DIRECTORS’ REPORT Dear Members, Your Directors have great pleasure in presenting the 29th Annual Report of your Company, together with the audited statement of accounts for the financial year ended 31st March, 2015. General Information The FY 2014-15 has witnessed key policy reforms, aimed at aiding growth revival and surmounting the structural constraints in the Indian Economy. The Indian Economy grew at 7.3 % in FY 2014-15. The Economy posted a 7.5 % growth in the January to March quarter of the fiscal, outpacing China’s GDP of 7 % in that quarter. Growth rebounded in the three most crucial components of industrial sector i.e. mining, manufacturing and electricity. The latest policy initiative of the Indian Government “Make in India” is a welcome move for the growth of Indian Economy. Automobile Sector showed growth both in Domestic as well as Export Sales. FY 2014-15 numbers reveal all vehicle categories other than Commercial Vehicles are in positive territory. Riding on the back of a gradual uplift in market sentiments, excise duty cuts continuing through to December 2014 and the opening up of the mining and infrastructure sectors, the Indian automotive industry posted an overall growth of 7.22 % in FY 2014-15, as compared to 3.53 % in the previous fiscal year. According to International Monetary Fund, the global economy is expected to grow at 3.5% in 2015 and 3.8% in 2016. However, Global recovery will continue to be moderate and uneven. While developed economies are expected to strengthen, aided by lower oil prices and low interest rates, most emerging economies are expected to slow down moderately, due to country specific reasons-with India being an exception. The Indian economy is expected to grow by 7.5% in 2015-16. Growth will benefit from recent policy reforms, a consequent pick-up in investment, and lower oil prices”. Demand is expected to grow due to various underlying factors including “Make in India”, “Digital India”, raising per capita income, growing urbanization etc. Operations Growth of your Company has been satisfactory and upto the expectation. During the FY 2014-15, total revenue from operations (net of excise) stood at Rs.431.92 crores as compared to Rs 361.02 crores in FY 2013-14, registering an impressive increase of 19.63%. The profit before tax stood at Rs 26.30 crores as compared to Rs 22.07 crores in previous year. Similarly, the Net profit of the Company also grew by 15.65% i.e. from Rs 15.94 crores to Rs 18.41 crores. Exports of our country were not much encouraging due to massive fluctuation of the exchange rate, recession in the world economy & the pressure of rising raw material cost. Still, your company’s export sales were increased by 12% with export revenue of Rs 94.12 crores in the FY 2014-15 as compared to previous year of Rs 84.04 crores, registering a growth of 12%. This was made possible, because of your Company’s continuing efforts to tap new customers and markets. Your Company expects to benefit over the next period from its good business linkage with OEMs, due to its healthy operating efficiencies. In view of this, the long term prospects of your Company are bright. Share Capital The paid up Equity Share Capital as on 31st March 2015 was Rs. 18,76,80,000. During the year under review, the Company has not issued shares or granted stock options or sweat equity. Dividend During the year under review, an interim dividend of 10 % i.e. Rs. 1.0 per equity share amounting to Rs. 187.68 lacs was declared and paid, the same is being confirmed at the forthcoming AGM. The Directors have now recommended to the shareholders a final dividend of 15% i.e. Rs. 1.50 per equity share, resulting in a payout of Rs. 281.52 lacs. The total dividend payout stands at Rs 469.20 Lacs (Previous year Rs 469.20 Lacs) & tax on dividend comes to Rs 93.81 Lacs (Previous year 79.74 Lacs). Additionally, an amount of Rs. 1.00 Crore is transferred to General Reserve. If the dividend on the shares as, recommended by the Board of Directors, is approved by the shareholders in their 29th Annual General Meeting, payment of such dividend will be made to those members whose names appear in the Register of Members as per Book closure dates mentioned in the shareholder’s information. Directors Responsibility Statement In terms of section 134(3) (c) & 134 (5) of the Companies Act, 2013, and to the best of their knowledge and belief, and according to the information and explanations provided to them, your Directors hereby make the following statements: (a) that in preparation of the Annual Accounts, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any, (b) that such accounting policies have been selected and applied consistently and judgments and estimates made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as on March 31, 2015 and of the profit of the Company for the year ended on that date, (c) that proper and sufficient care has been taken for maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for prevention and detection of fraud and other irregularities, (d) that the annual financial statements have been prepared on going concern basis, (e) that proper internal financial controls were in place and that the financial controls were adequate and were operating effectively, and (f) that the systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. Details of Subsidiary/Joint Ventures/Associate Companies The Company has neither any Subsidiary, Joint Venture nor an Associate Company