DIRECTORS' REPORT Your Directors have pleasure in presenting their Twenty fifth Annual Report together with the audited Statements of Accounts for the year ended 31st March, 2015. Dividend: Enthused with the improved working of the Company, your Directors are pleased to recommend a higher dividend of 60% (Rs. 3/- per share of Rs. 5/- each) as against 50% paid for the previous year. The total payout on account of dividend including tax thereon will be Rs. 39.56 million. Dividend if declared, will be free of tax in the hands of the shareholders. Performance On standalone basis, the Company recorded the total income of Rs. 6,389.78 million as against Rs. 4410.46 million in the previous year, showing a jump of 44.9%. Pre-tax profit was also correspondingly higher by 34.95% compared to the last year. The Company earned a pre-tax profit of Rs. 297.22 millions as against Rs. 220.25 millions a year ago. On consolidated basis, the Company recorded the total income of Rs. 7157.86 million as against Rs. 5365.79 million in the previous year, an increase of 33.4%. However, the pre-tax profit is Rs. 291.21 million as against Rs. 290.09 million a year ago. Transfer to General Reserve The Company has transferred Rs. 25 million to the general reserve during the current financial year. Directors' Responsibility Statement Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to be best of their knowledge, confirm that - a) in the preparation of the accounts the applicable accounting standards have been followed along with proper explanations relating to material departure; b) appropriate accounting policies have been selected and applied consistently and have 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; c) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the annual accounts have been prepared on a going concern basis; e) they 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) they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively. Management Discussion and Analysis A detailed report on the Management Discussion and Analysis is provided as a separate section in the Annual Report which forms part of the Directors' Report. Update on the Scheme of Arrangement The Hon'ble High Court of Bombay on 23rd October, 2015 had approved the scheme of arrangement under which the Casting Unit of Atlas Castalloy Ltd. is transferred and merged with the Company. The appointed date of the Scheme was April 1, 2014 and subsequent to filing of the necessary forms, the Scheme has become effective from 29th November, 2015. Consequent upon the Scheme becoming effective, the Company will allot 12,56,222 Equity Shares of Rs. 5/- each to the shareholders of the Atlas Castalloy Ltd. The Scheme has enabled the Company to augment its capacity by 6,000 MTPA with an additional revenue of Rs. 1341 million for the financial year 2014-15 without any outflow of cash. Acquisition of unit will also enable the Company to achieve economies of scale with additional production capacity, optimal utilization of resources and reduction in cost. This will also give access to your Company to expand its large customer base with additional clients like Greaves Cotton Ltd., Royal Enfield Ltd., Piaggio and defence, which are the existing customers of Atlas Castalloy Ltd. Loans, Guarantees and Investments The full particulars of guarantee given, investment made or loan given or security provided as per the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the financial statements (refer to note no.8(b)) Transactions with Related Parties All the related party transactions including in relation to direct/indirect subsidiaries are strictly done on an arm's length basis and in ordinary course of business. The Company presents details of all related party transactions before the Audit Committee. The policy on Related Party Transactions as approved by the Board of Directors is placed on the Company's website. Since all the transactions with related parties entered into by the Company were in ordinary course of business and were on arm's length basis, Form AOC-2 is not applicable to the Company. Subsidiary Companies: Your Company has three foreign subsidiaries viz. Alicon Holding GmbH, Illichmann Castalloy S.R.O. and Illichmann Castalloy GmbH. Alicon Holding GmbH is the 100% subsidiary of your Company, who in turn is holding 100% capital of Illichmann Castalloy S.R.O. Illichmann Castalloy GmbH is the 100% subsidiary of Illichmann Castalloy S.R.O. A separate section on the performance and financial position of each of the subsidiaries in Form AOC-1 is part of this report and is annexed as Annexure I. Consolidated Financial Statements In accordance with the Accounting Standards 21, 23 and 27 issued by the Institute of Chartered Accountants of India, consolidated financial accounts prepared on the basis of financial statements of the subsidiary companies forms part of this report and accounts. Pursuant to the provisions of Section 136 of the Companies Act, 2013, the Company has placed separate audited accounts of its subsidiaries on its website www.alicongroup.co.in The Company will make available the audited annual accounts and related information of its subsidiaries upon