BOARD'S REPORT Dear Members, Your Directors have great pleasure in presenting the 30th Annual Report together with the Audited Statement of Accounts for the financial year ended March 31, 2015. OPERATIONS & STATE OF THE COMPANY’S AFFAIRS The Company has achieved a sales turnover, including other income, of Rs. 179,197.05 lacs registering a growth of 2.94 per cent vis-a-vis Rs. 174,074.41 lacs in the previous year. The profit before tax in the current year was at Rs. 10,630.71 lacs as compared to Rs. 8,018.54 lacs in the previous year registering a growth of 32.58 per cent. TRANSFER TO GENERAL RESERVE The Board proposes to transfer an amount of Rs. 2,000 lacs to General Reserve. The balance amount of Rs. 16,364.50 lacs (Previous year Rs. 12,905.08 lacs) will be retained as surplus in the statement of Profit and Loss. DIVIDEND Your directors are pleased to recommend a dividend of 200 per cent (i.e. Rs. 4/- Per equity share of Rs. 2/- each fully paid up) for the financial year ended March 31, 2015 amounting to Rs. 1,599.8 lacs in aggregate as compared to 175 per cent i.e. Rs. 3.50/- per share in the corresponding last year. Dividend will be tax free in the hands of shareholders, as the Company will bear the dividend distribution tax of Rs. 325.68 lacs (Previous year Rs. 237.90 lacs). The dividend, if approved, at the Annual General Meeting shall be payable to the shareholders registered in the books of the Company and the beneficial owners whose names are furnished by the depositories, determined with reference to the book closure from August 08, 2015 to August 26, 2015 (both days inclusive). SHARE CAPITAL & DEBENTURES The paid up Equity Share Capital as on March 31, 2015 was Rs. 7.99 Crore. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options or sweat equity. And also the Company has not accepted or repaid any Debentures, Preference Share Capital and any Bond & Security during the financial year, and none of the Directors of the Company hold any shares or security of the Company. The Company does not has any Debentures, Preferential Shares as on March 31, 2015. FINANCE Cash and cash equivalent as at March 31, 2015 was Rs. 156.41 lacs. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS The company has neither given any guarantee nor provided any security covered under the provision of Section 186 of the Companies Act, 2013. The Company has made investments in Mutual funds and given loan/advance to its vendors during ordinary course of business. Please refer note numbers 10 and 12 to the financial statements. CORPORATE GOVERNANCE Report on Corporate Governance and Management Discussion & Analysis Report along with Certificate of the Auditors of your Company pursuant to clause 49 of the Listing Agreement with the Stock Exchanges, have been included in this Report as Annexure-A. Your Company has been practicing the principles of good Corporate Governance over the years. In terms of part IX of Clause 49 of the Listing Agreement, Certificate of CEO/CFO is also enclosed as a part of the Report. The Board of Directors has laid down a Code of Conduct to be followed by all the Directors and members of Senior Management of your Company. The Board of Directors support the broad principles of Corporate Governance. In addition to the basic governance issues, the Board also lays strong emphasis on transparency, accountability and integrity. AUDITORS M/s S.R. Batliboi & Co.LLP, Chartered Accountants, Gurgaon, the Auditors of the Company, appointed at 29th Annual General Meeting from the date of 29th Annual General Meeting up to the date of 32nd Annual General Meeting of the Company. Now at the 30th Annual General Meeting of the Company, their appointment will be the subject to ratification by shareholders of the Company. The Company has also received certificate from the auditors to the effect that their ratification of appointment, would be in accordance with Section 139 & 141 of the Companies Act, 2013 and the rules framed thereunder. The Board recommends their ratification of appointment for your approval. SECRETARIAL AUDITORS Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Satyender Kumar & Associates, a proprietorship firm of Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as Annexure -B. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO The information pursuant to Section 134(3)(m) of the Companies Act, 2013 and the rules made thereunder regarding Conservation of Energy, Technology Absorption and Foreign Exchange earnings & outgo are given in Annexure-C which forms part of Board's Report. EXTRACT OF ANNUAL RETURN The extract of annual return in Form MGT 9 as required under Section 92(3) and Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as an Annexure-D to this Report. PARTICULARS OF EMPLOYEES The statement of particulars of employees as per Section 197 of the Companies Act, 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, for the year ended March 31, 2015, is annexed hereto and forms part of this Report. Annexure-E CORPORATE SOCIAL RESPONSIBILITY INITIATIVES As part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken projects in the areas of Education, Livelihood, Health, Water and Sanitation. These projects are largely in accordance with Schedule VII of the Companies Act, 2013. Please refer Annexure-F to Board's Report The Company was required to spend Rs. 156 lacs under Corporate Social Responsibility activities (CSR Activities) but Company could spend only Rs. 28.33 Lacs under CSR Activities. As the CSR is a new concept for the Company so Company is trying to develop its CSR activities. Your Company will try to spend whole amount to be spent on CSR activities during the financial year 2015-2016. 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 of the company to which the financial statements relate and the date of the report. ENVIRONMENT COMPLIANCE We believe that "waste is a precious resource kept in a wrong place". We further believe that "there is no waste as per the law of the nature". Hence from the solid waste like Iron & Steel from old scrap machines, we are collecting the raw material and we are manufacturing "Lean and Low cost" machines with a philosophy of Easy to run, Easy to maintain, Easy to clean and Zero accident by meeting all the quality and productivity standard. Everything is done in house starting from design up to finishing of the machine. This concept of reuse of metallic waste is highly appreciated by CII, ACMA and international experts of our Japanese Collaborator. By Regular training for workers and staff to prevent accident related to mechanical, electrical, chemical, physiological and psychological safety the Company has made "Zero incidents" as acceptable standard. Hazard Identification and Risk Assessment (HIRA) is our primary focus to mitigate and prevent the abnormalities. Because of our dedicated and committed efforts in continual improvement of Safety, Health and Environment area, we had received two National Awards from Ministry of Labour and Employment, Government of India for safety. The Company is a regular member of Haryana Environment Management Society. The Company has started Green Vendor Development Programme (GVDP) since 2009-10. The aim of the project is to conserve water and Energy, Minimize generation of waste, terminate hazardous chemicals with non-hazardous chemicals, minimize carbon foot print, generate pollution prevention awareness throughout the plant and to achieve 100 percent legal compliance. The Company is rigorously improving to create a better place for our next generation. TPM The Company has taken up the journey of Total Productive Maintenance (TPM) with the help of JIPM (Japan Institute of Plant Maintenance) Japan and CII, TPM Club India. Major objectives of TPM are to increase (PQCDSME) Productivity, to improve Quality, to reduce Costs, to ensure in time Delivery, to increase Safety, to increase profitability, to build Morale and to protect environment by formation of small cross functional work groups and to improve overall Plant efficiency. The other objectives are to procure and install maintenance free plant and machinery; and to achieve zero defects, zero break down, zero losses and zero accidents. In nutshell, TPM is to identify 16 types of Losses & converts them into Profit. We have achieved TPM Excellency Award "category A" for Gurgaon and Manesar Plant in the years 2008 and 2010 respectively from Japan Institute of Plant Maintenance. We have been awarded by JIPM TPM Excellence Consistency Award for both Gurgaon & Manesar Plants in the year 2013. Now we have started TPM Journey to our Haridwar Plant. Lean TPM Activities: We have clubbed TPM with lean manufacturing system. Our Company has conducted Lean Manufacturing System (Value Stream Mapping) Work Shop. We have converted huge & complicated machines to Lean Machines. These machines consumes very less Electricity, occupies less space, takes very less inputs like consumables, manpower, tools, oils, compressed air, less set-up time etc. These machines are 5S Machines. Simple, Small, Slim, Speed & Safe and helps us in reducing Cost of manufacturing. ISO/TS 16949 ACCREDITATION Your Company's manufacturing facilities located at Gurgaon, Haridwar and Manesar continue to maintain and uphold the prestigious ISO/TS 16949:2009, ISO 14001:2004 and OHSAS 18001: 2007 (Occupational Health & Safety Assessment Series) certifications from reputed leading Indian and International Certification Institutions. These