Mar 31, 2018
The Directors are pleased to present their 43rd Annual Report together with the Audited Statement of Accounts of the Company for the year ended 31st March, 2018.
1. FINANCIAL RESULTS
The Financial Results of the Company for the year ended 31st March, 2018, were as follows:
(Rs. in Lacs)
Particulars |
Consolidated |
Standalone |
||
Year Ended 31 March 2018 |
Year Ended 31 March 2017 |
Year Ended 31 March 2018 |
Year Ended 31 March 2017 |
|
Gross Revenue |
140,842 |
153,918 |
56,895 |
53,143 |
Less: Excise duty |
872 |
3,308 |
642 |
2,640 |
Net Revenue |
139,970 |
150,610 |
56,253 |
50,503 |
Less: Cost of material and increase/decrease in stock |
71,961 |
83,804 |
26,877 |
22,937 |
Less: Employee benefit expenses |
24,838 |
22,958 |
8,178 |
6,718 |
Less: Other Expenses |
29,932 |
27,320 |
12,089 |
11,128 |
EBITDA |
13,239 |
16,528 |
9,109 |
9,720 |
EBITDA Margin |
9.46% |
10.97% |
16.19% |
19.25% |
Add: Other Income |
578 |
576 |
647 |
1,588 |
Less: Finance Charges |
7,442 |
7,836 |
6,328 |
6,162 |
Less: Depreciation and Amortisation Expense |
5,644 |
5,282 |
2,875 |
2,816 |
Less: Exceptional Expense |
- |
426 |
- |
314 |
Profit before tax |
731 |
3,560 |
553 |
2,016 |
Profit before tax margin |
0.52% |
2.36% |
0.98% |
3.99% |
Less: Tax expense |
659 |
1,598 |
174 |
484 |
Profit After Tax |
72 |
1,962 |
379 |
1,532 |
Profit After Tax margin |
0.05% |
1.30% |
0.67% |
3.03% |
Add: Other Comprehensive Income/(Losses) |
2,226 |
(2,138) |
(142) |
(20) |
Profit for the year |
2,298 |
(176) |
237 |
1,512 |
Profit available for appropriation |
2,298 |
(176) |
237 |
1,512 |
Balance carried to Balance Sheet |
2,298 |
(176) |
237 |
1,512 |
Note: Previous yearsâ figures have been recast wherever necessary. COMPANY PERFORMANCE
FY2018 was a year of important reforms in the Indian economy including the Goods & Service Tax (GST). While in the short term, it faced temporary challenges of implementation, on a long-term basis it will lead to improved business environment and renewed investment opportunities. Recent regulatory changes coupled with our strategy of rationalizing product mix resulted in a subdued business performance. Consolidated net sales for FY2018 decreased by 7.06% to Rs. 139,970 lacs as compared to Rs. 150,610 lacs in FY2017.
Consolidated EBITDA (excluding other income) for FY2018 decreased by 19.9% to Rs. 13,239 lacs as compared to Rs. 16,528 lacs during the same period last year. This EBITDA (excluding other income) included an impact of Rs. 957 lacs on account of unfavorable foreign exchange variations. After adjusting for this impact, EBITDA (excluding other income) for the year would have been Rs. 14,196 lacs, representing a decline of 14.1% compared to FY2017. EBITDA (excluding other income) margin for the year under review was 9.4% compared to 10.9% in FY2017. On account of the implementation of GST, our working capital utilization increased, leading to higher short-term borrowings and finance charges on a y-o-y basis.
The Aerospace & Defence segment recorded a revenue growth of 3.1% to reach Rs. 35,634 lacs compared Rs. 34,569 in FY2017. Continuing order book execution led to substantial revenue growth in Q4 FY2018. Further, ramp up of phase 2 Airbus orders started resulting in stabilization of overall operations. Segment EBITDA was Rs. 8,143 lacs compared with from Rs. 10,473 lacs in FY2018. While India operations registered a 11.5% growth in revenue, UK performance increased by 17% on constant currency basis.
During the year, the Aerospace & Defence segment continued its focus on product innovation and advanced technology platform. The division announced commercial production of Airbus A330 Long Range FTBs to be manufactured in India and the UK during the life of the program. The Company successfully started the ramp up of phase 2 of Airbus orders, putting in place a state-of-the-art infrastructure and achieved a full-scale industrialization of the entire value chain. Further, the Company became the sole supplier of major sub-assemblies for Bell 407 helicopter cabins.
Hydraulics segment continued its strong performance during Q4 and FY2018, mainly on account of better order off takes. Revenues for this segment increased by 12.4% to Rs. 31,111 lacs compared to Rs. 27,683 lacs in the same period last year. One-time impact of long term union wages revision led FY2018 EBITDA to decline by 6.8% to Rs. 3,712 lacs. With a recent established sales office in the US, the Company expects to expand further in the North American markets. With improved farm sentiment and infrastructure investments, this segment is expected to remain strong.
With a focus on margin expansion, low margin products rationalization continued for the Automotive and Metallurgy business during FY2018. Adoption of such rationalization strategy impacted the financials performance during the year but resulted in significant improvement in EBITDA during the last quarter of FY2018. Revenue for this segment was Rs. 73,225 lacs, representing a decline of 17.1% compared to same period last year. Segment EBITDA was Rs. 1,849 compared to Rs. 2,939 in FY2017. New order ramp up and new machining facility in Germany expected to drive growth for this division going forward.
SHARE CAPITAL
As of March 31, 2018, the Company had an authorized share capital of Rs. 2,500 lacs, divided into 2,00,00,000 equity shares of Rs. 10/- each and Rs. 500 lacs divided into 5,00,000 redeemable cumulative preference shares of Rs. 100/- each. During the year under review, there was no change in the Companyâs issued, subscribed and paid-up equity share capital. As of 31st March, 2018, the Company had issued, subscribed and paid-up equity share capital of Rs. 634.14 lacs divided into 63,41,443 equity shares of Rs. 10/- each.
TRANSFER TO RESERVES
During the year under review, your Directors do not propose to transfer any amount to General Reserve.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has duly complied with the provisions of Section 186 of the Companies Act, 2013 during the year under review. The details of loans availed by the Company during the year under review are mentioned in the notes to accounts that form part of this Annual Report.
DIVIDEND
During the year under review, your Directors do not propose to declare any dividends due to poor economic conditions and paucity of profits.
CAPITAL EXPENDITURE
During the year under review, your Company incurred capital expenditure of Rs. 7,085 lacs for physical infrastructure and Rs. 218 lacs for procurement of intangible assets. Significant investments have been made in building infrastructure, state-of-the-art machinery, design software, data security, information systems, and design and development activities; for the future benefits of your Company.
DEPOSITS
During the year under review, the Company neither accepted any deposits nor there were any amounts outstanding at the beginning of the year which were classified as âDepositsâ in terms of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 and hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Companies Act, 2013 is not applicable.
SUBSIDIARIES
The Company has ten subsidiaries. Pursuant to Section 129(3) of the Companies Act, 2013 and Accounting Standard- 21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the Financial Statements of its Subsidiaries.
Consolidated Financial Statements forms part of this Annual Report. Statement containing the salient features of the Financial Statements of the Companyâs subsidiaries, associate(s) and joint venture(s) are enclosed as Annexure 1 in form AOC-1 to this Annual Report.
In terms of provisions of Section 136 of the Companies Act, 2013, the Company shall place separate audited accounts of the Subsidiary Companies on its website at www.dynamatics.com
The structure of Dynamatic Technologies Limited and its subsidiaries as on March 31, 2018 is appended hereunder :
INDIAN SUBSIDIARIES
JKM Research Farm Limited, India, (JRFL) is a wholly owned subsidiary of the Company. It continues to be the Research & Development facilitator to the Company. It operates a unique facility for testing and analysing complete tractor aggregates and systems.
JKM Erla Automotive Limited, India (JEAL) continues to be a wholly owned subsidiary of the Company.
JKM Ferrotech Limited, India (JFTL) is a subsidiary of Dynamatic Technologies. JFTL is into the manufacturing of ferrous alloy and castings, having its operations in Gummidipoondi, Tamil Nadu. This subsidiary has expertise in producing High Si-Mo automotive components and is certified to the highest quality standards specified by the Automotive Industry.
JKM Automotive Limited (JAL) is a wholly owned subsidiary of JKM Erla Automotive Limited.
OVERSEAS SUBSIDIARIES
JKM Global Pte. Limited, Singapore, is a wholly owned subsidiary of the Company. It continues to be a holding company for the overseas businesses.
Dynamatic Limited, UK, (DLUK) is a subsidiary of your Company having aerospace and hydraulics units at Bristol and Swindon.
Yew Tree Investments Limited, Bristol, UK is a wholly owned subsidiary of Dynamatic Limited, UK.
Dynamatic LLC, US is a subsidiary of Dynamatic Limited, UK.
JKM Erla Holdings GmbH, Germany (JKM Erla GmbH) is engaged in the business of setting up automotive components processing/manufacturing units.
Eisenwerk Erla GmbH, Germany (Eisenwerk) is a subsidiary of the Company. Eisenwerk has been in business for over many years and is a preferred supplier to leading global OEMs such as Audi, BMW, Borg Warner Turbo Emission Systems, Volkswagen and Daimler. The capabilities of this subsidiary includes high precision, complex metallurgical products for automotive engines and turbochargers.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Inductions, Re-appointments, Retirements & Resignations
During the year under review, the Board of Directors at their meeting held on 09th August, 2017 appointed Mr. Arvind Mishra as Additional Director of the Company.
Mr. Raymond Keith Lawton (DIN:01687605) stepped down from the Board Directors of the Company with effect from 19th July, 2017.
Mr. Vijai Kapur (DIN:00056415) and Mr. Krishnaswamy Srinivasapuram (00056250) ceased to be with effect from 13th August, 2017.