request by any of its shareholders. Material Changes and Commitment There are no material changes and commitments affecting the financial position of the Company between the end of the financial year and the date of this report. Public Deposits Your Company has not accepted any deposit from the public, its shareholders or employees during the year under review. Conservation of Energy etc. Information pertaining to conservation of energy, technology absorption and foreign exchange earning and outgo as required under the provisions of Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure II. Risk Management The Company has Risk Management Committee. This committee is responsible for reviewing the risk management plan and its effectiveness. The audit committee also reviews the financial risk and its control. The management also continuously access the risk involved in the business and all out efforts are made to mitigate the risk with appropriate action. All the assets of the Company are adequately covered by comprehensive insurance. A detailed note on risk management is given under financial review section of the Management Discussion and Analysis of this Annual Report. Corporate Social Responsibility (CSR) Brief outline on the Corporate Social Responsibility (CSR) Policy of the Company and the initiative undertaken by the Company on CSR activities during the year are set out in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014 and is annexed as Annexure III to this report. The said CSR Policy is hosted on the Company's website. Corporate Governance In line with the requirement of the Companies Act,2013 as also amended Clause 49 of the Listing Agreement, the Board of Directors has constituted new committees. Details of these committees along with their terms of reference, composition and meetings held during the year, are provided in the Corporate Governance Report. During the year the Company has also amended the existing policies and adopted new policies such as CSR policies, Related Party Transaction Policies, Whistle Blower Policies. A separate report on Corporate Governance is annexed, which forms part of this report. A certificate of CEO and CFO of the Company confirming the correctness of the financial and cash flow statements, adequacy of the internal control measures and reporting of matters to the Audit Committee is also annexed and forms part this Directors' Report. Directors and Key Managerial Personnel The Board of Directors in its meeting held on 30th April 2015 had appointed Mr. Ajay Nanavati as an Additional Director (Independent). Pursuant to the provisions of Section 161 of the Act, Mr. Nanavati would be vacating the office as Director in the forthcoming Annual General Meeting. The Company has received a notice under Section 160 of the Act along with refundable deposit of Rs. 1,00,000/- proposing the appointment of Mr. Ajay Nanavati as an Independent Director. The proposed appointment of Mr. Ajay Nanavati was recommended by the Nomination & Remuneration Committee. The Board of Directors of the Company had formed the opinion that the said Director meets with the criteria of Independence as per Section 149(6) of the Act and rules made thereunder and requirements of Clause 49 of the listing agreement with the stock exchanges. Mrs. Pamela Rai shall retire by rotation at the forthcoming Annual General Meeting and being eligible has offered herself for re-appointment. Additional information and brief profile as required under Clause 49 of the Listing Agreement for each of the above Directors seeking appointment and/or re-appointment is provided in the Corporate Governance Report, which forms part of the Annual Report. Further, the business items relating to the re-appointment of the above Directors have been included in the Notice of the AGM. During the year under review, none of the non-executive directors had any pecuniary relationship or transactions with the Company. Pursuant to the provisions of Section 203 of the Companies Act, 2013 and Clause 49 of the listing agreement Mr. S. Rai is Managing Director, Mr. R. Sikand is Group Chief Executive Officer, Mr. Vimal Gupta is the Group Chief Finance Officer and Mr. P S. Rao is the Company Secretary. Declaration of Independence All the independent directors have submitted declarations as required pursuant to Section 149(7) of the Companies Act, 2013 stating that they meet the criteria of independence as stipulated in Section 149(6) of the Act. Nomination & Remuneration Policy The Nomination and Remuneration Policy recommended by the Nomination & Remuneration Committee is duly approved and adopted by the Board of Directors. The said policy is annexed to the report as Annexure IV. Number of Meeting of The Board Six meetings of the Board were held during the year under review. Corporate Governance Report, which forms part of this report, contains the details about the Board meeting as also meeting attended by each Directors of the Company. Board Evaluation Pursuant to the provisions of the Act and Clause 49 of the Listing Agreement, the Board of Directors had done the annual evaluation of its own performance, its committees and individual directors. The