certifications help in continuous improvements, besides emphasis being laid on prevention of defects, reduction of wastes and variation in supply chain management. LISTING The shares of your Company are listed at The National Stock Exchange of India Limited and BSE Limited, and pursuant to Clause 38 of the Listing Agreement, the Annual Listing fees for the year 2015-16 have been paid to them well before the due date i.e. April 30, 2015. Annual Custody/Issuer fee for the year 2015-16 will be paid by the Company to NSDL and CDSL on receipt of the invoices. HUMAN RESOURCES Preventive Human Resources management is the strength of our Company and over a period of time, we have changed our vision of employees from "Human Resources Management" to "Human Capital Management". Your Company believes that employees form the fulcrum of growth and differentiation for the organization. The Company recognizes that people are its principal assets and that to continued growth is dependent upon the Company's ability to attract and retain quality people. The total headcounts were 3,401 at the end of the year as compared to 3,525 of the previous year. The Company encourages long-term commitment to the Company by rewarding its people for the opportunities they create and the value generated for customers and shareholders. The Company conducts several training programmes to upgrade the skills of the workforce. Many initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes which has helped the organization achieve higher productivity levels. A significant effort has also been undertaken to develop leadership as well as technical/ functional capabilities in order to meet future talent requirement. BUSINESS RISK MANAGEMENT The Company has a Risk Management Policy to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company's competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting. The Company regularly conducts a study to develop a comprehensive 360° view on the opportunities, risks and threats to the business. These include areas such as market trends, new competition, changing customer preferences, disruptions in supplies, product development, talent management etc. The Board has identified following risks:- Intensifying Competition, Declining margins, Imposition of strict environmental / safety / regulatory regulations, Increase in raw material/component prices , Dependence on Collaborators , Over dependence on limited user segment base, Economic downturn, Risk of natural or manmade disasters, Product liability / recall, Single vendor dependence for critical components , Investment risks in expansion projects, Sales Catering only to Domestic Market, Over Dependence on few customers base, Retention & development of personnel and Inappropriate addressing of customer grievances. We through qualitative products and brand image, import only in case of cost advantage, regular improvement in productivity, controls over overhead and labour cost through a robust control of approvals, internal audit of environmental safety and regulatory compliance, localization of components, insurance, TS 16949 certification, TPM certification, regular development of alternate vendors where only single source, capturing customer complaints and response to them, have effective risk mitigating plans. VIGIL MECHANISM / WHISTLE BLOWER POLICY The Company has a vigil mechanism policy to deal with instance of fraud and mismanagement, if any. The details of the Policy is explained in the Corporate Governance Report and also posted on the website of the Company. The website link is given below- http://www.munjalshowa.net/pdf/Vigil%20Mechanism%20%20Whistle%20Blower%20Policy.pdf RECOMMENDATION OF THE AUDIT COMMITTEE During the year, there was no such recommendation of the Audit Committee which was not accepted by the Board. Hence, there is no need for the disclosure of the same in this Report. There is no change in the nature of the business of the Company during the Financial Year 2014-15 DIRECTORS & KEY MANAGERIAL PERSONNEL Mr. Matsui Masanao (DIN 00340218) has been appointed as an additional director under Section 161(1) and any other applicable provisions of the Companies Act, 2013 and the rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force) read with Article 89 of the Articles of Association of the Company w.e.f May 22, 2015. Mr. Ashok Kumar Munjal (DIN 00003843) non executive director of the Company is liable to retire by rotation at the ensuing Annual General Meeting. Mr. Ashok Kumar Munjal being eligible has offered himself for re-appointment. Mr. Ashok Kumar Munjal aged about 64 years old, serves as the Managing Director of Sunbeam Auto Private Limited. Mr. Munjal has 33 years of experience in