs. 54.25 Crs. in the previous year. Foreign Subsidiaries: During the year under review, the consolidated revenue of the foreign subsidiary companies stood at Rs. 17.85 Crs. as compared to previous year's consolidated revenue of Rs. 11.70 Crs. The foreign subsidiaries reported a consolidated loss of Rs. 2.82 Crs. during the year under review as compared to a loss of Rs. 3.08 Crs. during the previous year. FINANCE After adjusting the loss of Rs. 66.37 Crs. for the current year, the Reserves & Surplus (excluding Revaluation Reserves) of the Company has come down from Rs. 226.08 Crs. to Rs. 159.71 Crs. and the Shareholders' Fund (excluding Revaluation Reserves) decreased from Rs. 236.11 Crs. to Rs. 169.74 Crs. The Reports and Accounts of Subsidiary Companies are annexed to this Report along with the Statement pursuant to Section 129 of the Companies Act, 2013. DIVIDEND As the Company did not earn any profit during the financial year 2015-16, the Board does not recommend payment of any Dividend. SUBSIDIARY COMPANIES Presently, your Company has three subsidiary companies namely, Tractors India Private Limited; Tractors Nepal Private Limited in Nepal and TIL (Overseas) Pte. Limited in Singapore. The Board of Directors of the Company, at its meeting held on 21st April 2016, has passed a Resolution, subject to approval of the Shareholders to be obtained by a Special Resolution through Postal Ballot, for sale of its Caterpillar Dealership Business as a going concern. The proposed sale process will be carried out as follows: i) Sale of shares in the wholly owned subsidiary, Tractors India Private Limited (TIPL) [Book value Rs. 9,585 lakhs as on 31st March 2016] for a consideration of Rs. 35,000 lakhs. ii) Sale of shares at the book value, in the wholly owned subsidiary, Tractors Nepal Private Limited (TNPL) [Book value of Rs. 75 lakhs as on 31st March 2016]. iii) Sale of specified assets and liabilities pertaining to the Caterpillar Dealership Business standing in the books of the wholly owned subsidiary, TIL Overseas Pte. Limited (TILO). For this proposed sale the Company has executed a 'Non-Binding Term Sheet' dated 9th April 2016 with Goodearth Minetech Private Limited (GMPL), the proposed Buyer. Based on the aforesaid Term Sheet, the Company and GMPL is in the process of finalizing a Share Purchase Agreement (SPA). As agreed in the Term Sheet, the transaction needs to be completed on or before 30th June 2016. The Shareholders of the Company has approved the proposed sale through Postal Ballot with requisite majority, results of which were declared on 25th May 2016. Upon completion of the transaction, TIPL and TNPL will cease to be a subsidiary of the Company on and from 1st April 2016, being the appointed date as per the Non-Binding Term Sheet signed between the Company and GMPL BOARD OF DIRECTORS Dr. T. Mukherjee has been appointed as a Non-Executive Independent Director of the Company with effect from 1st April 2016 for a term of five years subject to approval of the Shareholders at the ensuing Annual General Meeting, by the Board of Directors of the Company at its meeting held on 27th May 2016. Ms. Veena Hingarh has been re-appointed as a Non-Executive Independent Director of the Company with effect from 26th March 2016 for a term of five years. The re-appointment of Ms. Veena Hingarh is subject to the approval of the Shareholders at the ensuing Annual General Meeting. Resolution proposing the appointment of Dr. T. Mukherjee and re-appointment of Ms. Veena Hingarh forms part of the Notice convening the 41st Annual General Meeting. Pursuant to the provisions of Section 149 of the Companies Act, 2013 Non-Executive Independent Directors are not liable to retire by rotation. Mr. Sumit Mazumder, Director, retires by rotation and being eligible, offers himself for re-appointment. The Board recommends his re-appointment. As per the disclosure received from the Directors, none of the Directors are disqualified from being appointed as Directors as specified in Section 164(2) of the Companies Act, 2013. The Independent Directors have furnished required declaration as provided in Section 149(7) of the Companies Act, 2013 regarding their independence Formal Annual Evaluation of the Board The Nomination and Remuneration Committee has laid down the criteria for performance evaluation of Executive and Non-Executive Directors including that of the Board as a whole. The Committee has already reviewed the performance of the Directors and the Board for the year under review. The evaluation was done primarily through a questionnaire duly completed by all Directors providing specific rating for other Directors and also for the Board as a whole. Board Meetings The Board of Directors met four times during the financial year 2015-16 on 29th May 2015, 7th August 2015, 9th November 2015 and 8th February 2016 respectively. KEY MANAGERIAL PERSONNEL Pursuant to Section 203 of the Companies Act, 2013, following are the Key Managerial Personnel of the Company: 1. Mr. Sumit Mazumder, Chairman & Managing Director 2. Mr. Somnath Bhattacharjee, President & Chief Executive Officer 3. Mr. Aloke Banerjee, President & Chief Financial Officer 4. Mr. Sekhar Bhattacharjee, Company Secretary FIXED DEPOSIT The Company has not accepted any deposits from the public during the year as defined under Section 73 of the Companies Act, 2013. Deposits outstanding as on 31st March 2016 including unclaimed deposit was nil. SHARE CAPITAL During the year under review, the Company has neither issued any class of shares nor there was any buy-back of shares. Further, the Company does not have any stock option plan for employees. STATE OF COMPANY'S AFFAIRS The state of affairs of the Company together with SWOT analysis has been