SONA BLW PRECISION FORGINGS LIMITED

(CIN:U27300DL1995PLC073456)

Registered Office- GF-19, Indra Prakash

21, Barakhamba Road

New Delhi 110 001

Tel. No. - 011-40348813

Email -raajesh.gupta@sonagroup.com

Website -www.sonagroup.com

DIRECTORS' REPORT

To The Members,

Your Directors have pleasure in submitting their 22ndAnnual Report of the Company together with the Audited Statements of Accounts for the year ended 31stMarch, 2018:

1.  FINANCIAL RESULTS

        (Rs. In Million)

Particulars	2017-18	2016-17
Sales and other Income	6,158.51	5,053.62
Profit before interest and Depreciation	1,710.06	1,088.41
Less: Finance Cost	181.04	194.23
Less: Depreciation	223.38	171.79
Profit Before Tax	1,305.63	722.39
Less: Exceptional Items	-	16.53
Less : Provision for Tax	423.16	210.49
Increase / (Decrease) in Deferred Tax Liability	22.57	46.67
Profit After Tax	859.89	448.70
Add : Profit Brought Forward	1,617.60	1,168.90
Profit available for appropriations	2,477.50	1,617.60
Appropriations
Proposed Dividend	NIL	NIL
Dividend Tax Payable / Paid	NIL	NIL
Transfer to General Reserve	NIL	NIL
Adjustment of Depreciation Charge	NIL	NIL
Balance Carried to Balance Sheet	2,477.50	1,617.60

2. STATE OF COMPANIES AFFAIRS

The financial year 2017-18, has again been a stellar year from operational point of view. The sales of the Company on standalone basis during this year was higher by 21.86% (approx.) to Rs. 6,158.51 million as against Rs. 5,053.62 million of last financial year (2017-2018), the EBITDA during the year was higher by 57.11% to Rs. 1,710.06 million as against Rs. 1,088.42 million of last financial year. During this year, the exports of the Company grew by 14.24% to Rs. 1,857.24 million as against 1,625.60 million during the last financial year.

3.  DIVIDEND andAMOUNT PROPOSED TO BE CARRIED TO ANY RESERVE

Keeping in view the requirement of resources to meet the expansion plans of the Company, your Directors do not recommend any dividend for the financial year ended 31stMarch, 2018.

The Board of directors of the Company do not propose to carry any amount to reserve other than transfer of undistributed profit to surplus in statement of Profit and Loss.

4.  TRANSFER OF UNCLAIMED DIVIDEND TO INVESTOR EDUCTION AND PROTECTION FUND

Since there was no unpaid/unclaimed Dividend declared and paid last year(s), the provisions of Section 125 of the Companies Act, 2013 do not apply.

5.  SHARE CAPITAL

As at 31stMarch, 2018, the paid up share capital of the Company was Rs. 277,183,760/- divided into 27,71,8376 Equity Shares of Rs. 10/- each. There was no change (increase/decrease) in the share capital of the Company during the year.

The Company has not bought back any of its securities during the year under review. The Company has also not issued any Sweat Equity Shares / bonus shares / Shares under Employees Stock Options Scheme during the year under review.

6.  SONA BLW GROUP STATUS

The Company has following Subsidiaries /Associate Companies:

Subsidiary Company:

1)   Sona Holding B.V, The Netherlands.

Step- Down Subsidiaries:

1) Sona AutoComp Germany GmbH, Munchen, Germany

2) Sona BLW Prazisionsschmiede GmbH, Munchen, Germany

3) Sona AutoComp USA LLC, Wilmington, Delaware, USA

4)  Sona BLW-Hilfe GmbH, Munchen, Germany

5)  Sona BLW Hungary Kft., Budapest, Hungary

6)  Sona BLW Driveline LLC, Troy, Michigan, USA

Associate Company:

1)  Sona Skill Development Centre Limited.

Out of the above subsidiaries, only Sona Autocomp Germany GmbH, Germany and Sona BLW Prazissionchmiede GmbH, Germany andSona BLW Hungary Kft., Hungary are the operating companies. During the year the operations of all these entities in general continued to remain under stress. The management of these subsidiary companies are making all efforts to improve the financial position of the companies and it is expected that the financial health of these subsidiaries will improve in near future.  

7.  FIXED DEPOSITS

The Company has neither accepted nor renewed any deposits during the year under review.