the field of engineering industry, investment, finance and auto component. He serves as a Director in Ledpra Infracon Private Limited, Radha Kishan Buildwell Private Limited And Privilege Estates Private Limited w.e.f. October 13, 2014. He is also a Director in Orient Craft Limited, SKH Education Private Limited., Chandernagar Chemicals And Minerals Private Limited, Hero Auto Components Private Limited, H & H Industries Private Limited and Sunglow Industries Private Limited. Mr. Munjal is a Commerce and Law Graduate from Punjab University, Chandigarh. He does not hold any share in the Company. He is the Member of Audit Committee and Share Transfer/Stakeholder Relationship Committee of the Company. He is also the member of the Audit Committee of Orient Kraft Limited. He is holding the position of directorship in twelve Companies including Munjal Showa Limited. Your directors recommend his re-appointment at the ensuing Annual General Meeting. Mr. Matsuura Katsuhiko (DIN 05276954) has resigned as Director of the Company w.e.f May 22, 2015. The Board placed its appreciation for the valuable services rendered by Mr. Matsuura Katsuhiko during his tenure as Director of the Company. The shareholders approved the variation in the terms of appointment of Mr. Yogesh Chander Munjal (DIN 00003491) & Mr. Isao Ito (DIN 05134031) at the 29th Annual General Meeting of the Company. The Board of Directors in its meeting held on May 22, 2015 after recommendation of Nomination and Remuneration Committee recommended to the shareholders variation in the Terms of Appointment of Mr. Yogesh Chander Munjal & Mr. Isao Ito w.e.f. September 1, 2015. Mr. Pankaj Gupta was looking after dual responsibility of Chief Financial Officer and Company Secretary of the Company after the resignation of Mr. Mahesh Taneja from the post of Chief Financial Officer and the company was searching for a Company Secretary who will take care of all secretarial functions. After completion of search Mr. Pankaj Gupta resigned from the post of Company Secretary & Compliance Officer and retained the post of Chief Financial Officer of the Company w.e.f. February 06, 2015. Mr. Saurabh Agrawal was appointed as Company Secretary & Compliance Officer of the Company w.e.f. February 06, 2015. The following employees were designated as whole-time key managerial personnel: a. Mr. Yogesh Chander Munjal- Managing Director b. Mr. Isao Ito- Joint Managing director c. Mr. Pankaj Gupta- Chief Financial Officer d. Mr. Saurabh Agrawal- Company Secretary Pursuant to the section 149, 150, 152 of the Company Act 2013, the rules framed thereunder and the Listing Agreement, All the Independent Directors have been appointed for five years w.e.f. April 01, 2014 to March 31, 2019. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement. The members of the Company at 29th Annual General Meeting held on August 28, 2014 approved the appointments of Mrs. Charu Munjal (DIN 03094545) as a non-executive Non-Independent Director who is liable to retire by rotation and of Mr. Krishan Chand Sethi, Mr. Vinod Kumar Agrawal, Mr. Devi Singh, Mr. Surinder Kumar Mehta and Mr. Nand Dhameja as Independent Directors who are not liable to retire by rotation. The information under rule 5(1) of Companies (Appointment & Remuneration) Rules 2014 is given in Annexure D-1 SUBSIDIARY COMPANIES, JOINT VENTURES OR ASSOCIATE COMPANIES The Company neither has any Subsidiaries, joint ventures or associate companies nor any company have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year. 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 other committees of the Board i.e. Audit Committee, Nomination & Remuneration Committee, Risk Management Committee and Share Transfer/ Stakeholders Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report. REMUNERATION POLICY AND REMUNERATION TO THE DIRECTORS 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 Nomination and Remuneration Policy has been included in this Report as Annexure-G. The details of remuneration, sitting fee etc. paid to directors are given in Corporate Governance Report. (Please refer point no. IV of Corporate Governance Report) MEETINGS A calendar of Meetings is prepared and circulated in advance to the Directors. During the year four Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Listing Agreement. (Please refer point no. I & II of Corporate Governance Report) DIRECTORS' RESPONSIBILITY STATEMENT Your Director's state that: a. in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same; b. the Directors have selected such accounting policies and applied them consistently and made judgements 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 March 31, 2015 and of the profit of the Company for the year ended on that date; c. the Directors have taken proper and sufficient care 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; d. the Directors have prepared the annual accounts on a 'going concern' basis; e. 