Mr. Arvind Mishra has been appointed as Executive Director and Global Chief Operating officer, Hydraulics & Head of Homeland Security.
Mr. Hanuman Kumar Sharma (DIN:07012725) stepped down from the Board Directors of the Company with effect from 14th February, 2018.
Mr. Chalapathi P, has been appointed as a Chief Financial Officer of the company with effect from 13th December 2017.
Mr. Sirish Saraf (DIN:0001918219) vacated the office of Directorship under section 167 read with 164(2)(a) of Companies Act, 2013.
Mr. James Tucker, Non-Executive Director of the Company would retire by rotation in accordance with section 152 of the Companies Act, 2013 and being eligible, offers himself for reappointment.
None of the Directors of the Company except Mr. Sirish Saraf, are disqualified from being appointed as Directors as specified under Section 164 of the Companies Act, 2013.
Details of all the Directors have been covered in Corporate Governance Report which forms part of the Annual Report.
Declaration by Independent Directors
All Independent Directors of the Company meet the criteria of Independence laid down in Section 149(6) of the Companies Act, 2013. In line with the provisions of section 134(3)(d) of the Companies Act, 2013, the declaration from Independent Directors, confirming their independence in terms of section 149 of the Companies Act, 2013 have been obtained.
Key Managerial Personnel (KMP)
During the year under review, the Company has designated following personnel as KMPs as per the definition under Section 2(51) and Section 203 of the Act:
- Mr. Udayant Malhoutra, CEO & Managing Director
- Mr. P S Ramesh, Executive Director & COO - Aerospace, India
- Mr. Arvind Mishra has been appointed as Executive Director and Global Chief Operating officer, Hydraulics & Head of Homeland Security.
- Mr. Naveen Chandra P, Head Legal, Compliance and Company Secretary
- Mr. Chalapathi P, has been appointed as a Chief Financial Officer of the company with effect from 13th December 2017.
BOARD MEETINGS
The Company prepares a Board and allied committee meeting calendar and circulates to all the directors in advance for their concurrence. During FY2018, seven meetings of the Board of Directors were held.
Details of the composition of the Board and its Committees and of the Meetings held, attendance of the Directors at such Meetings and other relevant details are provided in the Corporate Governance Report. These Board meetings were held during the FY2018 and not more than one hundred and twenty days had intervened between two consecutive meetings of the Board.
COMMITTEES OF BOARD OF DIRECTORS
The Board has seven committees viz; the Audit and Risk Management Committee, Nomination and Remuneration Committee, Stakeholdersâ Relationship Committee, Technology & Strategy Development Committee, Finance Committee, Corporate Social Responsibility Committee and Independent Directorsâ Committee. Details of all the Committees of Board of Directors as per the Secretarial Standard-1 as issued by the Institute of Company Secretaries of India have been disclosed in the Corporate Governance Report. The Board has accepted most of the recommendations made by all the Committees of Board of Directors during the year under review.
familiarization programme for the independent
DIRECTORS
An appropriate induction for new directors and ongoing training for all directors ensure high corporate governance in the Company. Dynamatic conducts induction programme for every new independent director to provide them an opportunity to build an understanding about Dynamatic, its businesses and the markets and regulatory environment in which it operates; familiarize with its management and its operations so as to gain a clear understanding of their roles and responsibilities and contribute significantly towards the growth of the Company. They have full opportunity to interact with Senior Management Personnel and are provided all the documents required and sought by them for enabling them to have a good understanding of the Company, its various operations and the industry in which it operates. Dynamatic Technologies firmly believes that a Board, which is well informed /familiarised with the Company, can contribute significantly to effectively discharge its role of trusteeship in a manner that fulfils stakeholdersâ expectations.
During the year under review, the Company had carried out familiarisation programme for Independent Directors by organizing workshop at Auto unit, Eisenwerk Erla GmbH, Germany; Aerospace unit, Dynamatic Limited, Bristol, UK and Hydraulics unit, Dynamatic Limited, Swindon, UK.
In pursuit of this, the Directors are updated on a continuing basis on developments in the corporate and industry scenario including those pertaining to regulatory and economic environment, to enable them to take well informed and timely decisions. The details of the familiarisation programme may be accessed on the Companyâs corporate website (www. dynamatics.com/investor.html)
PARTICULARS OF REMUNERATION OF DIRECTORS, KMP AND EMPLOYEES
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with 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 is attached as Annexure 2 which forms part of this report. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure 2 which forms part of this report.
DIVERSITY IN THE BOARD
The Company recognizes and embraces the importance of a diverse board in its success. We believe that a truly diverse board will leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical background, age, ethnicity, race and gender, which will help us retain our competitive advantage. The Board has adopted the policy on appointment, continuation and cessation of Directors which sets out the approach to diversity in the composition of the Board.
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
The Companies Act, 2013 states that a formal annual evaluation needs to be performed by the Board of its own performance, various committees of the Board and that of the individual directors. Schedule IV of the Companies Act, 2013, states that the performance evaluation of independent directors shall be done by the entire Board, excluding the director being evaluated.
The evaluation of all the directors and the Board as a whole was carried out based on the criteria and framework adopted by the Board as explained in the Corporate Governance Report. The Board of Directors expressed their satisfaction with the evaluation process.
REMUNERATION POLICY
The philosophy for remuneration of directors, KMP and all other employees of the Company is based on the commitment of fostering a culture of leadership with trust. Furthermore, the Company believes in providing an opportunity that has a strong linkage to and reinforces the performance culture of the Company. The remuneration policy is aligned to this philosophy. The Company has laid down remuneration policy which is designed to attract, motivate, retain manpower and improve productivity by creating a congenial work environment, encouraging initiative, personal growth and teamwork besides offering appropriate remuneration package. Pursuant to the applicable provisions of the Companies Act, 2013 and the Listing Regulations, the Board, in consultation with its Nomination & Remuneration Committee, has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company and Individual Directors, including Independent Directors. The said policy has been enclosed as Annexure 3.
Members can download the complete remuneration policy on the Companyâs website (www.dynamatics.com/investor. html).
CORPORATE SOCIAL RESPONSIBILTY (CSR)
- Dynamatic Technologies Ltd has strengthened its objectives of CSR and created a Skill Development Initiative Team to develop skills in trainees with ITI / Diploma and in serving workers from aerospace industry, who volunteer to enhance their skill levels. The team also focuses in upgrading the technical skills in operations such as sheet metal forming, material handling, painting and NDT etc.
- To accomplish this task in earnest, your company adopted ITI Devanahalli under PPP program and has developed and introduced special curriculum in Aerospace Fitter Trade to train the students in structural assembly techniques such as drilling, reaming, riveting and sealant application. Classes for the ITI trainees were conducted in some existing trades to provide basic introduction to aerospace technology and certain soft skills.
- During the current year an exclusive Building along with a Borewell to provide drinking water was constructed and state-of- the-art teaching aids, tools and materials were acquired to create a new Skill Development Center at ITI Devanahalli.
- This new Skill Development Center at ITI Devanahalli has adequate Training Rooms for theory classes, Workshop practices and Rest Rooms for the trainee students. The required infrastructure such as Compressor and Generator have been procured and installed. The Building is fully furnished and was inaugurated on 12th December 2017 by the amidst designatories and CEO & MD of Dynamatic Technologies Ltd. ITI authorities from the State Government, IMC Chairman and Members, and other industry partners were present on the occasion.
- Total amount spent for various CSR activities for ITI Devanahalli was over Rs. 7 lakh.
RISK MANAGEMENT POLICY
Risk management forms an integral part of the management system and determines the risk situation in business processes and organizational units. Risk management provides the organization at all levels with an instrument for detecting risks early and taking steps to eliminate, reduce, and consciously deal with risks The Company has a robust process in place to identify key risks across the Group and prioritise relevant action plans to mitigate these risks. The Audit & Risk Management Committee has been entrusted with the responsibility to assist the Board members about the risk assessment and its minimization procedures, which includes discussing the management submissions on risks, prioritising key risks and approving action plans to mitigate such risks. The Policy suggests framing an appropriate response action for the key risks identified, so as to make sure that risks are adequately compensated or mitigated.
The main objectives of the said policy are.
i. To ensure that all the current and future material risk exposures of Dynamatic Technologies are identified, assessed, quantified, appropriately mitigated and managed;
ii. To establish a framework for Dynamatic Technologiesâ risk management process and to ensure company-wide implementation;
iii. To ensure systematic and uniform assessment of risks related with each of the units of Dynamatic Technologies;
iv. To enable compliance with appropriate regulations, wherever applicable, through the adoption of best practices; and
v. To assure business growth with financial stability.
The said policy has been uploaded on Companyâs website (www.dynamatics.com/investor.html)
WHISTLE BLOWER POLICY AND VIGIL MECHANISM
The Company has adopted a Vigil Mechanism Policy through which all stakeholders including Directors and employees may report unethical behavior, malpractices, wrongful conduct, fraud, violation of the Companyâs code of conduct without fear of reprisal. Details of complaints received and the action taken are reviewed by the Audit & Risk Management Committee. During the year under review, the Company / Committee has not received any such complaint. The functioning of the vigil mechanism is reviewed by the Audit & Risk Management Committee from time to time. The policy on vigil mechanism may be accessed on the Companyâs website (https://www. dynamatics.com/investor.html)
POLICY FOR SAFETY AND WELL BEING OF WOMEN
To motivate our Women work force, Womenâs Day was celebrated with full gusto in all the Divisions. In keeping with our resolve to ensure zero incidents of sexual harassment at workplace, provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of complaints of sexual harassment at workplace are being strictly adhered to. Awareness programmes and workshops are held periodically to educate all employees. There have been no complaints of sexual harassment received during the year. Work on construction of a Creche in Aerospace Division has commenced and likely to be completed by end May 2018.