8.  MATERIAL CHANGES AND COMMITMENT IF AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THIS FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT

No material changes and commitments affecting the standalone financial position of the Company occurred from the end of the financial year 2017-18 till the date of this report. 

9.  ANNUAL RETURN

The extracts of Annual Return pursuant to the provisions of Section 92 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is furnished in Form MGT-9 attached to this Report asAnnexure A.

10.  NUMBER OF BOARD MEETINGS HELD DURING THE YEAR

As on the date of this report, the Board of the Company consists of the following directors:

1)  Mrs. Rani Kapur

2)  Mr. Sunjay Kapur

3)  Mr. Siddharth Pradip Kothari

4)  Mr. Vikram Verma Vadapalli

5)  Mr. Jurgen Klaus Theodor Ziegler

6)  Mrs. Pallavi Joshi Bakhru

7)  Mrs. Bhaswati Mukherjee.

During the FY 2017-18, the Company had Five (5) Board meetings on 6thJune, 2017, 11thAugust, 2017, 28thSeptember, 2017, 10thNovember, 2017 and 12thFebruary, 2018.

In terms of the provisions of Section 160(1) of the Companies Act, 2013, the Company has received notice from a member, proposing the candidature of Mr. Sunjay Kapur for appointment as Director on the Board of the Company. In view of his contribution in growth and development of Company, Board recommends his appointment.

11.  COMPOSITION OF CORPORATE SOCIAL RESPONSIBILITY COMMITTEE MEETING

The Corporate Social Responsibility Committee consists of the following members:

1)  Mr. Sunjay Kapur, Chairman

2)  Mr. Siddharth Pradip Kothari, Director

3)  Mr. JurgenKlaus Theodor Ziegler, Independent Director

4)  Mrs. Bhaswati Mukherjee, Independent Director.

During the financial year financial year 2017-18, the Company held 2 (Two) meetings of Corporate Social Responsibility Committee on 10thNovember, 2017 and 12thFebruary, 2018.

12.  COMPOSITION OF AUDIT COMMITTEE and recommendations thereof not accepted by board, if any

The Audit Committee consists of the following members:

1)  Mrs. Pallavi Joshi Bakhru, Independent Director

2)  Mr. JurgenKlaus Theodor Ziegler, Independent Director;

3)  Mr. Sunjay Kapur, Director, Managing Director

4)  Mrs. Bhaswati Mukherjee, Independent Director

5)  Mr. Siddharth Pradip Kothari, Nominee - JM Financial

During the financial year 2017-18, the Company held 5 (Five) meetings of the Audit Committee meetings on 6thJune, 2017, 11thAugust, 2017, 28thSeptember, 2017, 10thNovember, 2017 and 12thFebruary, 2018. 

All the recommendations of Audit Committee were accepted by the Board.

13.  COMPOSITION OF Nomination and remuneration COMMITTEE

As on the date of this report, the Nomination and Remuneration Committee consists of the following members:

1)  Mrs. Pallavi Joshi Bakhru, Independent Director

2)  Mrs. Bhaswati Mukherjee, Independent Director

3)  Mr. Siddharth Pradip Kothari, Nominee Director

4)  Mrs. Rani Kapur, Director

During the financial year financial year 2017-18 the Company held 4 (four) meetings of the Nomination and Remuneration Committee meetings on 6thJune, 2017, 11thAugust, 2017, 10thNovember, 2017 and 12thFebruary, 2018.

14. DECLARATION OF INDEPENDENT DIRECTORS

The Independent Directors on the Board of the Company have submitted requisite declarations to the Board that they fulfil all the requirements as stipulated in Section 149(6) of the Companies Act, 2013 so as to qualify themselves to be appointed as Independent Directors under the provisions of the Companies Act, 2013 and the relevant rules.

On 11thof August, 2017 a meeting of the independent directors was duly held to review the performance of the non-independent directors, chairperson and to assess the quality, quantity and timelines of flow of information between the Company Management and the Board.

15. DISCLOSURE ON COMPANY'S POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION AS PER SECTION 178 OF THE COMPANIES ACT, 2013

The Board of Directors of the Company in their meeting held on 27thMarch 2015 has approved and adopted remuneration policy of the Company in accordance with the provisions of Section 178 of the Companies Act, 2013.

