DIRECTORS' REPORT TO THE MEMBERS The Directors present the 53rd Annual Report on the business and operations of your company along with Standalone and Consolidated summary of financial statements for the year ended 31st March, 2016 Dividend : No dividend has been recommended by the Directors for the financial year under review. B. Economic Outlook The Indian economy achieved GDP growth of7.6% in FY'15-16compared to 7.2 % in FY'14-15. It is expected that the 20 Indian economy will continue to grow at 7% to 8%. Manufacturing and Infrastructure sectors continued to languish. Recent steps taken by the Government in road construction and to improve power & port sector through schemes like UDAY and Sagarmala project are expected to improve growth in these sectors though no major improvement is expected in the short term. C. Operation & Performance of TRF The power, steel, mining and port sectors, which have been the main customer segments for the Company's Project business, remained depressed and only very few new enquiries / tenders were floated during the year. As a result no project orders were received during the year. However, the Company booked highest ever Product orders totaling Rs 244crore during the yearas against previous best of Rs 213crore in FY'08-09 and also achieved best ever order book for Port & Yard Equipment -Rs133 crore against previous best of Rs 122 crore in FY'12-13. The order book as on 31.03.2016 is approx Rs 1100 crore, of which about Rs 600 crore are project orders. Balance comprises of product, spares and services. The focus of the Company during the year had been on completing the major old projects, which were at an advanced stage but delayed due tovarious reasons many of which had been beyond company's control and execute new projects profitably. Cost increases in old projects impacted year's performance. Focused efforts made to reduce costs and recoveries against earlier provisions partially mitigated increase in costs. The Company has initiated a number of measures to improve performance of project business. Company has already completed two major old projects and other three retargeted to be completed during FY'16-17.TheCompany has intensified efforts for collection of retention amounts with encouraging results during the year. Despite challenging market conditions product business performed better and continues to be profitable. During the year ,the Company had also developed new products such as Smooth Double Roll Crusher which generates less fines and has higher efficiency up to 95%,Travelling Plough Feeder and Hexagonal Frame for pipe conveyor which has features for ease of maintenance. The focus during the FY'16-17 will be to complete the old projects, collect retention amount and other dues/receivables, improve share of product business and collections, build capability and prepare for the economic upturn. Operations and Performance of Subsidiary Companies York Group The turnover for York Group in FY 15-16was Rs 360crore compared to Rs 344crore in FY' 14-15. The consolidated Profit Before Tax was Rs 13.22 crore compared to FY 14-15 of Rs 49.20 crore (which included an exceptional income of Rs 41.68 crore). Devaluation of currencies of majorexport markets impacted revenue and profitability. York also faced global slowdown and countered the same by increasing spare part aftermarket sales, new product introductions, inexpensive co-branding, increasing distribution reach & fleet contacts and expansion into newer segments, besides reducing expenses. Market share of Yorkin the Indian market improved to 30%, dominating the car carrier market and also achieving the overall leading player status in trailer axle & suspension industry. York completed the consolidation of its two facilities in China, into a new single location in October 2015. This will enable York to reduce costs resulting in greater competitiveness in Chinese markets and margins for exports. A new axle for the domestic market was put on road trial. York launched the new YPS long life hub system with technology from Temper Corporation USA and also a new fabricated suspension. A new 5th wheel coupler was developed for the European port trailer market. Dutch Lanka Trailer Manufacturers Ltd (DLT) The turnover of DLT Group in FY'15-16was Rs 127crore compared toRs111 crore during previous year. The consolidated Profit Before Tax of DLT Group for FY15-16was Rs 1.78crorecompared to a loss of Rs 3.31 crore in FY14-15. Despite difficult market conditions, DLT improved its market share in Bangladesh, which is a major market for the Company. It also secured a major order from Iran. TATA DLT, the Joint Venture Company of DLT performed well during the year. The turnover for FY'15-16 was Rs 162 crore compared to Rs 133 crores in FY'14-15 and the profit before tax for FY'15-16 was Rs 7.78 crores as compared Rs 4.28 crore in FY'14-15. TATA DLT increased its market reach especially in the regions of Rajasthan, Maharashtra, Gujarat& Jharkhand. Adithya Automotive Applications (AAA) During the year, the company achieved Net Sales of Rs 94 crore compared to Rs. 104 crore during the previous year. Decrease in revenue primarily due to lower unit price on account of reduction in steel prices. The profit before tax was Rs 8.13 crore during the year compared to Rs 6.83 crore in previous year. Hewit Robins International Ltd (HRIL) Global economic conditions, depression in the mining, steel and aggregate sectors coupled with a strong pound in the first three quarters of the financial year adversely affected turnover and profitability of the Company. Turnover for FY'15-16was Rs 29 crore compared to Rs 45 crore during FY 14-15. The consolidated Profit Before Tax of HRILGroupforFY15-16was Rs 1.24 crorecompared to Rs 11.85 crore in FY14-15. Company is taking steps to reduce cost, improve quality and operational efficiencies and introduce new vibrating equipment to increase its market share. In terms of the fourth proviso to sub section 1 of section 136 