REPORT OF THE DIRECTORS TO THE MEMBERS Your Directors are pleased to present their 41st Annual Report together with the Audited Accounts for the Financial Year ended 31st March, 2016. REVIEW OF OPERATIONS Members may kindly note that subdued market conditions that tractor industry witnessed during fiscal 2015, continued in fiscal 2016 as well. Further, sluggish demand conditions that were prevalent during the year in the car industry segment where your Company operates had turned FY 2015-16 into a tough year. These industry trends has impacted seats and seat mechanism business of your Company. However, the Company was able to register growth in the agri implements business. In the above backdrop, total net revenue for the financial year 2015-16 reached to Rs. 95.64 crores against the previous year's revenue of Rs. 93.83 crores. Profit before tax for the year at Rs. 2.98 crores was lower against Rs. 3.57 Crores of previous year primarily because of the change in product mix. Profit after tax for the year was Rs. 2.04 crores (previous year - Rs. 2.41 crores). These post tax earnings translated into an Earning Per Share (EPS) of Rs. 8.48 (previous year - Rs. 10.07). DIVIDEND Your Directors have recommended a dividend of Rs.3.50 per Equity Share of face value of Rs.10.00 each for the financial year 2015-16, same as declared and paid in the previous year. The dividend would be payable to those Members whose names shall appear in the Register of Members as on Book Closure date. The dividend including dividend distribution tax, surcharge and education cess would absorb a sum of Rs.1.01 crores (previous year - Rs. 1.01 crore). FINANCE The fund position of the Company stayed comfortable throughout the financial year 2015-16. As a result, after meeting routine capital expenditure and working capital requirements to support the operations, net interest income for the year was Rs.0.57 crore against Rs.0.59 crore for the previous year. CURRENT YEAR'S REVIEW With positive signal for a good monsoon the current year has started on optimistic note in tractor and agri business. Growth in auto industry is also seems promising. The Company's business is expected to move in line with industry trend and Company is also exploring new business opportunities to generate additional revenue. DIVESTMENT BY MAJOR SHAREHOLDERS As members may be aware, Mahindra & Mahindra Limited, one of the promoters of the Company ("the Seller") entered into a Share Purchase Agreement on 16th October 2015 with b4S Solutions Private Limited ("the Acquirer") for sale of their entire equity stake of 71.19% held in the Company at Rs. 145.50 per share. The acquirer subsequently acquired the entire equity stake of 2.99% of other promoter, Punjab State Industrial Development Corporation (PSIDC), held in the Company, at the same rate. Thereafter, pursuant to SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011, the acquirer had also made an open offer to the shareholders of the Company for acquiring another 25.82% equity shares of the Company. The entire process was successfully completed on 1st February 2016, taking b4S Solutions Private Limited's equity holding in the Company to 88.28% and they became promoter of the Company. M/s. b4S Solutions Private Limited, is a leading manpower services providing Company, engaged in the business of manpower consultancy, outsourcing, security staff, contract labour, and managing operations & maintenance in telecom industry. Your Directors believe that the acquisition by b4S Solutions Private Limited in SAL will bring in a new era of growth and progress for all the stakeholders of SAL. SHARE CAPITAL The Issued and Paid-up Share Capital of the Company remained unchanged during the year and stood at Rs.2.40 crores at the end of the financial year 2015-16. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS During the year under review, the Company has not extended any loans, given guarantees or provided securities and made investment pursuant to Section 186 of the Companies Act, 2013. MANAGEMENT DISCUSSION AND ANALYSIS REPORT A detailed analysis of the Company's performance is discussed in the Management Discussion and Analysis Report, which forms part of this Annual Report. CORPORATE GOVERNANCE A report on Corporate Governance along with a certificate from the Auditors of the Company regarding the compliance of conditions of Corporate Governance as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report. INDUSTRIAL RELATIONS Industrial relations were cordial throughout the year under review. SAFETY, HEALTH AND ENVIRONMENTAL PERFORMANCE Your Company is committed towards excellence in Safety, Occupational Health and Environment. This is also to ensure sustainable business growth. The Company has a well-established Safety, Occupational and Environmental Policy which inter alia ensures safety of public, employees, plant and equipment by ensuring compliance with all statutory rules and regulations on regular basis. Your Company also imparts training to its employees as per the predefined training calendar, carries out statutory safety audits of its facilities as per legal requirement and promotes eco-friendly activities. In reiteration of its commitment to improve the well being of the employees, Medical Check-ups, both curative and preventive have been organized regularly, including educating the employees on Industrial Hygiene at the work place. The Company's Plant is ISO 14001 : 2004 and OHSAS 18001 : 2007 certified. CORPORATE SOCIAL RESPONSIBILITY Keeping with the Company's core value of Good Corporate Citizenship, your Company is committed to display its social responsibility by taking various initiatives benefiting the society at large. These initiatives include organizing plantation of trees at various locations, awareness campaign on ill effects of tobacco, organizing medicines, beds and sheets to destitute people's home etc. During the year under review, the Company was not covered under the provisions of Section 135 of the Companies Act, 2013 related to Corporate Social Responsibility. SUSTAINABILITY INITIATIVE Your Company is conscious of its responsibility towards preservation of natural resources and continuously taking various initiatives to reduce the consumption of electricity and water. DIRECTORS Punjab