AUDITORS
Statutory Auditors
M/s. B S R & Co. LLP, Chartered Accountants are the Statutory Auditors of the Company for a period of five years with effect from 14th August 2014. M/s. B S R & Co., LLP have confirmed to the Company that they are not disqualified under section 141 of the Companies Act, 2013, or any other applicable provisions for the time being in force and are eligible for continuing as statutory auditors of the Company. M/s. B S R & Co., LLP have also confirmed to the Company that, their appointment, if made, would be within the limits prescribed under the Companies Act, 2013.
The report of the Statutory Auditors along with notes to Schedules is enclosed to this report. The observations made in the Auditorsâ Report are self-explanatory and therefore do not call for any further comments. The Auditorâs Report does not contain any qualification, reservation or adverse remark.
Cost Auditors
As per Section 148 of the Act, the Company is required to have the audit of its cost records conducted by a Cost Accountant in practice. M/s Rao, Murthy & Associates who were appointed as Cost Auditors of the Company for the FY2018 conduct cost audits pertaining to relevant products prescribed under the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time.
Internal Auditors
The Internal Audit function is responsible for assisting the Audit & Risk Management Committee on an independent basis with a full status of the risk assessments and management. M/s. Ernst & Young, LLP were appointed as Internal Auditors of the Company for the FY2018.
Secretarial Auditor
The Company had appointed Mr. R Vijayakumar, Company Secretary in practice in Bangalore, to conduct its Secretarial Audit for the financial year ended 31st March, 2018. The Secretarial Auditors have submitted their report, confirming compliance by the Company of all the provisions of the applicable corporate laws. The Report does not contain any qualification, reservation or adverse remark. The Secretarial Audit Report is annexed as Annexure 4 to this report.
Tax Auditors
M/s BVS & Associates, Chartered Accountants, are the Tax Auditors of the Company. The Tax Auditorâs Report does not contain any qualification, reservation or adverse remark.
INTERNAL CONTROLS SYSTEMS AND THEIR ADEQUACY
According to Section 134(5)(e) of the Companies Act, 2013, the term Internal Financial Control (IFC) means the policies and procedures adopted by a company for ensuring the orderly and efficient conduct of its business, including adherence to the companyâs policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.
The Company has a well-placed, proper and adequate internal financial control system which ensures that all assets are safeguarded and protected and that the transactions are authorised, recorded and reported correctly. The Companyâs internal financial control system also comprises due compliances with Companyâs policies, standard operating procedures and audit and compliance by an in-house internal audit division, supplemented by internal audit checks from M/s. Ernst &Young, LLP, the Internal Auditors and various transaction auditors.
The Internal Auditors independently evaluate the adequacy of internal controls and concurrently audit the majority of the transactions in value terms. Independence of the audit and compliance is ensured by direct reporting to the Audit & Risk Management Committee of the Board. A CEO and CFO Certificate, forming part of the Corporate Governance Report, further confirms the existence and effectiveness of internal controls and reiterates their responsibilities to report deficiencies to the Audit & Risk Management Committee and rectify the same. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.
OTHER DISCLOSURES
Events Subsequent to the Date of the Financial Statements
There were material changes / commitments affecting the financial position of the company between March 31, 2018 and the date of Boardâs Report.
The Board at its meeting held on 28th February, 2018 had approved the Divestment of Automotive and wind Farm business located at Chennai and Coimbatore. The shareholders had approved the proposal of Divestment through postal ballot process. Mr. Vijay Kumar (practicing Company Secretary had issued the scrutinizer report dated 16th May, 2018 and declared the resolution passed with requisite majority and the same is made available on the website of the Company.
Change in the Nature of Business, if any
The Company continues to focus on its key business segments and looks for selective growth / expansion opportunities. There was no change in the nature of business during the year under review. State of the affairs of the Company and future plan of action and outlook is discussed in this report.
Significant & Material Orders Passed by the Regulators
During the year under review, no significant / material orders were passed by the regulators or the Courts or the Tribunals impacting the going concern status and the Companyâs operations in future.
Demat Suspense Account unclaimed shares
As on 31st March, 2018 there are 22 members, holding 1,161 equity shares of Rs. 10/- each, lying in the escrow account due to non-availability of their correct particulars. A detailed note in this regard is provided in the Corporate Governance Section under âSuspense Account for the unclaimed sharesâ. The voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.
Extract of the Annual Return
Pursuant to the provisions of section 92(3) of the Companies Act,2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return is made part of this Annual Report.
Listing with Stock Exchanges
The Company confirms that it has paid the Annual Listing Fees for the year 2017-2018 to NSE and BSE where the Companyâs Shares are listed.
Consolidated Financial Statements
The Directors have pleasure in attaching the Consolidated Financial Statements prepared by the Company in accordance with the relevant Accounting Standards issued by the Institute of Chartered Accountants of India, which form part of the Annual Report.
RELATED PARTY TRANSACTIONS
With reference to Section 134(3)(h) of the Companies Act, 2013, all contracts and arrangements with related parties under Section 188(1) of the Act, entered into by the Company during the financial year, were in the ordinary course of business and on an armâs length basis.
As per the Listing Regulations, all related party transactions are placed before the Audit & Risk Management Committee for approval. Prior omnibus approval of the Audit & Risk Management Committee has been obtained for the transactions which are of foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval are presented to the Audit & Risk Management Committee by way of a statement giving details of all related party transactions. The Company has developed a Related Party Transactions Manual for the purpose of identification and monitoring of such transactions. Particulars of Contracts or Arrangements with Related parties referred to in Section 188(1) is disclosed in Form AOC- 2 as Annexure 6.
ENVIRONMENTAL PROTECTION MEASURES
Your Company continuously strives to reduce our environmental footprint, while enhancing livelihood of people across our product value chain. Accordingly the Company has adopted a number of measures to improve in the field of environment, safety and health. Measures like standard operating procedures, training programmes for all levels of employees regarding resource conservation, environment protection and housekeeping have been conducted. Sustainable living is a part of long-term business strategy of the Company.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGOING
The information relating to conservation of energy and technology absorption are appended hereunder:
Conservation of Energy
All our facilities in India and abroad are built with the environment in mind and the processes are designed for efficiency, energy conservation and to ensure that no waste is transmitted into the environment. The industrial complexes are highly energy efficient and completely non-polluting. This is being systematized and quantifiable by implementing ISO 14000.
Technology Absorption
Research & Development plays a vital role in developing and adopting new technologies to enhance our operational efficiencies. The Company owns the worldâs best hydraulic technologies. The Company has added technology from Plessey through the acquisition of Dynamatic Limited, UK, in 2007.
The Aerospace & Hydraulics units in India & the UK; Automotive units in India and Germany work together in resolving engineering challenges leading to better synergies across the group.
Research & Development (R&D)
R&D and Innovation continues to be an integral part of the Companyâs growth strategy, business profitability, sustainability and as a part of its contribution towards the building of the Nation. Dynamatic Science Lab, created by consolidating various research and technology functions, helps to enhanced value delivery by leveraging skills and competencies to create new business opportunities. The Companyâs Research & Development is actively driven by a Board level committee constituted as the Technology & Strategy Development Committee.
The Technology & Strategy Development Committee of the Board provides direction to the Companyâs R&D strategy and on key issues pertaining to R&D technology. The Committee regularly reviews and updates the skills and competencies required, the structure and the processes needed to ensure that the R&D initiatives of today result in products necessary for the sustained and long term growth of the Company.
MANAGEMENTâS DISCUSSION & ANALYSIS REPORT
Pursuant to regulations 34 of the Listing Regulations, Managementâs Discussion & Analysis Report for the year is presented in a separate section forming part of the Annual Report.
CORPORATE GOVERNANCE
Corporate Governance is a set of principles, processes and systems which govern a company. The Company believes that an effective corporate governance practices provides a strong foundation for a successful enterprise. The key principles on which a sound Corporate Governance system is based are independence, transparency, accountability, responsibility, compliance, ethics, values and trust. Corporate Governance enables an organization to perform efficiently and ethically generate long term wealth and create value for all its stakeholders.
Dynamatic Technologies is committed to maintain the best standards of Corporate Governance and adopted many ethical and transparent governance practices even before they were mandated by law. The Company has always strived towards building trust with shareholders, employees, customers, suppliers and other stakeholders based on the principles of good corporate governance. Strong leadership and best-in-class corporate governance practices are considered one of the major strength of the Company.
A detailed report on Corporate Governance, pursuant to the requirements of Regulation 34 of the Listing Regulations, forms part of the Annual Report. The certificate from the Practicing Company Secretary confirming compliance of the Corporate Governance norms as stipulated in the Listing Regulations is also included in the Annual Report.
PROMOTERS
The list of the promoters is disclosed for the purpose of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
Mr. Udayant Malhoutra is the promoter of the Company within the definition of âPromoterâ for the purpose of regulations 2(1)(s) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
Details of the promoter group are appended as under:
No. |
Name of the entity / person |
1. |
JKM Holdings Private Limited |
2. |
Udayant Malhoutra and Company Private Limited |
3. |
JKM Offshore India Private Limited |
4. |
Wavell Investments Private Limited |
5. |
Mrs. Barota Malhoutra |
6. |
Vita Private Limited |
7. |
Christine Hoden (India) Private Limited |
8. |
Primella Sanitary Products Private Limited |
9. |
Greenearth Biotechnologies Limited |
DIRECTORSâ RESPONSIBILITY STATEMENT
Pursuant to the section 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of knowledge and belief and according to the information and explanations obtained by them, hereby confirm that:
a. In the preparation of accounts for the financial year ended March 31, 2018, the applicable Accounting Standards have been followed with proper explanation relating to material departures if any.
b. We have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 & Loss Account of the Company for the year under review.
c. We have taken proper and sufficient care for the maintenance of adequate 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. We have prepared the accounts for the financial year ended March 31, 2018, on a âgoing concernâ basis.
e. We have laid down internal financial controls to be followed by the company and that the internal financial controls are adequate and are operating effectively.
f. We have devised proper systems to ensure compliance with the provisions of all applicable laws and the systems are adequate and operating effectively.
g. Transfer of amounts to Investor Education and Protection Fund
Pursuant to the provisions of the Companies Act, 2013 (as amended from time to time), dividends and shares which remained unclaimed for a period of seven years, have been transferred by the Company to the Investor Education and Protection Fund.