the separate audited accounts of each of the subsidiaries are available on the website of the Company at www.trf.co.in Any shareholder who wants a copy of the audited financial statement of the Company's subsidiaries can request for the same. Shareholders can send a mail at investors@trf.co.in or write a letter to the registered office of the Company addressed to the Company Secretary. The details of all subsidiaries and joint ventures are given in Annexure 1. There has been no new addition or deletion of subsidiaries/Joint Ventures during the year under review. The Company has in terms of Listing Regulations adopted a Policy for determining material subsidiaries. The said policy is available on the website of the Company at www.trf.co.in D. CSR and Affirmative Action (CSR &AA) TRF ladies association under guidance of the Company has undertaken various CSR initiatives in the areas of education, literacy, health, employability, environment protection and climate change. The Company encourages its employees to voluntarily participate in various welfare activities. E. Human Resource and Industrial Relations Human resource development, retention and engagement continued to be a focus area. Various training and development programs were carried out during the year to enhance skill and capability of employees. Employee engagement survey was also undertaken during the year. Based on the outcome, HR initiates to improve employee satisfaction and engagement are being initiated. F. Corporate Governance Pursuant to Regulation 27 of SEBI (Listing Obligations and Disclosure Requirements Regulations) executed with the Stock Exchanges, a Management Discussion and Analysis, Corporate Governance Report, Managing Director's declaration regarding compliance to code of conduct and Auditors' Certificate regarding compliance to conditions of Corporate Governance are made a part of the Annual Report. Board Meetings The Board met 9 times during the year. The details are given in the Corporate Governance report that forms a part of the annual report. Selection of New Directors and Board membership criteria The Nomination and Remuneration Committee works with the Board to determine the appropriate characteristics skills and experts for the board as a whole and its individual members with the objective of having a board with diverse background and expertise. Characteristics expected of all directors include independence, integrity, high personal and professional ethics and sound business judgment, ability to participate effectively in deliberations. The policy has been annexed to this report as Annexure-2 Director induction / familiarization All individual independent directors inducted into the Board are given an orientation. Presentations are made by the executive directors and senior management and also visit to the factory is organized. The policy on the company's familiarization programme is posted on the Company's website www.trf.co.in Evaluation The Board evaluates the effectiveness of its functioning and that of the committees and of individual directors by seeking their inputs on various aspects of Board / Committees and governance. The Chairman of the Board had one on one meeting with the independent directors to obtain director's inputs on effectiveness of the Board/committee. The Board considered and discussed the inputs received from the Directors. Further, the independent directors at their meetings reviewed the performance of the Board, Chairman of the Board and Non-executive directors. Compensation policy for the Board and Senior Management Based on the recommendations of the Nomination & Remuneration Committee (NRC), the Board has approved the remuneration policy for the directors, Key Managerial Personnel and all other employees of the Company. The remuneration policy for Directors, Key Managerial Personnel and other employees is annexed with this report as Annexure -3. Independent Directors Declaration The company has received the necessary declaration from each independent director in accordance with the section 149 (7) of the Companies Act 2013 that he/she meets the criteria of independence as laid out in sub-section (6) of Section 149 of the Companies Act, 2013and Regulation 16(1) (b) of the Listing Regulations. Retirement/Resignation In accordance with the Tata Group retirement policy, Mr Prasad R Menon (DIN- 00005078) has stepped down from the Board effective from October 30, 2015. The directors place on record their sincere appreciation of the contribution made by him during his tenure. Appointment / Re-appointment The Nomination & Remuneration Committee of the Board reviewed the appointment/re-appointment of the Directors, as follows:- MrAlok R Kanagat, (DIN No 02193153) director who retires by rotation at the ensuing Annual General Meeting, being eligible, offers himself for re-appointment. Mr Sudhir L Deoras stepped down as Managing Director on completion of tenure on31st March, 2016. Post completion of his tenure as Managing Director he will continue to bein the employment of the Company as an advisor and shall retire with effect from August 1,2016upon attaining the retirement age of65years as per Company's retirement policy for Executive Directors. Post retirement the Board has decided to engage him as an advisor for a period of 1 year to advice on matters relating to subsidiary companies. Mr Srinivasa Reddy Polimera (DIN: 03181178) who had been appointed as Deputy Managing Director with effect from May 29,2015, has been appointed as Managing Director with effect from April 1,2016. Managerial Remuneration Details of remuneration as required under section 197(12) of the Companies Act,2013 read with Rule 5 of the Companies (Appointment & Remuneration of Managerial Personnel) Rules, 2014 is given in Annexure 4. Directors Responsibilities Statement Based on the representations received from the Operating Management, pursuant to Section 134(5) of the Companies Act, 2013,the Board of Directors, to the best of