State Industrial Development Corporation Limited (PSIDCL) withdrew the nomination of Mr. A.K. Mahajan as their representative on the Company's Board. Accordingly, Mr. A.K. Mahajan ceased to be a Director of the Company with effect from 12th January 2016. Consequent upon their resignations, Mr. Hardeep Singh, Chairman of the Board of Directors of the Company and Mr. Rajesh Jejurikar, Mr. S. Durgashankar, and Mrs. Neera Saggi ceased to be Directors of the Company with effect from 3rd February, 2016. Your Board has placed on record its deep appreciation of notable contributions of Mr. Hardeep Singh, Mr. Rajesh Jejurikar, Mr. S. Durgashankar, and Mrs. Neera Saggi, as Directors of the Company. Mr. Rama Kant Sharma, Mr. Jamil Ahmad, Mr. Jeevan Mahaldar, and Mrs. Namrata Jain were appointed as Additional Directors of the Company with effect from 3rd February, 2016, and shall hold office up to the date of upcoming Annual General Meeting. The Company has received notices under Section 160 of the Companies Act, 2013 from member signifying intention to propose Mr. Rama Kant Sharma, Mr. Jamil Ahmad, Mr. Jeevan Mahaldar, and Mrs. Namrata Jain, for the office of Director at the forthcoming Annual General Meeting. Mr. Jai Bhagwan Kapil and Mr. Rajiv Sharma were appointed as Additional Directors of the Company with effect from 3rd February, 2016, and shall hold office up to the date of upcoming Annual General Meeting and the Company has received notices under Section 160 of the Companies act 2013 from member signifying intention to propose Mr. Jai Bhagwan Kapil and Mr. Rajiv Sharma for the office of Independent Director from the said date at the forthcoming Annual General Meeting. The Company has received declarations from the Independent Directors of the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013. The Board of Directors further at its meeting held on 4th February 2016 has approved the appointment of Mr. Rama Kant Sharma and Mr. Jeevan Mahaldar as Managing Director and Executive Director respectively for a period of 3 years with effect from 4th February, 2016. Appropriate resolutions for their appointment have been proposed for the approval of the shareholder at the forthcoming Annual General Meeting. Consequent to the resignation of Mr. Hardeep Singh from Chairmanship, the Board of Directors in their meeting held on 4th February, 2016 has appointed Mr. J.B. Kapil as Chairman of the Company in place of Mr. Hardeep Singh. As the entire Board was reconstituted during the year, hence, there is no Director, who shall retire by rotation at the forthcoming Annual General Meeting. EVALUATION OF THE BOARD Pursuant to the provision of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a system has been put in place to carry out performance evaluation of the Board, its Committees and individual Directors. Criteria for performance evaluation is covered in the Corporate Governance Report. REMUNERATION POLICY The Board has, on the recommendation of the Nomination & Remuneration Committee (NRC), framed policies on appointment of Directors and Senior Management and their remuneration. The remuneration policy is covered in the Corporate Governance Report. DIRECTORS' MEETINGS A calendar of Meetings is prepared and circulated in advance to the Directors. During the year, five meetings of Board and five meetings of the Audit Committee were convened and held. The details are covered in the Corporate Governance report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. The Independent Directors of the Company meet at least once in every financial year without the presence of Non-Independent Directors, Executive Directors and any other management personnel. The meeting(s) is conducted in an informal manner to enable the Independent Directors to discuss matter pertaining to, inter alia, review of performance of Non-Independent Directors and the Board as a whole, assess the quality, quantity and timeliness of flow of information between the Company's management and the Board that is necessary for the Board to effectively and reasonably perform their duties. During the year, one meeting of Independent Directors was held. DIRECTORS' RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors in terms of Section 134(5) of the Companies Act, 2013 state that: a) in the preparation of Annual Accounts, for the financial year 31st March, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departure, if any; b) in the selection of the accounting policies, consulted the Statutory Auditors and applied them consistently and made judgment and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit of the Company for the year ended on that date c) proper and sufficient care has been taken for 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; d) the Annual Accounts have been prepared on a going concern basis; e) internal financial controls to be followed by the Company have been laid down, which are adequate and operating effectively; f) proper systems have been devised to ensure compliance with the provisions of all applicable laws and such systems are adequate and operating effectively. AUDIT COMMITTEE The Audit Committee was reconstituted during the year and currently comprises of the following Directors viz. Mr. Jai Bhagwan Kapil (Chairman of the Committee), Mr. Rajiv Sharma and Mr. Jeevan Mahaldar. Except Mr. Jeevan Mahaldar, all the members are Independent Directors. The Company Secretary of the Company is the Secretary of the Committee. All the recommendations made by the Audit Committee were accepted by the Board. KEY MANAGERIAL PERSONNEL Consequent to their resignations, Mr. Arun Arora, Manager, Mr. Rajesh Kumar Kapila, Company Secretary and Mr. Kulvinder Singh Dhiman, Chief Financial Officer from their respective positions, ceased to be Key Managerial Personnel of the Company with effect from 3rd February, 2016. The Board has appointed Mr. Rama Kant Sharma as Managing Director, Mr. Jeevan Mahaldar as Executive Director, Mr. Gagan Kaushik as Company Secretary, and Mr. Jagdish Lal as Chief Financial officer with effect from 4th February 2016 and also designated them as Key Managerial Personnel of the Company as per Companies Act, 2013. INTERNAL FINANCIAL CONTROL SYSTEMS The Company has laid down adequate internal financial controls with reference to financial statements, commensurate with the size, scale and complexity of its operations. During the year, such controls were tested and no reportable material weakness in their operating effectiveness was observed. Pursuant to the requirement of Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is having risk management framework covering identification, evaluation, and control measures to mitigate the identified business risk. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has a vigil mechanism through Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The details of the policy is explained in the Corporate Governance Report and is also posted on the website of the Company. RELATED PARTY TRANSACTIONS All related party transactions that were entered during the financial year 2015-16 were in the ordinary course of the business and were on arm's length basis. There were no materially significant related party transactions made by the Company which may have a potential conflict of the interest with its Promoters, Directors, Key Managerial Personnel or other persons. All such Related Party Transactions are placed before the Audit Committee for approval, wherever applicable. The policy on materiality of and dealing with related party transactions as approved by the Audit Committee and the Board of Directors is uploaded on the website of the Company and the link for the same is "<http://www.swarajenterprise.com/AutoNCC.asp>". Details of related parties and transactions with them during the year are covered at Note 2.28 of the Annual Accounts. AUDITORS M/s J.S. Chopra & Associates, Chartered Accountants, Statutory Auditors of the Company, hold office till the conclusion of the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. They have expressed their willingness to act as Auditors of the Company, if appointed, and have further confirmed that the said appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment. The Members are requested to appoint Auditors and fix their remuneration. The Audit Report issued by the Auditors of the Company forms part of the Annual Report and does not contain any qualification, reservation or adverse remark. COST AUDITORS Pursuant to Section 148(3) of the Companies Act, 2013 read with The Companies (Cost Records and Audit) Amendment Rules, 2014, the Board of Directors on the recommendation of Audit Committee has appointed M/s Aggarwal Vimal & Associates, Cost Accountants, as the Cost Auditors of the Company for the financial year ending on 31st March, 2017. M/s Aggarwal Vimal & Associates have confirmed that their appointment, if approved, will be within the limits of Section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from disqualification specified under Section 141(3) of the Companies Act, 2013. The Audit Committee has also received a certificate from the Cost Auditors certifying their independence and arm's length relationship with the Company. SECRETARIAL AUDIT Pursuant to Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s A.Arora & Co., Company Secretaries in practice (CP No. 993) to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit is annexed herewith as Annexure A. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. DEPOSITS The Company has not accepted deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. The Company has not made any loans/advances, and investment in its own shares, associates, etc. during the year. EXTRACT OF ANNUAL RETURN The details forming part of the extract of the Annual Return in Form MGT-9 is annexed herewith as Annexure B. ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Particulars in respect of the above activities stipulated under Section 134(3)(m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure C. LISTING WITH BSE LIMITED As shared in the last year's Directors Report, the Securities and Exchange Board of India (SEBI) vide its order dated 19th November, 2014 withdrew the recognition of Delhi Stock Exchange where Company's equity shares were listed exclusively. In the back drop of these developments, the Company took the initiatives to get its equity shares listed at one of the nationwide Stock Exchange and accordingly got the Company's equity shares listed at BSE Limited (BSE). The trading in Company's equity shares at BSE started with effect from 23rd September 2015. The Securities and Exchange Board of India, by replacing the earlier listing agreement had issued SEBI (Listing Obligations and Discloser Requirements) Regulations, 2015 effective from 1st December, 2015. Accordingly, your Company has executed fresh listing agreement with BSE Limited. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Companies Act, 2013, the Report and Accounts are being sent to the Members and others entitled thereto, excluding the information on employees' particulars which is available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard. GENERAL The Managing Director and the Executive Director are not receiving any commission neither from the Company nor from its Holding Company. The Company has no subsidiary Company. Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions/events happened on these items during the year under review: a. issue of equity shares with deferential voting rights or sweat equity or stock options. b. significant or material orders passed by the Regulators / Courts/ Tribunal which impact the going concern status of the Company and its future operations. c. voting rights which are not directly exercise by the employees in respect of shares for the subscription/ purchase for which loan was given by the Company (as there is no scheme pursuant to which such person can beneficially hold shares as envisaged under section 67(3)(c) of the Companies Act, 2013). d. Fraud reporting by the auditors. ACKNOWLEDGMENT Your Directors would like to thank various Government Authorities and Banks for the cooperation extended by them and also take this opportunity to express their deep sense of appreciation to all the stakeholders of the Company for the support provided by them during the year. The Directors also place on record the appreciation to all the employees of the Company for the efforts put in by them. FOR AND ON BEHALF OF THE BOARD J.B. KAPIL Chairman Place : Ghaziabad Date : 10th May, 2016 |