HUMAN RESOURCES
The Company believes that human resources are critical for the overall success of the organization and ensures to undertake best efforts for maintaining a cordial relationship with the employees. Dynamaticâs focus has always been to acquire, nurture and develop the best talent to prepare them for leadership roles within the organization. Various initiatives to improve the skills of its employees though training initiatives are ongoing exercise at the Company. Such initiatives are important to ensure job enrichment, engagement and accountability for performance, career progression, reward, recognition and welfare of the employees. Your Company has an excellent track record of cordial and harmonious industrial relations and over the years not a single man-day has been lost on account of labor unrest
ACKNOWLEDGMENTS
Your Directors would like to wish their sincere appreciation to the investors, financial institutions and banks for their continued support during the year. Your Directors would like to thank the regulatory authorities and government authorities and agencies for their continued guidance and support. Your Directors also wish to place on record their deep sense of appreciation to employees and executives at all levels for their efforts and dedication. Their hard work and commitment has enabled the Company to be on the forefront of the industry. We also take this opportunity to thank all our customers without whom our success story would not have been possible.
For and on behalf of the Board of Directors
Udayant Malhoutra P S Ramesh
CEO & Managing Director Executive Director
DIN : 00053714 & COO, Aerospace, India
DIN:05205364
Place : Bangalore
Date : 29 May 2018
Mar 31, 2017
DIRECTORS'' REPORT TO SHAREHOLDERS
The Directors are pleased to present their 42nd Annual Report together with the Audited Statement of Accounts of the Company for the year ended 31st March, 2017.
strong operating margin profile of Aerospace & Defense and Hydraulics segments. Consolidated net profit after tax (PAT) for the year increased by 19.0% to Rs,1,460 lacs as compared to same period last year. PAT for the year included a one-time impact of Rs,1,012 lacs on account of various expenses such as prepayment charges, processing fees and ancillary charges incurred by the Company towards pre-payment of loan funds to the banks and financial institutions. Adjusting for this onetime impact, PAT for FY2017 increased by 73.4% to Rs,2,130 lacs.
The Aerospace & Defense segment recorded a robust revenue growth of 28.1% to reach Rs,34,568 lacs compared Rs,26,981 in FY2016. Successful deliveries of new projects along with a robust and continuing order book execution was the primary driver for this growth during the year. Segment EBITDA increased to Rs,10,473 lacs from Rs,7,636 lacs in FY2016, indicating a growth of 37.2%. This includes the turnover from the Aerospace division of Dynamatic Limited, UK, a subsidiary
1. FINANCIAL RESULTS
The Financial Results of the Company for the year ended 31st March, 2017, were as follows: (Rs, in Lacs)
Standalone |
Consolidated |
|||
Particulars |
Year Ended 31 March 2017 |
Year Ended 31 March 2016 |
Year Ended 31 March 2017 |
Year Ended 31 March 2016 |
Gross Sales |
53,180 |
45,883 |
1,54,084 |
1,52,809 |
Net Sales |
50,540 |
43,137 |
1,50,776 |
1,49,378 |
Profit (Before Other Income, Interest, Depreciation & Taxation) (EBITDA) |
9,760 |
7,430 |
16,534 |
14,108 |
Other Income |
1,196 |
401 |
594 |
499 |
Interest & Finance Charges |
5,709 |
5,163 |
7,411 |
7,275 |
Depreciation |
3,114 |
2,911 |
5,439 |
5,243 |
Net Profit Before Taxation and Exceptional Items |
2,133 |
(243) |
4,278 |
2,089 |
Exceptional Items |
(788) |
- |
(1,012) |
- |
Net Profit Before Taxation and after Exceptional Items Provision for Taxation: |
1,345 |
(243) |
3,266 |
2,089 |
- Current Tax |
739 |
(104) |
1,971 |
1,212 |
- Deferred Tax Charge |
(153) |
(268) |
(165) |
(351) |
Net Profit After Tax |
759 |
129 |
1,460 |
1,228 |
Balance brought forward from previous year |
5,969 |
5,840 |
9,782 |
8,554 |
Amount available for appropriation Appropriations |
6,728 |
5,969 |
11,242 |
9,782 |
Dividend on Equity Shares - Interim |
- |
- |
- |
- |
Proposed Final Dividend on Equity Shares |
- |
- |
- |
- |
Tax on Dividend |
- |
- |
- |
- |
Transfer to General Reserve |
- |
- |
- |
- |
Balance carried to Balance Sheet |
6,728 |
5,969 |
11,242 |
9,782 |
Note: Previous years'' figures have been recast wherever necessary. COMPANY PERFORMANCE
Consolidated net sales for FY2017 increased marginally by 0.9% to Rs,150,776 lacs as compared to Rs,149,378 lacs in FY2016. However, on a constant currency basis, FY2017 revenue if adjusted for a foreign exchange impact of Rs,1,643 lacs would have been Rs,152,419 lacs, representing a growth of 2.0% y-o-y.
Consolidated EBITDA (excluding other income) for FY2017 increased by 17.2% to Rs,16,534 lacs as compared to Rs,14,108 lacs compared to the same period last year. This EBITDA (excluding other income) growth was achieved despite the impact of Rs,509 lacs on account of unfavorable foreign exchange variations. After adjusting for this impact, EBITDA (excluding other income) for the year was Rs,17,044 lacs, representing a growth of 20.8% compared to FY2016. EBITDA (excluding other income) margin for the year under review improved by 152 basis points (bps) to 11.0% from 9.4% in FY2016. This improvement in the margin was primarily driven by of the Company, to the extent of Rs,11,916 lacs and segment EBITDA of Rs,8,092 lacs.
During the year, the Aerospace & Defense segment continued its focus on product innovation and advanced technology platform. The division announced commercial production of Airbus A330 Long Range FTBs to be manufactured in India and UK during the life of the program. The Company also inaugurated new Aerospace facility in Bangalore - Dynamatic Aerotropolis in February 2017 with the strategic focus of further strengthening the Aerospace business. This facility has started order execution for Airbus A330 and Bell Helicopter during the year under review.
The revenues from Hydraulics segment increased by 6.0% to Rs,27,692 lacs compared to Rs,26,136 lacs in the same period last year. Segment EBITDA for the division improved by 22.0% to Rs,3,978 lacs compared to Rs,3,257 in FY2016. This growth was primarily driven by a strong performance of the Hydraulics segment in India and supported by marginal growth of the UK facility on a constant currency basis compared to same period last year. The Company has established a sales office in the US during the year which is expected to help Dynamatic to expand further in the North American market.
The Automotive and Metallurgy business was Rs,88,395 lacs, a decline of 8.0% from Rs,96,052 compared to same period last year. Segment EBITDA was Rs,2,939 compared to Rs,3,929 in FY2016. The performance of this segment remained subdued due to impact of demonetization in the second half of the fiscal year. The global Volkswagen challenges further added to the subdued performance of the division during the year.
SHARE CAPITAL
As of March 31, 2017, the Company had an authorized share capital of Rs,2,000 lacs, divided into 2,00,00,000 equity shares of Rs,10/- each and Rs,500 lacs divided into 5,00,000 redeemable cumulative preference shares of Rs,100/- each. During the year under review, there was no change in the Company''s issued, subscribed and paid-up equity share capital. As of 31st March, 2017, the Company had issued, subscribed and paid-up equity share capital of Rs,634.14 lacs divided into 63,41,443 equity shares of Rs,10/- each.
TRANSFER TO RESERvES
During the year under review, your Directors do not propose to transfer any amount to General Reserve.
PARTICULARS OF LOANS, GUARANTEES OR INvESTMENTS
The Company has duly complied with the provisions of Section 186 of the Companies Act, 2013 during the year under review. The details of loans availed by the Company during the year under review are mentioned in the notes to accounts that form part of this Annual Report.
dividend
During the year under review, your Directors have decided to plough back profits into business to support new project plans. The Board does not propose to declare any dividends.
CAPITAL EXPENDITURE
During the year under review, your Company incurred capital expenditure of Rs,8,049 lacs for physical infrastructure and Rs,2,997 lacs for procurement of intangible assets. Significant investments have been made in building infrastructure, state-of-the-art machinery, design software, data security, information systems, and design and development activities; for the future benefits of your Company.
DEPOSITS
During the year under review, the Company neither accepted any deposits nor there were any amounts outstanding at the beginning of the year which were classified as ''Deposits'' in terms of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposit) Rules, 2014 and hence, the requirement for furnishing of details of deposits which are not in compliance with the Chapter V of the Companies Act, 2013 is not applicable.
SUBSIDIARIES
The Company has ten subsidiaries. Pursuant to Section 129(3) of the Companies Act, 2013 and Accounting Standard- 21 issued by the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the Financial Statements of its Subsidiaries.
Consolidated Financial Statements forms part of this Annual Report. Statement containing the salient features of the Financial Statements of the Company''s subsidiaries, associate(s) and joint venture(s) are enclosed as Annexure 1 in form AOC-1 to this Annual Report.
In terms of provisions of Section 136 of the Companies Act, 2013, the Company shall place separate audited accounts of the Subsidiary Companies on its website at www.dynamatics.com
The structure of Dynamatic Technologies Limited and its subsidiaries as on 31st March 2017 is appended hereunder :
INDIAN SUBSIDIARIES
JKM Research Farm Limited, India, (JRFL) is a wholly owned subsidiary of the Company. It continues to be the Research & Development facilitator to the Company. It operates a unique facility for testing and analysing complete tractor aggregates and systems.