the ir knowledge and ability, confirm that: • In preparation of annual accounts, the applicable accounting standards have been followed and that there are no material departures in the preparation of the annual accounts. • Accounting policies were selected in consultation with statutory auditors and were applied consistently and judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at the end of the financial year and of the profit / loss of the Company for the relevant period; • Proper and sufficient care has been taken, to the best of their knowledge and belief 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; • The annual accounts have been prepared on a going concern basis; • The company has in place an established internal financial control system and the said systems are adequate and operating effectively. Steps are also being taken to further improve the same. • The company has in place a system to ensure compliance with the provisions of all applicable laws and the system is adequate. Steps are also being taken to further improve the legal compliance monitoring. Audit Committee The constitution of the Audit Committee, Terms of Reference and the dates on which meetings of the Audit Committee were held are mentioned in the Corporate Governance Report for FY 15-16forming part of this Annual Report. There has been no instance where Board has not accepted the recommendations of the Audit Committee during the year under review. Internal Financial Controls The company has in place an established internal financial control system designed to ensure proper recording of financial and operational information and compliance of various internal control and other regulatory and statutory compliances .The Audit Committee has reviewed the effectiveness of internal controls and compliance control, financial and operational risks, risk assessment and management systems and related party transaction. To further improve Internal Financial Controls the Company has availed, the services of KPMG ,external consultants to improve the processes in respective areas. Audit Committee at a special meeting has reviewed the status of internal Financial Control and Key Accounting Controls. Related party transactions Details of transaction with related parties in Form AOC is given in Annexure 5. The Company did not have any related party transaction as per section 188 of the Companies Act,2013 read with Rule 15of the Companies (Meetings of Board and its Powers) Rules, 2014. The details of transactions with related parties as per AS-18 are disclosed in notes to accounts. The Company has adopted a Policy on Related Party Transactions. The said policy is available on the website of the Company at www.trf.co.in Whistle Blower Policy/Vigil Mechanism The details of Whistle Blower Policy/Vigil Mechanism existing in the Company are mentioned in the Corporate Governance Report for FY 15-16forming part of this Annual Report. Disclosure under Sexual Harassment of women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 TRF has a stringent policy for prevention of sexual harassment of women at workplace and management takes a zero- tolerance approach towards those indulging in any form of sexual misconduct. TRF has constituted a committee as required under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. No instance of sexual harassment was reported during FY'15-16. Risk Management Policy The Board had at its meeting held on 26th December, 2005 adopted Risk Management Framework for the Company for identification and prioritization of various risks based on pre determined criteria relating to i) Strategic Risk ii) Operational Riskand iii) Functional Risk. The Company has developed risk registers and has identified key risks and has also framed risk mitigation plan for the same. The risk management executive Committee comprising of senior Head of Department's have reviewed the risks and risk mitigation plan. Risk management process in the Company is an on-going activity and steps are being taken to improve the same. Explanations to Audit Report The Statutory Auditors Report on Standalone Financial statement and the Secretarial Audit Report for the financial year 2015-16does not contain any qualification which warrants comments from the Board of Directors. The Statutory Auditors Report on Consolidated Financial statement contains a qualified opinion of the auditors as under: Basis of Qualified Opinion The recoverable amount of the cash generating unit which includes goodwill on consolidation of Rs. 6,564.36 lakhs, in respect of one subsidiary company, has been estimated based on future cash flow projections. We have been unable to obtain sufficient audit evidence to satisfy ourselves on the reasonableness of the assumptions made to estimate the future cash flow projections and consequently, we are unable to determine whether any adjustment is necessary to the carrying amount of the goodwill. Qualified Opinion on Internal Financial Control over Financial Reporting According to the information and explanations given to us and based on our audit, material weakness has been identified as at March 31,2016 in the Holding Company's internal financial control system for good will on consolidation in respect of one subsidiary with regard to estimation of future cash flow projections, which could potentially result in the Company not recognizing an impairment in the carrying value of such goodwill. Explanation to Qualifications The Statutory Auditors have expressed concern over the reasonableness of the assumptions made to estimate the future cash flow projections of Dutch Lanka Trailer Manufacturers Ltd , which manufactures and markets trailers internationally, and have accordingly expressed their inability to determine whether any adjustment is necessary to the carrying amount of the goodwill on consolidation and have made a qualified opinion in their report on Consolidated Financial Statement for the year ended March 31,2016. The goodwill impairment