While formulating policy relating to the remuneration for the Directors, Key Managerial Personnel and other employee, the Board has ensured that�

a)  the level and composition of remuneration is reasonable and sufficient to attract, retain and motivate directors of the quality required to run the company successfully;

b)  relationship of remuneration to performance is clear and meets appropriate performance benchmarks; and

c)  Remuneration to directors, key managerial personnel and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the company and its goals.

16.  EXPLANATION OR COMMENTS ON QUALIFICATIONS, RESERVATIONS OR ADVERSE REMARKS OR DISCLAIMERS MADE BY THE AUDITORS AND THE PRACTICING COMPANY SECRETARY IN THEIR REPORTS

There were no qualifications, reservations or adverse remarks made by:

a. the Statutory Auditors in their report on the financial statements of the Company for the year ended 31stMarch, 2018;

b. the Practicing Company Secretary in its report MR-3 for the year ended 31stMarch, 2018

17.  PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013.

During the year under review the Company has made investment of Rs. 116.39 million (Euro 1.50 million) in equity shares of Sona Holding BV, the Netherland, the wholly owned subsidiary of the Company. Further, the application money amounting to Rs. 46.55 million (Euro 0.64 million) invested inSona Holding B.V, The Netherlands,in the previous year,which was due to be allotted, was allotted during the current financial year.

Besides above, the Company had issued Corporate Guarantee of Rs. 655.12 (Euro 8 million), in favour of Axis Trustee Services Limited on behalf of Sona Autocomp Germany GmbH. The Corporate Guarantee was issued by the Company in respect of the loan obtained by Sona Autocomp Germany GmbH from Axis Bank UK Ltd. This guarantee was issued in substitution of the corporate guarantee earlier issued in favour of ICICI Bank Limited for an outstanding amount of Rs. 527.70 million (Euro 7.5 million).

Further, the SBLC amounting to Rs.131.20 (USD 2 million) issued by the Company in favour of Sona AutoComp GMBH Germany has been satisfied in full during the period under review.

18.  PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES

All contracts or arrangements made with related parties were at arm length and in ordinary course of business hence report in Form AOC-2 is not required.

19.  DETAILS UNDER SECCTION 134(1)(ca) OF THE COMPANIES ACT, 2013

The auditors have not reported any frauds under sub-section (12) of Section 143 of the Companies Act, 2013 or otherwise.

20.  CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pertaining to conservation of energy, technology absorption, Foreign exchange Earnings and outgo as required under Section 134 (3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is furnished in annexure and is attached to this report asAnnexure B.

21.  STATEMENT CONCERNING DEVELOPMENT AND IMPLEMENTATION OF RISK MANAGEMENT POLICY OF THE COMPANY

The Company has adopted a risk management policy and is following measures concerning the development and implementation of a Risk Management Policy.The specific objectives of the Risk Management Policy are:

1.  To ensure that all the current and future material risk exposures of the company are identified, assessed, quantified, appropriately mitigated, minimized and managed i.e. to ensure adequate systems for risk management.

2.  To establish a framework for the company's risk management process and to ensure its implementation.

3.  To enable compliance with appropriate regulations, wherever applicable, through the adoption of best practices.

4.  To ensure smooth running of the business, assure business growth with financial stability.

Further, the Risk Management Policy defines rules and responsibilities of the Risk Management Committee and the Board of Directors of the Company.

22.  DETAILS OF POLICY DEVELOPED AND IMPLEMENTED BY THE COMPANY ON ITS CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The Company have constituted CSR Committee of directors and the committee shall suggest out ways and means to spend the same in the coming months and shall submit the relevant report in the ensuing year.

During the year, the Company has spent an amount of Rs.11.11 million as against the statutory limit of Rs.10.72 million.

The Disclosure as per Rule 9 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed to this Report atAnnexure- C.

23.  Manner of annual evaluation of Board, its committees and individual directors

The Board has approved the Evaluation Policy for evaluating the performance of Board, its committees and individual directors. This policy had been devised as per the provision of Section 178 read with Schedule IV of the Companies Act, 2013.The policyinter aliacontained detailed questionnaire for carrying out the performance evaluation.

The detailed questionnaire were circulated to all the directors of the Company and detailed summary of the responses received from the directors were placed before the Nomination and Remuneration Committee of Directors in its meeting scheduled to be heldon 29thAugust, 2018.