JKM Erla Automotive Limited, India (JEAL) continues to be a wholly owned subsidiary of the Company.
JKM Ferrotech Limited, India (JFTL) is a subsidiary of Dynamatic Technologies. JFTL is into the manufacturing of ferrous alloy and castings, having its operations in Gummidipoondi, Tamil Nadu. This subsidiary has expertise in producing High Si-Mo automotive components and is certified to the highest quality standards specified by the Automotive Industry.
JKM Automotive Limited (JAL) is a wholly owned subsidiary of JKM Erla Automotive Limited.
Overseas SUBSIDIARIES
JKM Global Pte. Limited, Singapore, is a wholly owned subsidiary of the Company. It continues to be a holding company for the overseas businesses.
Dynamatic Limited, UK, (DLUK) is a subsidiary of your Company having aerospace and hydraulics units at Bristol and Swindon.
Yew Tree Investments Limited, Bristol, UK is a wholly owned subsidiary of Dynamatic Limited, UK.
JKM Erla Holdings GmbH, Germany (JKM Erla GmbH) is engaged in the business of setting up automotive components processing/manufacturing units.
Eisenwerk Erla GmbH, Germany (Eisenwerk) is a subsidiary of the Company. Eisenwerk has been in business for over 630 years and is a preferred supplier to leading global OEMs such as Audi, BMW, Borg Warner Turbo Emission Systems, Volkswagen and Daimler. The capabilities of this subsidiary includes high precision, complex metallurgical products for automotive engines and turbochargers.
Dynamatic LLC, US is a subsidiary of Dynamatic Limited, UK.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
Inductions, Re-appointments, Retirements & Resignations
During the year under review, the Board of Directors at their meeting held on 11th November, 2016 appointed Mr. Shirish Saraf (DIN: 01918219) as an Additional Director of the Company. Mr. Ramesh Venkataraman, an Independent Director, stepped down from the directorship effective 5th May, 2016.
Terms of Mr. Vijai Kapur (DIN: 00056415) and Air Chief Marshal
S. Krishnaswamy (Retd.) (DIN: 00056250) as Independent Directors of the Company will come to an end on 13th August 2017. As per Company''s policy on age criteria, the said Independent Directors would not be seeking re-appointment.
The Board places on record its sincere appreciation for all the contributions of the outgoing Directors. Mr. Hanuman Kumar Sharma (DIN: 07012725) and Mr. P S Ramesh (DIN: 05205364), Directors of the Company would retire by rotation in accordance with section 152 of the Companies Act, 2013 and being eligible, offers themselves for re-appointment.
None of the Directors of the Company are disqualified from being appointed as Directors as specified under Section 164 of the Companies Act, 2013. Details of all the Directors have been covered in Corporate Governance Report which forms part of the Annual Report.
Declaration by Independent Directors
The Company has received declaration from all Independent Directors that they meet the criteria of independence as laid down in Section 149(6) of the Companies Act, 2013 and regulation 27(2) of the Securities and Exchange Board of India (Listing Obligation & Disclosure Requirements) Regulations,
2015 (hereinafter referred as the "Listing Regulations"). The Company keeps a policy of transparency and arm''s length while dealing with its Independent Directors. There were no pecuniary transactions entered into with the Independent Directors apart from sitting fees. The Independent Directors have also confirmed that they have complied with the Company''s code of conduct.
Key Managerial Personnel (KMP)
During the year under review, the Company has designated following personnel as KMPs as per the definition under Section 2(51) and Section 203 of the Act:
- Mr. Udayant Malhoutra, CEO & Managing Director
- Mr. Hanuman Kumar Sharma, Group CFO & Executive Director
- Mr. P S Ramesh, Executive Director & COO - Aerospace, India
- Mr. Naveen Chandra P., Head Legal, Compliance and Company Secretary
board meetings
The Company prepares a Board and allied committee meeting calendar and circulates to all the directors in advance for their concurrence. During FY2017, four meetings of the Board of Directors were held.
Details of the composition of the Board and its Committees and of the Meetings held, attendance of the Directors at such Meetings and other relevant details are provided in the Corporate Governance Report. These Board meetings were held during the FY2017 and not more than one hundred and twenty days had intervened between two consecutive meetings of the Board.
COMMITTEES OF BOARD OF DIRECTORS
The Board has seven committees viz; the Audit and Risk Management Committee, Nomination and Remuneration Committee, Stakeholders'' Relationship Committee,
Technology & Strategy Development Committee, Finance Committee, Corporate Social Responsibility Committee and Independent Directors'' Committee. Details of all the Committees of Board of Directors as per the Secretarial Standard-1 as issued by the Institute of Company Secretaries of India have been disclosed in the Corporate Governance Report. The Board has accepted all the recommendations made by all the Committees of Board of Directors during the year under review.
familiarization programme for the independent DIRECTORS
An appropriate induction for new directors and ongoing training for all directors ensure high corporate governance in the Company. Dynamatic conducts induction programme for every new independent director to provide them an opportunity to build an understanding about Dynamatic, its businesses and the markets and regulatory environment in which it operates; familiarize with its management and its operations so as to gain a clear understanding of their roles and responsibilities and contribute significantly towards the growth of the Company. They have full opportunity to interact with Senior Management Personnel and are provided all the documents required and sought by them for enabling them to have a good understanding of the Company, its various operations and the industry in which it operates. Dynamatic Technologies firmly believes that a Board, which is well informed /familiarized with the Company, can contribute significantly to effectively discharge its role of trusteeship in a manner that fulfils stakeholders'' expectations.
During the year under review, the Company had carried out familiarization programme for Independent Directors by organizing workshop at Auto unit, Eisenwerk Erla GmbH, Germany; Aerospace unit, Dynamatic Limited, Bristol, UK and Hydraulics unit, Dynamatic Limited, Swindon, UK.
In pursuit of this, the Directors are updated on a continuing basis on developments in the corporate and industry scenario including those pertaining to regulatory and economic environment, to enable them to take well informed and timely decisions. The details of the familiarization programme may be accessed on the Company''s corporate website (www. dynamatics.com/investor.html)
PARTICULARS OF REMUNERATION OF DIRECTORS, KMP AND EMPLOYEES
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with 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 is attached as Annexure 2 which forms part of this report. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure 2 which forms part of this report.
Diversity IN THE BOARD
The Company recognizes and embraces the importance of a diverse board in its success. We believe that a truly diverse board will leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical background, age, ethnicity, race and gender, which will help us retain our competitive advantage. The Board has adopted a policy on appointment, continuation and cessation of Directors which sets out the approach to diversity in the composition of the Board. The Company has an optimum mix of executive and non-executive, independent directors and woman director.
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
The Companies Act, 2013 states that a formal annual evaluation needs to be performed by the Board of its own performance, various committees of the Board and that of the individual directors. Schedule IV of the Companies Act, 2013, states that the performance evaluation of independent directors shall be done by the entire Board, excluding the director being evaluated.
The evaluation of all the directors and the Board as a whole was carried out based on the criteria and framework adopted by the Board as explained in the Corporate Governance Report. The Board of Directors expressed their satisfaction with the evaluation process.
REMUNERATION POLICY
The philosophy for remuneration of directors, KMP and all other employees of the Company is based on the commitment of fostering a culture of leadership with trust. Furthermore, the Company believes in providing an opportunity that has a strong linkage to and reinforces the performance culture of the Company. The remuneration policy is aligned to this philosophy. The Company has laid down remuneration policy which is designed to attract, motivate, retain manpower and improve productivity by creating a congenial work environment, encouraging initiative, personal growth and teamwork besides offering appropriate remuneration package. Pursuant to the applicable provisions of the Companies Act, 2013 and the Listing Regulations, the Board, in consultation with its Nomination & Remuneration Committee, has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire Board of the Company and Individual Directors, including Independent Directors. The said policy has been enclosed as Annexure 3.
Members can download the complete remuneration policy on the Company''s website (www.dynamatics.com/investor. html).
CORPORATE SOCIAL RESPONSIBILTY (CSR)
Dynamatic Technologies understands the significance of growing its business in a socially responsible way. The Company believes that CSR is not an obligation but an intrinsic part of the overall corporate values. The objective of the Company is to grow its business, whilst reducing the environmental impact of its operations and increasing its positive social impact. Growing responsibly is crucial for creating long-term sustainable stakeholder value. In pursuit of this objective, a Corporate Social Responsibility (CSR) Committee has been formed by the Company which oversees and facilitates deliberation on the social and environmental consequences of each of the decisions made by the Board. The Committee also takes into account the interests of all shareholders, customers, employees, suppliers, business partners, local communities and other organizations in the Board''s decision making. The Company has formulated the CSR Policy under the guidance of Ernst & Young taking into consideration the requirements of the stakeholders of the Company. The said policy has been approved by the Board and is available on the website of the Company (www. dynamatics.com/investor.html)
Pursuant to the provisions of section 135, 198 & other applicable provisions of the Companies Act read with applicable rules, although CSR initiatives are not mandatory for the Company for the time being in force, it has voluntarily undertaken various initiatives during the year which are summarized below:
- Skill Development: The Company conducted skill development training for both instructors and students at Industrial Training Institute (ITI), Devanahalli, Bangalore. This was conducted with the objective to bridge the gap between industry and academic institute.
- Courses on Aerospace Engineering: Finalized the contractors for constructing a building that would be used as dedicated facility to impart courses on aerospace engineering.
- Plantation: With the objective to increase greenery and conserve the environment, Dynamatic seeded Rose plants in the ITI campus. Various fruit plants were also planted and their maintenance is also undertaken by the Company.
- Drinking Water: A bore well was dug for the supply of drinking water in the ITI campus and water purifiers were also installed.