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 f. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. RELATED PARTY TRANSACTIONS All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were on arm's length basis and were in the ordinary course of business. During the year the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material. Hence, requirement of Form AOC-2 as required under section 188(1) of the Companies Act, 2013 is not applicable to the Company. All transactions with related parties were placed before Audit Committee and Audit committee has given omnibus approval for repetitive and foreseen transactions. The Board also noted these transactions on quarterly basis. The detail with related party transactions is given in note number 28 and 28A of financial statement. The Company has developed a policy on Related Party Transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company's website. And the link of such policy is given below: http://www.munjalshowa.net/pdf/Related%20Party%20Transaction%20Policy.pdf None of the Directors has any pecuniary relationships with the Company. EXPLANATIONS OR COMMENTS BY THE BOARD ON QUALIFICATION, RESERVATION OR ADVERSEREMARK OR DISCLAIMER MADE The observations of the Auditors in their report read with the notes to accounts are self-explanatory and do not require any specific comments. However as pointed out by the Auditors in annexure to their report at point number vii(a), the slight delay in payment of undisputed statutory dues in few cases was on account of finalization of accounts beyond the due date of statutory dues and the same were paid with interest. There is no other qualification, reservation or adverse remark or disclaimer made by the auditor in his report; and the company secretary in practice in his secretarial audit report. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY The Company has a comprehensive system of internal control to safeguard the Company's assets against any loss from unauthorized use and ensure proper authorization of financial transactions. The Company has internal control systems commensurate with the size and nature of the business and has experienced personnel positioned adequately in the organization to ensure internal control processes and compliances. The Company takes abundant care in designing, reviewing and monitoring regularly the working of internal control systems and their compliances for all important financial internal control processes. The Audit findings are reported on quarterly basis to the Audit Committee of the Board headed by a Non-executive Independent Director. The Company has robust ERP systems based on SAP platform. This ensures high degree of systems based checks and controls. The Company maintains a system of internal controls designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the reliability of financial controls and compliance with laws and regulations. GENERAL Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review: 1. Details relating to deposits covered under Chapter V of the Act. 2. Issue of equity shares with differential rights as to dividend, voting or otherwise. 3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme. 4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations in future. Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. ACKNOWLEDGEMENT Your Directors place on record their appreciation of the co-operation and support extended to the Company by Government of India, State Governments of Haryana and Uttrakhand, other local authorities, bankers, suppliers, customers and other stakeholders whose continued support has been a source of strength to the Company. The continued dedication and sense of commitment shown by the employees at all levels during the year deserve special mention. The Directors also place on record their appreciation for the valuable assistance and guidance extended to the Company by Showa Corporation, Japan and for the encouragement and assurance, which our collaborator has provided from time to time for the growth and development of the Company. The Directors also take this opportunity to express their deep gratitude for the continued co-operation and support received from its valued shareholders. For and on behalf of the Board Yogesh Chander Munjal (Managing Director) (DIN 00003491) B-175, Greater Kailash, Part I, New Delhi, 110048 Krishan Chand Sethi (Director) (DIN 00004471) 9/304 East End Apartments,Mayur Vihar Extn. Phase I, New Delhi, 110096 Place: New Delhi Date: May 22, 2015 |