given in the Management Discussion Analysis section which forms a part of this Report. DIRECTORS' RESPONSIBILITY STATEMENT The Board of Directors acknowledges the responsibility for ensuring compliance with the provisions of Section 134(3)(c) read with Section 134(5) of the Companies Act, 2013 and Part C of Schedule II of Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015 in the preparation of the annual accounts for the year ended on 31st March 2016 and state that : i. in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; ii. the Directors 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 of the Company for that period; iii. the Directors 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; iv. the Directors have prepared the annual accounts 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. there is a proper system to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. DETAILS IN RESPECT OF ADEQUACY AND OPERATING EFFECTIVENESS OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS The Company has in place adequate internal financial controls with reference to financial statements. During the year: i. Internal Financial Control Framework, process narratives, flowcharts and risk control matrices were prepared and put in place by Management and periodically reviewed by the Management team. Based on such review it was found to be adequate. ii. Independent Auditor Messrs. Swapan De & Associates have tested the operating effectiveness of Internal Control. No reportable material weakness in the design or operation was observed. Further, as per Section 143(3)(i) of the Companies Act, 2013, the Statutory Auditors of the Company, Messrs. Deloitte Haskins & Sells has issued a report on the adequacy and operating effectiveness on Internal Controls over Financial Reporting. PARTICULARS OF LOANS, GUARANTEES OR INV CO I IVICIM I o UIMUCrx OCl> I ION 186 The Company, being in manufacturing business, does not have any policy to give loans, directly or indirectly, to any person or to other body corporates or give any guarantee or provide any security in connection with a loan to any other body corporate except for its subsidiary. The Company also does not make any investment in securities of any other body corporate. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES Subject to any disclosure in the financial section thereof, the Company has not entered into any contract or arrangement with related parties referred to in Sub-section (1) of Section 188 of the Companies Act, 2013. HUMAN RESOURCE The total number of employees of the Company as on 31st March 2016 was 973. Your Company believes that employees are the most valuable assets of an organization and the optimum utilization of the skill, knowledge and attitude they possess are instrumental to the growth of the organization. Your Company has lived and encouraged meritocracy, entrepreneurship, teamwork and performance driven culture which is clearly reflected in its policies. The Company has in place an Anti-Sexual Harassment Policy in line with the requirements under the Sexual Harassment of Women at Workplace (Prohibition, Prevention and Redressal) Act, 2013. The Internal Complaint Committee which has been constituted by the Company to administer the Policy has met twice during the year on 23rd May 2015 and 19th September 2015 respectively. No complaint has been received by the Committee during the year under review. CORPORATE GOVERNANCE The Corporate Governance Report giving the details as required under Paragraph C of Schedule V of Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015 is attached as Annexure I and forms part of this Report. The Corporate Governance Certificate for the year ended on 31st March 2016 issued by Messrs. Deloitte Haskins & Sells (FRN : 302009E), Chartered Accountants, Kolkata, Statutory Auditors of the Company, is also attached as Annexure II and forms a part of this Report. AUDIT COMMITTEE The Audit Committee, presently, consists of 4 (four) Non-Executive Independent Directors namely, Mr. G. Swarup (Chairperson), Mr. R. L. Gaggar (Member), Dr. T. Mukherjee (Member) and Ms. Veena Hingarh (Member) and 1 (one) Nominee Director namely, Mr. S.V. Ramana Rao. The details of terms of reference of the Committee, number and dates of meetings held during the year ended 31st March 2016, attendance of the Directors are given separately in the attached Corporate Governance Report. Vigil Mechanism The Company has established a vigil mechanism for directors and employees by adopting a Whistle Blower Policy which is available on the website of the Company (weblink <http://www.tilindia.in/investor/whistle_blower_policy.php>) NOMINATION AND REMUNERATION COMMITTEE The Nomination & Remuneration Committee comprises 3 (three) Non-Executive Independent Directors namely, Mr. R. L.Gaggar (Chairperson), Mr. G. Swarup (Member) and Dr. T. Mukherjee (Member). The Company's Remuneration Policy is available on the Company's website (weblink <http://www.tilindia.in/investor/appointment_> remuneration_policy.php ) The details of terms of reference of the Nomination and Remuneration Committee, number and dates of the meetings held, attendance of the Directors and remuneration paid to all the Directors during the year ended 31st March 2016, are given separately in the attached Corporate Governance Report. ADOPTION OF CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY A Corporate Social Responsibility (CSR) Policy has been adopted by the Board at its meeting held on 25th October 2014 and is available on the Company's website (weblink <http://www.tilindia.in/investor/csr_policy.php>). The Corporate Social Responsibility Committee constituted by the Board for undertaking various welfare measures as specified