Nomination and Remuneration Committee reviewed the performance of the individual directors on the basis of criteria such as the contribution of the individual director to the Board and committee meetings. In a separate meeting of independent directors, performance of non-independent directors, performance of the Board as a whole was evaluated, taking into account the views of executive directors and nonexecutive directors. Policy on appointment of directors and remuneration as provided in Section 178(3) of the Companies Act, 2013 has been dealt with in the corporate governance report, which forms part of the Directors' Report. Audit Committee The Company has in place an Audit Committee in terms of the requirements of the Companies Act,2013 read with the rules made there under and Clause 49 of the Listing Agreement. The details pertaining to the audit committee are included in the Corporate Governance Report, which forms part of this report. Internal Control System Adequate internal control systems are in place to maintain quality of product, proper accounting as per norms and standards prescribed, asset maintenance and its proper use. The Company has an independent internal auditor, who periodically reviews the accounts and reports to the Audit Committee. Employees The relations between the management and employees remained cordial throughout the year. Information required under Section 197 of the Act read with rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are appended to this report as Annexure V and forms part of this report. The details of employees receiving remuneration exceeding Rs. 5 lakhs per month or Rs. 60 lakhs per annum as required under the Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in Annexure. In terms of Section 136(1) of the Act and the rules made there under, the Report and Account are being sent to the shareholders excluding the aforesaid Annexure. Any shareholder interested in obtaining a copy of the same may obtain form the registered office of the Company. None of the employees listed in the said Annexure is related to any Director of the Company. Statutory Auditors According to Directors, there is no adverse remarks made by Statutory Auditors in their report. Notes to the accounts are self explanatory to comments/observation made by the auditors in their report. Hence, no separate explanation is given. M/s. Asit Mehta & Associates, Chartered Accountants, Statutory Auditors of your Company shall retire at the forthcoming Annual General Meeting. However, they are eligible for reappointment. Pursuant to Section 139 (2) of the Companies Act, 2013, Audit Committee and the Board of Directors of the Company have recommended their appointment for a period of one year i.e. from the conclusion of the 25th Annual General Meeting till the conclusion of the 26th AGM. M/s. Asit Mehta & Associates have confirmed that their appointment, if made, will be within the eligibility criteria prescribed under Section 141 (3) of the Companies Act, 2013. Members are requested to appoint the Auditors and fix their remuneration. Secretarial Audit Report During the year, Secretarial Audit was carried out by Mr. Upendra C. Shukla, Practising Company Secretary for the financial year 2014-15. The report on the Secretarial Audit is appended as Annexure VI to this report. According to the Board of Directors the report does not have any adverse remark. Extract of Annual Return An extract of Annual Return in Form MGT-9 in pursuance to the provisions of Section 92(3) of the Companies Act,2013 is annexed to this report as Annexure VII and forms part of this report. Receipt of Remuneration by Managing Director From Subsidiary Company Mr. S. Rai, Managing Director of the Company, has not received any remuneration from any of its subsidiary companies. Vigil Mechanism The Company has a vigil mechanism policy to deal with instances of fraud and mismanagement. The whistle blower policy adopted by the Board of Directors is hosted on the website of the Company. Reporting of Fraud The Auditors of the Company have not reported any fraud as specified under the second proviso of Section 143(12) of the Companies Act, 2013. Details of Significant and Material Orders Passed by the Regulators or Courts or Tribunals During the year under review, there were no material and significant orders passed by any of the regulators or courts or tribunals impacting the going concern status and the Company's operations. Acknowledgement Your Directors wish to thank Enkei Corporation, Japan, our technical collaborator, for their valued support and guidance for development of new parts. Your Directors also take this opportunity to thank all the customers, vendors, bankers and other business associates for their continued support. Your Directors also thank all the employees for their commitment, hard work and contribution to the Company's excellent performance. Your Directors are thankful to all the shareholders of the Company for their unstinted support and confidence reposed in the management of the Company. On behalf of the Board of Directors (S. Rai) Managing Director (A.D. Harolikar) Director Place: Shikrapur, Pune Date: November 30, 2015 |