within the meaning of Companies Act, 2013. However, the Company is evaluating various options to tap the business opportunities in North American Free Trade Agreement (NAFTA) region by having an entity. Directors and KMP’s appointment/ reappointment a. Retire by Rotation Independent Directors are not liable to retire by rotation. Mr. Pranav Kapuria, Managing Director of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible offer himself for re-appointment. b. Additional Director Ms. Malini Sud was appointed as an Independent and Additional Director of the Company who holds the office till the date of ensuing Annual General Meeting. Her appointment is being confirmed at the ensuing Annual General Meeting subject to your approval. c. Re-appointment of Managerial Personal Mr. Pranav Kapuria and Mr. Anuj Kapuria have completed their tenure as the Managing Director and the Whole Time Director respectively. The Board of Directors upon the recommendation of Nomination and Remuneration Committee has re-appointed them for another period of five (5) years, subject to your approval. d. Key Managerial Personnel’s All Whole Time Directors such as Mr. Deep Kapuria, Executive Chairman, Mr. Pranav Kapuria, Managing Director and Mr. Anuj Kapuria, Executive Director are regarded as KMPs, in addition to Chief Financial Officer (C.F.O.) and Company Secretary (C.S.). Mr. S.K. Khatri is the continuing C.S. of the Company. Mr. Vijay Mathur, Sr. General Manager (Finance) was regularized as C.F.O. He resigned from the post of C.F.O. w.e.f. 30th November, 2014, upon the appointment of Mr. Alok Agarwal as the C.F.O. w.e.f. 1st December, 2014. However, Mr. Vijay Mathur will Continue to work as Sr. General Manager (Finance). Resolutions for the said appointment/reappointment of Directors pursuant to Section 149 & 152 of the Companies Act, 2013 & Rules made thereunder & Clause 49 of the Listing Agreement are being included in the notice for the ensuing Annual General Meeting for the approval of shareholders. There is no other change in the Directors during the FY 2014-15. Meetings of the Board Necessary Board Meetings transacted to conduct the operations of the Company. The details are given in the Corporate Governance Report, which forms part of this Annual Report. It is confirmed that the gap between two consecutive meetings was not more than one hundred and twenty days as provided in section 173 of the Act. Board Evaluation Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Committees. Declaration of Independent Director(s) The Independent Directors have submitted their declarations of independence, as required pursuant to provisions of section 149(7) of the Act, stating that they meet the criteria of independence as provided in sub-section (6). Auditors a) Statutory Auditors M/s Gupta Vigg & Company, Chartered Accountants, (Firm Registration No. 001393N) Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting and are eligible for reappointment. Pursuant to provisions of section 139 of the Act and the Rules made there under, the Board upon the recommendation of Audit Committee proposes to reappoint M/s Gupta Vigg & Company, Chartered Accountants as Statutory Auditors of the Company till the conclusion of the next Annual General Meeting. They have furnished a certificate confirming the eligibility under section 141 of the Act and Rules made there under. The Auditors’ Report does not contain any qualification, reservation or adverse remark and do not call for any further explanation/ clarification by the Board of Directors as provided under Section 134 of the Act. With respect to the point no. (VII) (b) in Annexure to Auditors’ Report with regard to non deposit of disputed taxes. The Board wishes to inform that the matters are related to nonadmission of service tax input by the Excise Department, others such as Entry tax & regular income tax matter for which the Company has preferred appeal to Appellate Authorities. The rest of report by the Statutory Auditors is self explanatory. Please refer to the Notes to Accounts, wherever necessary. b) Cost Auditors As per Section 148 and all other applicable provisions of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the Board of Directors has on the recommendation of the Audit Committee, approved the re-appointment of M/s. Kabra & Associates, Cost Accountants as the Cost Auditors of the Company for the year ending 31 March, 2016. The remuneration proposed to be paid to them requires ratification of the shareholders of the Company. In view of this, your ratification for payment of remuneration to Cost Auditors is being sought at the ensuing AGM. Accordingly, a resolution seeking ratification by members for the remuneration payable to M/s Kabra & Associates is included at Item No. 10 of the Notice convening 29th Annual General Meeting. c) Secretarial Auditor Section 204 of the Companies Act, 2013 inter-alia requires every listed company to annex with its Board’s report, a Secretarial Audit Report provided by a Company Secretary in Practice, in the prescribed form. The Board of Directors appointed M/s Grover Ahuja & Associates, Practicing Company Secretaries as Secretarial Auditor to conduct Secretarial Audit of the Company and their report is annexed to this Board report (Annexure I). The Secretarial Audit Repor t does not contain any qualification, reservation or adverse remark and do not call for any further explanation/ clarification by the Board of Directors