The NRC reviewed the responses and submitted its recommendations with respect to independent director's performance to the Board. The Board considered the recommendations of the Nomination and Remuneration Committee with respect to performance evaluation of the Independent Directors.

The performance of the Chairperson and other non-independent directors were reviewed by the Independent Directors at theirmeeting held on 29thAugust, 2018.

24. information as per rule 8 (5) OF THE COMPANIES (aCCOUNT) RULES, 2014

 (i)  the change in the nature of business, if any;

During the year under review the Company have not made any change in the nature of its business.

(ii)  the details of directors or key managerial personnel who were appointed or have resigned during the year;

(a)  Directors appointed during the year :  NIL

(b) Directors Resigned during the year: NIL

(c)  KMPs appointed during the year: Mr. Raajesh Kumar Gupta, was appointed as Company Secretary of the Company w.e.f 6thJune, 2017

(d) KMP resigned during the year:  Mr. Kapil Dev Taneja, resigned from the position of Company Secretary of the Company w.e.f. 5thJune, 2017.

(iii) the names of companies which have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year;

 During the year under review Sona BLW Precision Forge Inc. USA ceased to be step down subsidiary of the Company post filing of bankruptcy petition as per US laws on 19thAugust, 2016.

(iv) the details relating to deposits, covered under Chapter V of the Act

(a) accepted during the year:

During the year company has not accepted any deposit.

(b) remained unpaid or unclaimed as at the end of the year;

Nil

(c)  whether there has been any default in repayment of deposits or payment of interest thereon during the year and if so, number of such cases and the total amount involved-

(i) at the beginning of the year:Nil

(ii) maximum during the year:Nil

(iii)  at the end of the year:Nil

(v)  the details of deposits which are not in compliance with the requirements of Chapter V of the Act;

  Company has not accepted any deposit.

(vi) the 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;

During the year no orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

(vii)  the details in respect of adequacy of internal financial controls with reference to the Financial Statements.

The Company has an effective internal financial control and risk-mitigation system, which are constantly assessed and strengthened with new/revised standard operating procedures. The Company's internal control system is commensurate with its size, scale and complexities of its operations. The internal and operational audit pursuant to Section 138 of the Companies Act, 2013 is entrusted to M/s Sharad Chopra and Company, a reputed firm of Chartered Accountants. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry.

The Audit Committee of the Board of Directors actively reviews the adequacy and effectiveness of the internal control systems and suggests improvements to strengthen the same. The Company has a robust Management Information System, which is an integral part of the control mechanism.

The Audit Committee of the Board of Directors, Statutory Auditors and the Business Heads are periodically apprised of the internal audit findings and corrective actions taken. Audit plays a key role in providing assurance to the Board of Directors. Significant audit observations and corrective actions taken by the management are presented to the Audit Committee of the Board. To maintain its objectivity and independence, the Internal Audit function reports to the Chairman of the Audit Committee.

25.  DISCLOSURE ON VIGIL MECHANISM

The Company is committed to develop a culture of having high ethical, moral and legal standards of business conduct. In line with this and also its commitment to open communication and the best practices of Corporate Governance, the Company has formulated guidelines of the 'Code of Conduct for Directors and Senior Management (Code of Conduct)'.

The Independent Directors of the Company are entrusted with the responsibility to ascertain and to ensure that the company has an adequate and functional vigil mechanism and to ensure that the interests of a person who uses such mechanism are not prejudicially affected on account of such use.

26.  DISCLOSURE ON MANAGING AND WHOLE-TIME DIRECTOR RECEIVING REMUNERATION AND COMMISSION FROM HOLDING COMPANY OR SUBSIDIARY COMPANY

Neither the Managing Director nor the whole time director of the Company is not in receipt of remuneration and commission from Holding Company or Subsidiary Company.

27.  Disclosure under rule 5(2) and 5(3) of the companies (appointment AND REMUNERATION OF MANAGERIAL PRESONNEL) RULES, 2014

In terms of the provisions of Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, a statement showing the names and other particulars of the employees drawing remuneration in excess of the limits set out in the said Rules are provided in the Annual Report, which forms part of this Report.

Having regard to the provisions of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. The said information is available for inspection at the Registered Office of the Company during working hours and any member interested in obtaining such information may write to the Secretarial Department of the Company and the same will be furnished on request.