in the Policy and under Schedule VII to the Companies Act, 2013 comprises 1 (one) Whole-time Director namely, Mr. Sumit Mazumder (Chairperson) and 2 (two) Non-Executive Independent Directors namely, Mr. R. L. Gaggar (Member) and Dr. T. Mukherjee (Member). The terms of reference of the Corporate Social Responsibility Committee, number and dates of meetings held, attendance of the Directors during the year under review are given separately in the attached Corporate Governance Report. MANAGEMENT DISCUSSION AND ANALYSIS REPORT In terms of Regulation 34(2) read with Paragraph B of Schedule V of Securities and Exchange Board of India (Listing Obligations & Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis Report is attached as Annexure V and forms a part of this Report. STATUTORY AUDITORS The Statutory Auditors of the Company, Messrs. Deloitte Haskins & Sells (FRN : 302009E), Chartered Accountants, Kolkata, hold office till the conclusion of the ensuing Annual General Meeting of the Company and being eligible, offers themselves for re-appointment. The Company has received their written consent and a certificate that they satisfy the criteria provided under Section 141 of the Companies Act, 2013 and that the appointment, if made, shall be in accordance with the applicable provisions of the Companies Act, 2013 and the Rules framed there under. The Audit Committee and the Board of Directors recommends the re-appointment of Messrs. Deloitte Haskins & Sells (FRN : 302009E), Chartered Accountants, Kolkata as the Auditors of the Company for the financial year 201617 till the conclusion of the next Annual General Meeting. The re-appointment proposed is within the time frame for transition under the third proviso to Sub-section (2) of Section 139 of the Companies Act, 2013. STATUTORY AUDITORS' REPORT The Auditors' Report does not contain any qualifications. The notes to the Accounts referred to in the Auditors' Report are self-explanatory and, therefore, not call for any further comment under Section 134 of the Companies Act, 2013. SECRETARIAL AUDITOR & REPORT A Secretarial Audit was conducted during the year by the Secretarial Auditor, Mr. T. Chatterjee of Messrs. T. Chatterjee and Associates, Practicing Company Secretaries, in accordance with the provisions of Section 204 of the Companies Act, 2013. The Secretarial Auditor's Report is attached as Annexure III and forms a part of this Report. There are no qualifications or observations or remarks in the Secretarial Audit Report. On the recommendation of the Audit Committee, the Board of Directors of the Company have re-appointed Messrs. T. Chatterjee and Associates, Practicing Company Secretaries (PCS Registration No. 6935) as the Secretarial Auditors of the Company in relation to the financial year 2016-17, in terms of Section 204 of the Companies Act, 2013. The Company has received consent from Messrs. T. Chatterjee and Associates, Practicing Company Secretaries, for their re-appointment. COST AUDITORS The Board of Directors has pursuant to Section 148 of the Companies Act, 2013 and on recommendation of the Audit Committee has re-appointed Messrs. D. Radhakrishnan & Co., Cost Accountants, 11, Dover Lane, Kolkata (FRN: 000018) as the Cost Auditors of the Company, to carry out the cost audit of the products manufactured by the Company falling under the specified Central Excise Tariff Act heading, for the financial year 2016-17. The Company has received consent from Messrs. D. Radhakrishnan & Co. for their re-appointment. INTERNAL AUDITORS The Board of Directors has pursuant to Section 138 of the Companies Act, 2013 and on recommendation of the Audit Committee has re-appointed Messrs. Chaturvedi & Company, Chartered Accountants, 60, Bentinck Street, Kolkata (FRN: 302137E) as the Internal Auditors of the Company for the financial year 2016-17. The Company has received consent from Messrs. Chaturvedi & Company for their re-appointment. PARTICULARS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO The prescribed particulars of Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is attached as Annexure VI and forms a part of this Report. ENVIRONMENT Your Company remains committed to following a focused approach towards making the environment a better place for our future generations. Beside using products and services such as contamination control and rebuild initiatives that reduce negative impacts on environment, every year during the World Environment Day, to make the world a greener place to live in, your Company carries out tree plantation activities, 'own a sapling' program for its employees across most of its locations. PARTICULARS OF EMPLOYEES The prescribed particulars of Employees required under Section 134(3)(q) of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure VII and forms a part of this Report. EXTRACT OF ANNUAL RETURN The Extract of the Annual Return in Form No. MGT-9 is attached as Annexure VIII and forms a part of this report. CODE OF CONDUCT The Managing Director's Certificate under Regulation 34(3) read with Part D of Schedule V of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015 on compliance of Code of Conduct for the year ended 31st March 2016 is attached as Annexure IX and forms a part of this Report. ACKNOWLEDGEMENTS The Directors place on record their sincere gratitude towards the Customers, Principals, Shareholders, Banks, Financial Institutions and Government Authorities for their continuous co-operation and support to the Company. Although the year under review was very challenging and difficult, the Directors thank its employees for their continued good efforts. For and on behalf of Board of Directors Sumit Mazumder Chairman & Managing Director Date : 27th May 2016 Place : Kolkata |