under the Act. Internal Control Systems and its Adequacy The Company has internal control systems commensurate with the size, scale and complexity of its business operations. The scope and functions of Internal Auditors are defined and reviewed by the Audit committee. Internal Auditors present their quarterly report to the Audit Committee, highlighting various observations, system and procedure related lapses and corrective actions being taken to address them. Extract of Annual Return As required pursuant to section 92(3) & 134 (3) (a) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of Annual Return in MGT 9 as a part of this Annual Report as Annexure II The Conservation of Energy, Technology Absorption, Foreign Exchange earnings and outgo. Details of Energy Conservation, Technology Absorption, Research & Development activities undertaken by the Company and foreign exchange earnings and outgo of the Company and other information in accordance with the provisions of Section 134(3) (m) of the Companies Act, 2013, read with the Companies (Disclosure of Particulars in the Report of Board of Directors), Rules, 1988, are given in Annexure III, to this Report. Report on Corporate Governance The Report on Corporate Governance is given separately and forming part of this report and the certificate from the Statutory Auditors confirming compliance with the provisions of Corporate Governance as stipulated in Clause 49 of the listing agreement is also attached to the report. Management discussion & analysis report The Management Discussion & Analysis Report is given separately and forming part of this report. Corporate Social Responsibility Pursuant to the provisions of Section 135 and other applicable provisions of the Companies Act, 2013 and Rules made there under the brief of the Corporate Social Responsibility is provided in Annexure IV Particulars of contracts or arrangements with related parties All transactions entered by the Company with the parties, which may be regarded with related parties, were in the ordinary course of business and on the arm’s length basis. Necessary resolution for your approval is being placed at the ensuing Annual General Meeting, for your approval. As provided under section 134(3)(h) of the Act and Rules made there under disclosure of particulars of material transactions with related parties entered into by the Company with related parties in the prescribed format annexed to this report as Annexure V Disclosures on related party transactions are also set out in Note No. 31 to the financial statements. 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 at the link: http:// www.hitechgears.com/images/RPT.pdf. Electronic Clearing Services (ECS) As per the circular issued by Securities & Exchange Board of India (SEBI), companies should mandatorily use the facility of Electronic Clearing Services (ECS), for distribution of dividends to its members. This facility provides to the members an opportunity to receive dividend amount directly in their bank accounts. For availing this facility, members holding shares in physical form may send their duly filled ECS mandate form to the Company’s Registrar and Share Transfer Agent (RTA). Members are holding shares in dematerialized form may kindly note that their bank account details as furnished to their depositories will be taken for the purpose of ECS and the Company. Postal Ballot During the financial year 2014-15, no Resolution was required to be passed through postal ballot. Similarly, at the forthcoming Annual General Meeting, there is no item for approval through Postal Ballot is being placed. Code of Conduct of Insider Trading The Company has adopted a Code of Conduct to regulate, monitor and report trading by insiders This Code of Conduct is intended to prevent misuse of Unpublished Price Sensitive Information (“UPSI”) by Designated persons. In accordance with such Code of Conduct, the Company closes its trading window for Designated Persons from time to time. The trading window is also closed during and after occurrence of price sensitive events as per the said Code of Conduct. Code of Conduct Your Company has adopted a Code of Conduct for its Board Members and Senior Management personnel. The code of conduct has also been posted on the official website of the Company. The Declaration by the Managing Director of the Company regarding compliance with the Code of Conduct for Board Members and Senior Management is annexed with the Corporate Governance Report. Reconciliation of Share Capital Audit M/s Grover Ahuja & Associates, practicing Company Secretary carried out the Secretarial Audit on quarterly basis to reconcile the total issued and listed share capital with National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). The Board of Directors confirms that the total issued and paid up capital as on 31st March, 2015 is reconciled with the total number of shares in physical form and the total number of dematerialized shares held with NSDL and CDSL. The Reconciliation of Share Capital Audit Certificate is being submitted every quarter to the Stock Exchanges and is also placed before the Board Meeting. Listing of Shares With a view to provide easy liquidity in the shares of the Company, the equity shares of your Company are presently listed on the premier stock exchanges viz., the National Stock Exchange of India Limited (NSE) and the Bombay Stock Exchange India Limited (BSE) Mumbai. Pursuant to Clause 38 of the