28.  SECRETARIAL AUDIT REPORT

M/s Vinod Kothari and Co., Practicing Company Secretary, was appointed as Secretarial Auditor of the Company his report in Form MR-3 is attached herewith asAnnexure D.

29. STATUTORY AUDITORS

M/s Walker Chandiok and Co. (Grant Thornton Associates) (FRN No. 001076N) were appointed as  Statutory Auditors for a period of 5 years in the 21stAnnual General Meeting held on 28thSeptember, 2017 their continuance of appointment and payment of remuneration are to be confirmed and ratify in the ensuing Annual General Meeting. The Company has received a certificate from the above Auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.

30. DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(3)(c) read with Section 134 (5) of the Companies Act, 2013 the Board hereby states that:�

(a)  in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures;

(b)  the directors had selected such accounting policies and applied them consistently and 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 and loss of the company for that period;

(c)  the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d)  the directors had prepared the annual accounts on a going concern basis;

(e)  the directors had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively; and

(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

31.  DISCLOSURE OF MAINTENANCE OF COST RECORDS UNDER SECTION 148(1) OF THE COMPANIES ACT, 2013

The Company is in due compliance of maintenance of Cost records as specified by the Central Government under Section 148 (1) of the Companies Act, 2013. Furthermore, though the Company is not required to get its cost records audited by a cost accountant. However, the Company has been appointing cost accountant every year keeping in view the benefits it derives from the cost records. The cost records help the Company in comparing the standard cost movement during the year.

Accordingly, it had appointed M/s. Gurdeep Singh and Associates, Cost Accountants to conduct the necessary internal cost review and report thereon.

32. CONSTITUTION OF INTERNAL COMPLAINT COMMITTEE (ICC) UNDER THE SEXUAL HARASSMENT OF WORKMEN AT WORKPLACE (PREVENTION, PROHIBITION, REDRESSEL) ACT, 2013

  The Company has its manufacturing facilities in two cities viz; Gurgaon and Pune. Further, in Gurgaon it has three units and one in Pune. For all the manufacturing units, individual Internal Complaint Committee (ICC) has been formed and the Company have complied with provisions relating to the constitution of ICC under the Sexual Harassment of Workmen at Workplace (Prevention, Prohibition, Redressel) Act, 2013.

The members of the ICC for all the units are mentioned below:

A. GURGAON:

i.  UNIT I:

1.   Mrs. Gunjan Rohtagi- Presiding officer

2.   Ms. Rashmi Sisodia - Secretary

3.   Mr. Suman Bahuguna - Member

4.   Mr. Balkrishna Sharma - Member

5.   Ms. Rishika Dhawan - External Member

ii.  UNIT II:

1. Mrs. Gunjan Rohtagi - Presiding officer

2.   Ms. Suman Poddar - Secretary

3.   Mr. Naresh Sharma - Member

4. Mr. Sunrendra - Member

5.   Ms. Manjula Upadhyaya- External Member

iii.  UNIT III:

1.   Mrs. Gunjan Rohtagi- Presiding officer

2.   Ms. Rashmi Sisodia - Secretary

3.   Mr. Naresh Sharma - Member

4.   Mr. Inder Khurana-Member

5. Ms. Manjula Upadhyaya- External Member

B. PUNE UNIT:

1.  Mrs. Swati Arbale- Presiding Officer

2.  Mrs. Sandhya Singh- Secretary

3. Mr. Ajit Parikh- Member

4.  Mr. Sandeep Nipunge- Member

5.  Mrs. Sunita Sabne- External Member

34.  ACKNOWLEDGEMENT

Your Directors acknowledge with gratitude the co-operation and support extended by Sona Autocomp Holding Limited, Sona Management Services Ltd., Banks and various agencies of the Government.

Your Directors also wish to place on record their sincere appreciation of the services rendered by all employees of the Company.  

By order of Board of Directors

For Sona BLW Precision Forgings Limited

Place: Gurgaon       Mrs. Rani Kapur

Date: 29.08.2018            (Chairperson)

       DIN:00465750

The financial year 2017-18, has again been a stellar year from operational point of view. The sales of the Company on standalone basis during this year was higher by 21.86% (approx.) to Rs. 6,158.51 million as against Rs. 5,053.62 million of last financial year (2017-2018), the EBITDA during the year was higher by 57.11% to Rs. 1,710.06 million as against Rs. 1,088.42 million of last financial year. During this year, the exports of the Company grew by 14.24% to Rs. 1,857.24 million as against 1,625.60 million during the last financial year.