RISK MANAGEMENT POLICY
The Company believes that managing risks goes hand-in-hand with maximizing returns. To this effect, there is a robust process in place to identify key risks across the Group and priorities relevant action plans to mitigate these risks. The Audit & Risk Management Committee has been entrusted with the responsibility to assist the Board members about the risk assessment and its minimization procedures, which includes discussing the management submissions on risks, prioritizing key risks and approving action plans to mitigate such risks. The Policy suggests framing an appropriate response action for the key risks identified, so as to make sure that risks are adequately compensated or mitigated.
The main objectives of the said policy are:
i. To ensure that all the current and future material risk exposures of Dynamatic Technologies are identified, assessed, quantified, appropriately mitigated and managed;
ii. To establish a framework for Dynamatic Technologies'' risk management process and to ensure company-wide implementation;
iii. To ensure systematic and uniform assessment of risks related with each of the units of Dynamatic Technologies;
iv. To enable compliance with appropriate regulations, wherever applicable, through the adoption of best practices; and
v. To assure business growth with financial stability.
The said policy has been uploaded on Company''s website
(www.dynamatics.com/investor.html)
WHISTLE BLOWER POLICY AND vIGIL MECHANISM
The Company has adopted a Vigil Mechanism Policy through which all stakeholders including Directors and employees may report unethical behavior, malpractices, wrongful conduct, fraud, violation of the Company''s code of conduct without fear of reprisal. Details of complaints received and the action taken are reviewed by the Audit & Risk Management Committee. During the year under review, the Company / Committee has not received any such complaint. The functioning of the vigil mechanism is reviewed by the Audit & Risk Management Committee from time to time. The policy on vigil mechanism may be accessed on the Company''s website (https://www. dynamatics.com/investor.html)
POLICY FOR SAFETY AND WELL BEING OF WOMEN
Dynamatic Technologies has zero tolerance for sexual harassment at workplace and has adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules there under for prevention and redressal of complaints of sexual harassment at workplace. There have been no complaints of sexual harassment received during the year.
AUDITORS
Statutory Auditors
M/s. B S R & Co. LLP, Chartered Accountants are the Statutory Auditors of the Company for a period of five years with effect from 14th August 2014. M/s. B S R & Co., LLP have confirmed to the Company that they are not disqualified under section 141 of the Companies Act, 2013, or any other applicable provisions for the time being in force and are eligible for being appointed as statutory auditors of the Company. M/s. B S R & Co., LLP have also confirmed to the Company that, their appointment, if made, would be within the limits prescribed under the Companies Act, 2013.
The report of the Statutory Auditors along with notes to Schedules is enclosed to this report. The observations made in the Auditors'' Report are self-explanatory and therefore do not call for any further comments. The Auditor''s Report does not contain any qualification, reservation or adverse remark.
Cost Auditors
As per Section 148 of the Act, the Company is required to have the audit of its cost records conducted by a Cost Accountant in practice. M/s Rao, Murthy & Associates were appointed as Cost Auditors of the Company for the FY2017 conduct cost audits pertaining to relevant products prescribed under the Companies (Cost Records and Audit) Rules, 2014 as amended from time to time.
Internal Auditors
The Internal Audit function is responsible for assisting the Audit & Risk Management Committee on an independent basis with a full status of the risk assessments and management. M/s. Ernst & Young, LLP were appointed as Internal Auditors of the Company for the FY2017.
Secretarial Auditor
The Company had appointed Mr. R Vijayakumar, Company Secretary in practice in Bangalore, to conduct its Secretarial Audit for the financial year ended 31st March, 2017. The Secretarial Auditors have submitted their report, confirming compliance by the Company of all the provisions of the applicable corporate laws. The Report does not contain any qualification, reservation or adverse remark. The Secretarial Audit Report is annexed as Annexure 4 to this report.
Tax Auditors
M/s BVS & Associates, Chartered Accountants, are the Tax Auditors of the Company. The Tax Auditor''s Report does not contain any qualification, reservation or adverse remark.
INTERNAL CONTROLS SYSTEMS AND THEIR ADEQUACY
According to Section 134(5)(e) of the Companies Act, 2013, the term Internal Financial Control (IFC) means the policies and procedures adopted by a company for ensuring the orderly and efficient conduct of its business, including adherence to the company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.
The Company''s internal control systems are commensurate with the nature of its business and the size and complexity of its operations. The Company has a well-placed, proper and adequate internal financial control system ensures adherence to its philosophy of sustainable growth with proactive risk management. The Company''s internal financial control system also comprises due compliances with Company''s policies, standard operating procedures and audit and compliance by an in-house internal audit division, supplemented by internal audit checks from M/s. Ernst & Young, LLP, the Internal Auditors and various transaction auditors and cover all offices, factories and key business areas.
The Internal Auditors independently evaluate the adequacy of internal controls and concurrently audit the majority of the transactions in value terms. Independence of the audit and compliance is ensured by direct reporting to the Audit & Risk Management Committee of the Board. A CEO and CFO Certificate, forming part of the Corporate Governance Report, further confirms the existence and effectiveness of internal controls and reiterates their responsibilities to report deficiencies to the Audit & Risk Management Committee and rectify the same. During the year under review, no material or serious observation has been received from the Statutory Auditors and the Internal Auditors of the Company on the inefficiency or inadequacy of such controls.
OTHER DISCLOSURES
Events Subsequent to the Date of the Financial Statements
There were no material changes / commitments affecting the financial position of the Company or that may require disclosure, between 31st March, 2017 and the date of Board''s Report.
Change in the Nature of Business, if any
The Company continues to focus on its key business segments and looks for selective growth / expansion opportunities. There was no change in the nature of business during the year under review. State of the affairs of the Company and future plan of action and outlook is discussed in this report.
Significant & Material Orders Passed by the Regulators
During the year under review, no significant / material orders were passed by the regulators or the Courts or the Tribunals impacting the going concern status and the Company''s operations in future.
Demat Suspense Account unclaimed shares
As on 31st March, 2017 there are 110 members, holding 4,423 equity shares of ''10/- each, lying in the escrow account due to non-availability of their correct particulars. A detailed note in this regard is provided in the Corporate Governance Section under "Suspense Account for the unclaimed shares". The voting rights on these shares shall remain frozen till the rightful owner of such shares claims the shares.
Extract of the Annual Return
Pursuant to the provisions of section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of annual return in form MGT 9 is enclosed as Annexure 5 to this Annual Report.
Listing with Stock Exchanges
The Company confirms that it has paid the Annual Listing Fees for the year FY2018 to the NSE and the BSE where the Company''s equity shares are listed.
Consolidated Financial Statements
The Directors have pleasure in attaching the Consolidated Financial Statements prepared by the Company in accordance with the relevant Accounting Standards issued by the Institute of Chartered Accountants of India, which form part of the Annual Report.
RELATED PARTY TRANSACTIONS
With reference to Section 134(3)(h) of the Companies Act, 2013, all contracts and arrangements with related parties under Section 188(1) of the Act, entered into by the Company during the financial year, were in the ordinary course of business and on an arm''s length basis.
As per the Listing Regulations, all related party transactions are placed before the Audit & Risk Management Committee for approval. Prior omnibus approval of the Audit & Risk Management Committee has been obtained for the transactions which are of foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval are presented to the Audit & Risk Management Committee by way of a statement giving details of all related party transactions. The Company has developed a Related Party Transactions Manual for the purpose of identification and monitoring of such transactions. Particulars of Contracts or Arrangements with Related parties referred to in Section 188(1) is disclosed in Form AOC- 2 as Annexure 6.
ENVIRONMENTAL PROTECTION MEASURES
In view of the corporate responsibility on environmental protection, the Company has adopted a number of measures to improve in the field of environment, safety and health. Measures like standard operating procedures, training programmes for all levels of employees regarding resource conservation, housekeeping, Green Belt development and onsite emergency plan have been taken. Sustainable living is a part of long-term business strategy and your Company continuously strives to reduce our environmental footprint, while enhancing the livelihood of people across our product value chain.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
The information relating to conservation of energy and technology absorption are appended hereunder:
Conservation of Energy
All our facilities in India and abroad are built with the environment in mind and the processes are designed for efficiency, energy conservation and to ensure that no waste is transmitted into the environment. The industrial complexes are highly energy efficient and completely non-polluting. This is being systematized and quantifiable by implementing ISO 14000.
Technology Absorption
Research & Development plays a vital role in developing and adopting new technologies to enhance our operational efficiencies. The Company owns the world''s best hydraulic technologies. The Company has added technology from Plessey through the acquisition of Dynamatic Limited, UK, in 2007.
The Aerospace & Hydraulics units in India & the UK; Automotive units in India and Germany work together in resolving engineering challenges leading to better synergies across the group.
Research & Development (R&D)
R&D and Innovation continues to be an integral part of the Company''s growth strategy, business profitability, sustainability and as a part of its contribution towards the building of the Nation. Dynamatic Science Lab, created by consolidating various research and technology functions, helps to enhanced value delivery by leveraging skills and competencies to create new business opportunities. The Company''s Research & Development is actively driven by a Board level committee constituted as the Technology & Strategy Development Committee.
The Technology & Strategy Development Committee of the Board provides direction to the Company''s R&D strategy and on key issues pertaining to R&D technology. The Committee regularly reviews and updates the skills and competencies required, the structure and the processes needed to ensure that the R&D initiatives of today result in products necessary for the sustained and long term growth of the Company.