Listing Agreement, the annual listing fees for the year 2015-2016 has been paid within the prescribed time period. Fixed Deposits During the year under review your Company neither invited nor accepted any deposit within the meaning of Section 73 of the Companies Act, 2013, and rules made there under. Dematerialization of the equity shares 99.28 % of the total equity shares of the Company are held in dematerialized form with the par ticipants of National Securities Depository Limited (NSDL) and Central Depository Securities (India) Limited as on the date of this report. Keeping in view the benefits of dematerialization, your directors urge the shareholders holding shares in physical form to get their shares dematerialized. Change of Name The Board of Directors propose to change the name of the Company by prefixing “The” before the existing name of the Company, making it “The Hi-Tech Gears Limited”. Registrar of Companies, Jaipur have conveyed its name availability approval by vide its letter dated 7th August, 2015. A Special Resolution in this respect is being moved for your approval at the ensuing 29th Annual General Meeting. After your approval necessary formalities will be completed, for Change of name. Remuneration Policy The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report. Audit Committee Company has duly constituted Audit Committee, which meets on regular intervals for the business required to be transacted thereat. The recommendations made by such committee are accepted by the Board. As per Companies Act, 2013, the Company has reconstituted and revised the roles, responsibilities & powers of the Audit Committee. A synopsis is described in the Corporate Governance Report. Vigil Mechanism Policy The Company has a vigil mechanism policy to deal with any instance of fraud and mismanagement. The employees of the Company are free to report violations of any laws, rules, regulations and concerns about unethical conduct to the Audit Committee under this policy. The policy ensures that strict confidentiality is maintained whilst dealing with concerns and also that no discrimination with any person for a genuinely raised concern. The policy may be accessed on the Company’s website at the link: http://www.hitechgears.com/ images/Vigil_Mechanism_Policy.pdf Obligation of Company under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 Company has adopted a policy for prevention of Sexual Harassment of Women at workplace and has set up Committee for implementation of said policy. During the year Company has not received any complaint of harassment. Par ticulars of Loans given, Investments made, Guarantees given and Securities provided The company has not given any loans or guarantees covered under the provisions of section 186 of the Companies Act, 2013. The details of the investments made by company are given in the notes to the financial statements. Material changes and Commitments There are no material changes and commitments affecting the financial position of the Company which have occurred between the end of the Financial Year to which the financial statements relate and the date of the report. Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and company’s operations in future There is no significant and/or material order passed by the regulators or courts or tribunals impacting the going concern status of the Company. Particulars of Employees Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure VI Risk Assessment and Mitigation Process Company has a risk assessment policy which is periodically reviewed by the Audit Committee and Board of Directors in their meeting and it takes the appropriate measures. Business Responsibility Reporting As per Clause 55 of the Listing Agreement with the Stock Exchanges Business Responsibility Repor ting is not applicable. Personnel The Board of Directors place on record their appreciation of the untiring efforts of the employees of the organisation at every level. The efforts to create a family like atmosphere continued throughout the year. Like the many years gone-by, this year also witnessed increased cohesion among all levels of employees, which is evident from the performance of the Company. Training and Development of employees provided further impetus and have contributed towards the all round improved performance of your company. The Company encourages by rewarding & recognising employees for their long term commitment as & when the opportunity arise. Trade Relations The Board of Directors place on record their appreciation for the co-operation and valuable support extended by the customers, the suppliers and all other persons directly or indirectly associated with the Company. Your Company regards them as partners and shares with them a common vision of growth in the future. Acknowledgement Your directors place on record their sincere appreciation for the assistance, cooperation and valuable support provided to the Company by Customers, Vendors, Banks & Financial Institutions and hope to continue to receive the same in future. Your Directors also record their appreciation for the commitment and dedication of the employees of the Company at all levels. The Board of Directors also place on record their gratitude to the shareholders of the Company for their continued support to and confidence in the management of the Company. By Order of the Board For Hi - Tech Gears Limited Sd/- Deep Kapuria Chairman Place : New Delhi Dated: 11/08/2015 |