FORM "A" PARTICULARS WITH RESPECT TO CONSERVATION OF ENERGY Amount (In Rs.) A.POWER AND FUEL CONSUMPTION 2017-18 2016-17 1.Electricity a) Purchased Units (KWH) 25,055,390 26,189,120 Total Amount (Rs.) 194,091,391 200,032,064 Rate per Unit (Rs.) 7.75 7.64 b) Own Generation i) Through Diesel generator Total Units generated 3,074,302 1,728,713 Units per Ltr. of diesel 3.5 48.81 Cost per unit generated (Rs.) 15.72 15.32 ii) Through Steam Turbine/Generator N/A N/A Units Units per Ltr. of fuel oil/ gas Cost / units Total Cost of diesel 48,316,123 26,489,905 2. Coal (specify quality and where used) N/A N/A Quantity (tones) Total Cost Average Rate 3. Furnace Oil N/A N/A Quantity (K. Ltr.) Total amount Average Rate 4. Others / internal Generation:- Solar 119,770 N/A B. CONSUMPTION PER UNIT OF PRODUCTION Production (M.T.) 17,943 20,117 Electricity (in Units) per Ton of production 1,568 1,387 Furnace oil N/A N/A Coal (specify) N/A N/A Others (specify) N/A N/A

Particulars with respect to Technology Absorption A. Technology Absorption (Not Applicable) 1. Efforts in brief towards Technology Absorption, Adoption and Innovation. : Company have complete know-how to design and manufacture bevel gears through precision warm forging. Company have developed in-house capabilities in a. Die Design b. Die Manufacturing c. Gear Design d. Gear Manufacturing 2. Benefits derived as a result of above efforts e.g. Product Improvement, Cost Reduction, Product Development, and Import Substitution etc. : Cost Reduction and Reduction in "Time to Market". Complete indigenization of tooling. Superior gears compared to competition 3. In case of imported technology following information may be furnished: : a. Technology imported Bevel Gear tool design and manufacturing b. Year of Import 1995 c. Has technology been absorbed Yes A. Research & Development 1. Specific areas in which R&D carried out by the Company : The company is working on to developing e-axle, differential assembly, hypoid gears, helical and Spur gears. Company is also working on improving in house axle durability testing facility. 2. Benefits derived as a result of the above R&D. : Improve torque carrying capacity of gears, Light weighting , Improving material yield 3. Further Plan of action : Develop and validate manufacturing process of hypoid gear and helical gears. Increase differential assembly testing capabilities. 4. Expenditure on R&D : Revenue:- Rs. 1,23,90,450/- Capital:-Rs. 20,05,950/-

FOREIGN EXCHANGE OUTGO ON ACCOUNT OF: Amount (In Rs.) Particulars 2017-18 2016-17 (i) Royalty, Know-how, professional and consultation fees 2,71,78,750 - (ii) i) Interests ii) Other Matters Raw Materials & Consumption stores were imported on CIF Basis - - 4,06,71,393 - - 2,83,46,569 (iii) Foreign Traveling 30,54,382 72,07,069 (iv) Dividend 0 0 (v) Capital Expenditure on CIF basis 29,67,92,372 7,58,96,729 (vi) Legal & Professional fees 80,09,582 80,65,995 (vii) Other Borrowing Cost 0 0 FOREIGN EXCHANGE EARNINGS ON ACCOUNT OF: Amount (In Rs.) Particulars 2017-18 2016-17 (i) Export of Goods on FOB basis 1,85,72,42,358 1,625,605,788 (ii) Royalty, know how, professional and consultation fee 0 0 (iii) Interest and dividend etc. 2,12,05,629 8,849,469 (iv) Other Income including the Nature thereof tooling income 43,03,360 13,357,290 (v) Corporate Guarantee Fees 43,74,449 3,503,770 (vi) Professional Services 0 0

In accordance with the provisions of Section 134(3)(c) read with Section 134 (5) of the Companies Act, 2013 the Board hereby states that:- (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had selected such accounting policies and applied them consistently and 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 and loss of the company for that period; (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; (e) the directors had laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and were operating effectively; and (f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.