Expenditure on Research & Development
(Rs, in lacs)
Particulars |
31st March, 2017 |
31st March, 2016 |
|
A. |
Capital |
28 |
52 |
B. |
Recurring |
523 |
635 |
Total |
551 |
687 |
FOREIGN EXCHANGE EARNINGS AND OUTGO
Particulars of foreign exchange earnings and outgo are as follows:
(Rs, in lacs)
Particulars |
31st March, 2017 |
31st March, 2016 |
a. Total Foreign Exchange Earned |
24,460 |
16,608 |
b. Total Foreign Exchange Used |
8,562 |
7,439 |
- Import of Raw materials, components, stores and spares |
8,154 |
5,840 |
- Foreign Travel |
41 |
85 |
- Interest |
169 |
121 |
- Capital Expenditure |
93 |
1336 |
- Others |
105 |
57 |
MANAGEMENT''S DISCUSSION & ANALYSIS REPORT
Pursuant to regulations 34 of the Listing Regulations, Management''s Discussion & Analysis Report for the year is presented in a separate section forming part of the Annual Report.
CORPORATE GOvERNANCE
Corporate Governance is a set of principles, processes and systems which govern a company. The Company believes that an effective corporate governance practices provides a strong foundation for a successful enterprise. The key principles on which a sound Corporate Governance system is based are independence, transparency, accountability, responsibility, compliance, ethics, values and trust. Corporate Governance enables an organization to perform efficiently and ethically generate long term wealth and create value for all its stakeholders.
Dynamatic Technologies is committed to maintain the best standards of Corporate Governance and adopted many ethical and transparent governance practices even before they were mandated by law. The Company has always strived towards building trust with shareholders, employees, customers, suppliers and other stakeholders based on the principles of good corporate governance. Strong leadership and best-in-class corporate governance practices are considered one of the major strength of the Company.
A detailed report on Corporate Governance, pursuant to the requirements of Regulation 34 of the Listing Regulations, forms part of the Annual Report. The certificate from the Practicing Company Secretary confirming compliance of the Corporate Governance norms as stipulated in the Listing Regulations is also included in the Annual Report.
PROMOTERS
The list of the promoters is disclosed for the purpose of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. Mr. Udayant Malhoutra is the promoter of the Company within the definition of ''Promoter'' for the purpose of regulations 2(1 )(s) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011. Details of the promoter group are appended as under:
No. |
Name of the entity / person |
1. |
JKM Holdings Private Limited |
2. |
Udayant Malhoutra and Company Private Limited |
3. |
JKM Offshore India Private Limited |
4. |
Wavell Investments Private Limited |
5. |
Mrs. Barota Malhoutra |
6. |
Vita Private Limited |
7. |
Christine Hoden (India) Private Limited |
8. |
Primella Sanitary Products Private Limited |
9. |
Greenearth Biotechnologies Limited |
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the section 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of knowledge and belief and according to the information and explanations obtained by them, hereby confirm that:
a. in the preparation of accounts for the financial year ended 31st March, 2017, the applicable Accounting Standards have been followed with proper explanation relating to material departures if any.
b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were 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 & Loss Account of the Company for the year under review.
c. the Directors have taken proper and sufficient care for the maintenance of adequate 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 accounts for the financial year ended 31st March, 2017, on a ''going concern'' basis.
e. the Directors have laid down internal financial controls to be followed by the company and that the internal financial controls are adequate and are operating effectively.
f. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and the systems are adequate and operating effectively.
g. Pursuant to the provisions of the Companies Act, 2013 (as amended from time to time), dividends which remained unclaimed for a period of seven years, have been transferred by the Company to the Investor Education and Protection Fund.
HUMAN RESOURCES
The Company believes that human resources are critical for the overall success of the organization and ensures to undertake best efforts for maintaining a cordial relationship with the employees. Dynamatic''s focus has always been to acquire, nurture and develop the best talent to prepare them for leadership roles within the organization. Various initiatives to improve the skills of its employees though training initiatives are ongoing exercise at the Company. Such initiatives are important to ensure job enrichment, engagement and accountability for performance, career progression, reward, recognition and welfare of the employees. Your Company has an excellent track record of cordial and harmonious industrial relations and over the years not a single man-day has been lost on account of labor unrest.
ACKNOWLEDGMENTS
Your Directors would like to wish their sincere appreciation to the investors, financial institutions and banks for their continued support during the year. Your Directors would like to thank the regulatory authorities and government authorities and agencies for their continued guidance and support. Your Directors also wish to place on record their deep sense of appreciation to employees and executives at all levels for their efforts and dedication. Their hard work and commitment has enabled the Company to be on the forefront of the industry. We also take this opportunity to thank all our customers without whom our success story would not have been possible.
For and on behalf of the board of Directors
Udayant Malhoutra Hanuman Kumar Sharma
CEO & Managing Director Group CFO & Executive Director
DIN : 00053714 DIN: 07012725
Place : bangalore
Date : 29 May 2017
Mar 31, 2016
The Directors are pleased to present their 41st Annual Report together with the Audited Statement of Accounts of the Company for
the year ended 31st March, 2016.
1. FINANCIAL RESULTS
The Financial Results of the Company for the year ended 31st March, 2016, were as follows:
(Rs. in Lacs)
Standalone Consolidated
Particulars Year Ended Year Ended Year Ended Year Ended
31 March 2016 31 March 2015 31 March 2016 31 March 2015
Gross Sales 45,883 48,762 1,52,809 1,66,860
Net Sales 43,137 45,688 1,49,378 1,62,918
Profit (Before
Interest,
Depreciation
& Taxation)
(EBITDA) 7,430 6,736 14,108 15,143
Other Income 401 746 499 1,026
Interest &
Finance Charges 5,163 5,373 7,275 7,995
Depreciation 2,911 2,850 5,243 5,091
Net Profit
Before Taxation
and Exceptional
Items (243) (741) 2,089 3,083
Exceptional
Items - 3,719 - 1,909
Net Profit
Before Taxation
and after
Exceptional Items (243) 2,978 2,089 4,992
Provision for
Taxation:
- Current Tax (104) 1,451 1,212 2,781
- Deferred Tax
Charge (268) (578) (351) (654)
Net Profit
After Tax 129 2,105 1,228 2,865
Balance brought
forward from
previous year 5,840 3,735 8,554 5,689
Amount available
for
appropriation 5,969 5,840 9,782 8,554
Appropriations
Dividend on
Equity Shares -
Interim - - - -
Proposed Final
Dividend on
Equity Shares - - - -
Tax on Dividend - - - -
Transfer to
General Reserve - - - -
Balance carried
to Balance Sheet 5,969 5,840 9,782 8,554
Note: Previous years'' figures have been recast wherever necessary.
COMPANY PERFORMANCE
Net sales on a consolidated basis decreased by 8.3% to Rs. 149,378 lacs as against Rs. 162,918 lacs in FY2015. This was a clear
reflection of the prevailing difficult global macroeconomic scenario. Recovery of the global auto industry remained fragmented
which had a bearing on our Automotive segment performance. Erratic monsoon over the past couple of years and drought like
situation in many parts of the country continued to impact the Indian agriculture industry resulting in weak farmer sentiment for
most of the year. Although there were early signs of recovery in the hydraulics industry environment during the last quarter of
the fiscal year 2016 both in the UK and India. In the Aerospace segment, the Company has made investments over the last two years
in building capacities for the execution of orders for Airbus, Boeing and Bell. During Q4 FY2016, commercial deliverables for the
projects to Boeing Chinook CH-47F Helicopter started resulting in improved performance of the Aerospace segment. Revenue growth
during the year also included a negative impact of unfavorable foreign exchange fluctuation of Rs.5,847 lacs, in particular
EURO-INR.
EBITDA on a consolidated basis was Rs.14,108 lacs as against Rs.15,143 lacs in FY2015 representing a decline of (6.8)%. Of this
decline, Rs. 263 lacs was due to unfavourable foreign exchange fluctuation, in particular EURO-INR. Despite a decline in the
topline, EBITDA margins were sustained at 9.4%. Interest Expenses declined from Rs. 7,995 lacs in FY2015 to Rs.7,275 lacs in
FY2016. Net Profit Before Tax for the year on a consolidated basis was Rs.2,089 lacs as against Rs.4,992 lacs in FY2015. Profit
during the year FY2015 also included an exceptional item of Rs. 1,909 lacs on account of gain on sale of non-core assets. Net
Profit After Tax on a consolidated basis is Rs. 1,228 lacs as against Rs. 2,865 lacs in FY2015.
The Aerospace & Defence segment grew from Rs.26,020 lacs in FY2015 to Rs. 26,981 lacs FY2016 on account of ramp up of the order
book and commercial deliveries of project to Boeing Chinook CH-47. Profit (Before Interest & Tax) increased from Rs. 5,403 lacs
to Rs.6,555 lacs. This includes the turnover from the Aerospace division of Dynamatic Limited, UK, a subsidiary of your Company,
to the extent of Rs. 12,233 lacs and Profit (Before Interest & Tax) of Rs. 1,297 lacs.
The Hydraulics and Precision Engineering segment declined to Rs.26,132 lacs from Rs.29,218 lacs in 2015 due to the poor
agriculture industry environment. Profit (Before Interest & Tax) decreased from Rs.2,806 lacs to Rs.2,338 lacs. This includes the
turnover from the Hydraulics division of Dynamatic Limited, UK, a subsidiary of your Company, to the extent of Rs.9,591 lacs and
Profit (Before Interest & Tax) of Rs.102 lacs.
The Automotive and Metallurgy business declined from Rs. 1,07,498 lacs to Rs. 96,052 lacs while Profit (Before Interest & Tax)
decreased to Rs.900 lacs from Rs.2,336 lacs. This includes the turnover from Eisenwerk Erla GmbH, a subsidiary of your Company to
the extent of Rs.83,146 lacs and Profit (Before Interest & Tax) of Rs. 3,627 lacs. Exports from India have gone down by 2% with
sales of Rs.15,310 lacs against the previous year''s Rs. 15,655 lacs.
SHARE CAPITAL
During the year under review, there was no change in the Company''s issued, subscribed and paid-up equity share capital. On 31st
March, 2016, it stood at Rs.634.14 lacs divided into 63,41,443 equity shares of Rs. 10/- each.