of Rs 2,287.27 lakhs during the FY 2014-15was based on the Net Present Value of Discounted Cash Flows over a 5 years period and including perpetuity. The management would like to inform that the sales revenue projected by Dutch Lanka Trailer Manufacturers Ltd (DLT) for next five years are achievable considering improvement in market conditions in the Port Trailers and Road Trailers segment where DLT operates. Further, Tata International DLT Private Limited (Tata-DLT), a 50%-50%JVcompany between Tata International and DLT operating in India, has been performing well and has shown 26% growth in FY'15-16over the previous year in terms of numbers of trailers sold. Considering the improved sentiment in the trailers market in India, this improved performance will continue in coming years also. In view of above, the management is confident that the sales projections are achievable and no further impairment provision is required and the internal financial controls are effective. G. Statutory Auditors: The existing Auditors, M/s Deloitte Haskins & Sells (DHS), Kolkata, Chartered Accountants, retire at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Your Company has received a certificate from the Auditors to the effect that they are eligible for re-appointment under the applicable provisions of the Companies Act, 2013. Members are requested to reappoint the said Auditors for a further period of one year i.e for the financial year2016-17atthe Annual General Meeting and to authorize the Board of Directorst of itchier remuneration as mutually agreed upon between the Board and the Auditors. Cost Auditors: The Board of Directors had appointed M/s Shome & Banerjee, Cost Accountants (Firm Registration no 000001) of 5A, Nurulla Doctor Lane, 2nd Floor, Kolkata 700 017as Cost Auditors of the Company for the financial year 2015-16. The remuneration of the said auditors was approved by the members at their last Annual General Meeting held on September 26, 2015. M/s Shome & Banerjee, Cost Accountants have been re-appointed by the Board as Cost Auditors of the Company for the financial year 2016-17. In terms of section 148 approval of members is sought at the ensuing Annual General Meeting for payment of remuneration to the said auditors. Secretarial Auditors & Secretarial Audit Report The Board of Directors had appointed M/s P. K. Singh & Associates, Practising Company Secretaries having their office at Room no 309, Vikash Bhawan (AIADA), Main Road, Adityapur, Jamshedpur- 831013as Secretarial Auditors of the Company for the financial year 2015-16. The Secretarial Audit Report for FY 15-16 is given in Annexure 6. H. Extract of Annual Return Extract of Annual Return in Form MGT 9 as required under section 92(3), 134(3)(a) of the Companies Act, 2013 read with Rule 12of the Companies (Management and Administration) Rules, 2014 is given in Annexure 7. I. Legal Orders: There are no Significant/material orders of Courts/tribunal/regulation affecting the Company's going concern status. J. Loans, Guarantees or Investments: Details of Loans, Guarantees and investments as required under section 186 of the Companies Act, 2013 is given in Annexure 8. K. Environment: (conservation of Energy, technology absorption, foreign exchange earnings) Although the operations of the Company at Jamshedpur and at its project sites are basically non-polluting in nature, adequate precautions are taken to comply with all regulatory requirements in this regard at all locations. In addition to ensuring compliance with the legal norms, the Company continues its efforts towards urban beautification and tree plantation. As required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014the relevant particulars are given in the Annexure 9. L. Deposit As in the previous year, the Company has not accepted/ renewed any fixed deposits during the year. M. Other Disclosures • No director of the Company occupies the position of Managing Director or Whole time Director in any of the subsidiaries of the Company. • Changes affecting the financial position of the Company from the end of the financial year up to the date of the report will be reported in Q1'16-17 results • There has been no change in the nature of business of the Company during the year under review. • At the ensuing AGM, no new Independent Director is being appointed. • The Company has not given loan to its employees to purchase or subscribe fully paid up shares in the Company in terms of Section 67(3)(c) of the Companies Act, 2013 and Rule 16(4) of the Companies (Share Capital and Debentures) Rules, 2014. • The provisions of Section 131(1) of the Companies Act, 2013 are not applicable. The average net profits for the immediately preceding three financial years are negative. • In view of losses incurred in immediately preceding 3 financial years the provisions of Section 135(5) of the Companies Act, 2013 relating to CSR are not applicable. • The Company have not issued shares with differential voting rights, sweat equity shares ,employee stock option. N. REFERENCE TOBIFR As the net worth of the Company was fully eroded as at31st March 2015, in compliance with the provisions of Section 15ofSick Industrial Companies (Special Provisions) Act, 1985 read with applicable rules, reference has been filed with BIFR and the same has been registered. The Company has also submitted a revival scheme with BIFR which envisages to turn around the Company on its own effort. ACKNOWLEDGEMENT We thank our shareholders, customers, vendors, investors, business associates and bankers for their continued support during the year. We place on record appreciation of the contribution made by all the employees towards improving productivity and in the implementation of various initiatives to reduce internal costs and bring about improvement in operational efficiencies. We also thank our worker's union for their co-operation and support. On behalf of the Board of Directors Subodh Bhargava Chairman Date : May16,2016 Place : Kolkata, |