TRANSFER TO RESERVES
During the year under review, your Directors do not propose to transfer any amount to General Reserve. The Company has hedged a
part of its future foreign currency receivables to mitigate its foreign exchange fluctuation risks. The same has been designated
as a cash flow hedge with effect from April 1, 2008, applying the hedging criteria. The movement in the Mark To Market (MTM),
subsequent to the designation as a cash flow hedge, amounting to Rs.92 lacs (Consolidated) has been accounted under the Hedge
Reserve Account.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
The Company has duly complied with the provision of Section 186 of the Companies Act, 2013 during the year under review. The
details of loans, guarantees and investments covered under section 186 of the Companies Act, 2013 form part of the notes to the
financial statements provided in the Annual Report.
DIVIDEND
During the year under review, your Directors have decided to plough back profits into business to support new project plans. The
Board do not propose to declare any dividends.
CAPITAL EXPENDITURE
During the year under review, your Company incurred capital expenditure of Rs.3,229 lacs for physical infrastructure and Rs.33
lacs for the procurement of intangible assets. Significant investments have been made over the past two years in building
infrastructure, state-of-the-art machinery, design software, data security, information systems, and design and development
activities, for the future growth of your Company.
DEPOSITS
The Company has not accepted any deposit during the year under review. There were no deposits remaining unpaid/ unclaimed as at
the end of the financial year 2016 as such, no amount of principal of interest was outstanding, as on the balance sheet closure
date.
SUBSIDIARIES
The Company has eight subsidiaries. Pursuant to section 129(3) of the Companies Act, 2013 and Accounting Standard- 21 issued by
the Institute of Chartered Accountants of India, Consolidated Financial Statements presented by the Company include the Financial
Statements of its Subsidiaries.
Consolidated Financial Statements forms part of this Annual Report. Statement containing the salient feature of the financial
statement of the Company''s subsidiaries, associate(s) and joint venture(s) is enclosed as Annexure 1 in form AOC-1 to this Annual
Report.
In terms of provisions of Section 136 of the Companies Act, 2013, the Company shall place separate audited accounts of the
Subsidiary Companies on its website at www.dynamatics. com
The structure of Dynamatic Technologies Limited and its subsidiaries as on 31st March 2016 is appended hereunder:
INDIAN SUBSIDIARIES
JKM Research Farm Limited, India, (JRFL) is a wholly owned subsidiary of the Company. It continues to be the Research &
Development facilitator to the Company.
JKM Erla Automotive Limited, India (JEAL) continues to be a wholly owned subsidiary of the Company,
JKM Ferrotech Limited, India (JFTL) is a subsidiary of the Company. JFTL is into the manufacturing of ferrous alloy and
castings, having its operations in Gummidipoondi, Tamil Nadu
OVERSEAS SUBSIDIARIES
JKM Global Pte. Limited, Singapore, is a wholly owned subsidiary of the Company. It continues to be a holding company for the
overseas businesses.
Dynamatic Limited, UK, (DLUK) is a subsidiary of your Company having aerospace and hydraulics units at Bristol and Swindon
respectively.
Yew Tree Investments Limited, Bristol, UK is a wholly owned subsidiary of Dynamatic Limited, UK.
JKM Erla Holdings GmbH, Germany (JKM Erla GmbH) is engaged in the business of setting up automotive components
processing/manufacturing units.
Eisenwerk Erla GmbH, Germany (Eisenwerk) is a subsidiary of the Company. Eisenwerk has been in business for over 630 years and is
a preferred supplier to leading global OEMs.
DIRECTORS AND KEY MANAGERIAL PERSONNEL Inductions, Re-appointments, Retirements & Resignations
During the year under review, the Board of Directors at their meeting held on 28th May, 2015 appointed Mr. Rajendra Babu Subodh
as Additional Director and designated as Executive Director of the Company. The said appointment of Mr. Rajendra Babu Subodh has
also been considered and approved by the Shareholders by passing requisite resolutions in the Annual General Meeting (AGM) held
on 14th August, 2015. Mr. Rajendra Babu Subodh stepped down as Executive Director of the Company from the closing hours of 15th
March, 2016. Mr. Ramesh Venkataraman, an Independent Director, stepped down from the directorship effective 5th May, 2016.
Mr. Dietmar Hahn, Non-Executive Director of the Company would retire by rotation in accordance with section 152 of the Companies
Act, 2013 and being eligible, offers himself for re- appointment.
None of the Directors of the Company are disqualified from being appointed as Directors as specified under Section 164 of the
Companies Act, 2013. Details of all the Directors have been covered in Corporate Governance Report which forms part of the Annual
Report.
Declaration by Independent Directors
The Company has received declaration from all Independent Directors that they meet the criteria of independence as laid down in
Section 149(6) of the Companies Act, 2013 and regulation 25 of the Securities and Exchange Board of India (Listing Obligation &
Disclosure Requirements), Regulations 2015 (hereinafter referred as the "Listing Regulations"). The Company keeps a policy of
transparency and arm''s length while dealing with its Independent Directors. There were no pecuniary transactions entered into
with the Independent Directors apart from sitting fees.
Key Managerial Personnel (KMP)
The Company has designated following personnel as KMPs as per the definition under Section 2(51) and Section 203 of the Companies
Act 2013:
- Mr. Udayant Malhoutra, CEO & Managing Director
- Mr. Hanuman Kumar Sharma, CFO & Executive Director
- Mr. P S Ramesh, Executive Director & COO, Dynamatic Oldland Aerospaceâ¢, India
- Mr. Rajendra Babu Subodh*, Executive Director & COO, Dynamatic Oldland Aerospaceâ¢, India
- Mr. Naveen Chandra, Head Legal, Compliance and Company Secretary
- Resigned from the closing hours of 15th March, 2016
BOARD MEETINGS
The Company prepares a Board and allied committee meeting calendar which is circulated to all the directors in advance for their
concurrence. During FY2016, four meetings of the Board of Directors were held.
Details of the composition of the Board and its Committees and of the Meetings held, attendance of the Directors at such Meetings
and other relevant details are provided in the Corporate Governance Report. These Board meetings were held during the FY2016 and
not more than one hundred and twenty days has intervened between two consecutive meetings of the Board.
COMMITTEES OF BOARD OF DIRECTORS
Details of all the Committees of Board of Directors has been disclosed in the Corporate Governance Report. The Board has accepted
all the recommendations made by all the Committees of Board of Directors during the year under review,
FAMILIARIZATION PROGRAMME FOR THE INDEPENDENT DIRECTORS
The Company conducts induction programme for every new independent director to provide them an opportunity to familiarize with
the Company, its management and its operations so as to gain a clear understanding of their roles and responsibilities and
contribute significantly towards the growth of the Company. They have full opportunity to interact with Senior Management
Personnel and are provided all the documents required and sought by them for enabling them to have a good understanding of the
Company, its various operations and the industry in which it operates. Dynamatic Technologies firmly believes that a Board, which
is well informed /familiarised with the Company, can contribute significantly to effectively discharge its role of trusteeship in
a manner that fulfils stakeholders'' expectations.
In pursuit of this, the Directors are updated on a continuing basis on developments in the corporate and industry scenario
including those pertaining to regulatory and economic environment, to enable them to take well informed and timely decisions. The
details of the familiarisation programme may be accessed on the Company''s website (www.dynamatics. com).
PARTICULARS OF REMUNERATION OF DIRECTORS, KMP AND EMPLOYEES
In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with 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 is attached as Annexure 2 which forms part of
this report. Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act read with Rule
5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is also attached as Annexure 2 which
forms part of this report.
DIVERSITY OF THE BOARD
The Company recognizes and embraces the importance of a diverse board in its success. We believe that a truly diverse board will
leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical
background, age, ethnicity, race and gender, which will help us retain our competitive advantage. The Board has adapted a policy
on appointment, continuation and cessation of Directors which sets out the approach to diversity in the composition of the Board.
The Company has an optimum mix of executive and non-executive directors, independent directors and woman director.
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
The Companies Act, 2013 states that a formal annual evaluation needs to be performed by the Board of its own performance and that
of the individual directors. Schedule IV of the Companies Act, 2013, states that the performance evaluation of independent
directors shall be done by the entire Board, excluding the director being evaluated.
The evaluation of all the directors and the Board as a whole was carried out based on the criteria and framework adopted by the
Board as explained in the Corporate Governance Report. The Board of Directors expressed their satisfaction with the evaluation
process.
REMUNERATION POLICY
The philosophy for remuneration of directors, KMP and all other employees of the Company is based on the commitment of fostering
a culture of leadership with trust. The remuneration policy is aligned to this philosophy. The Company has laid down remuneration
policy which is designed to attract, motivate, retain manpower and improve productivity by creating a congenial work environment,
encouraging initiative, personal growth and teamwork besides offering appropriate remuneration package. Pursuant to the
applicable provisions of the Companies Act, 2013 and the Listing Regulations, the Board, in consultation with its Nomination &
Remuneration Committee, has formulated a framework containing, inter-alia, the criteria for performance evaluation of the entire
Board of the Company and Individual Directors, including Independent Directors. The said policy has been enclosed as Annexure 3.
Members can download the complete remuneration policy on the Company''s website (www.dynamatics.com).
CORPORATE SOCIAL RESPONSIBILTY
At Dynamatic Technologies, Corporate Social Responsibility is an intrinsic part of the overall corporate growth objectives.
Growing responsibly is crucial for creating long-term sustainable stakeholder value. In pursuit of this objective, a Corporate
Social Responsibility (CSR) Committee has been formed by the Company which oversees and facilitates deliberation on the social
and environmental consequences of each of the decisions made by the Board. The Committee also takes into account the interests of
all shareholders, customers, employees, suppliers, business partners, local communities and other organisations in the Board''s
decision making. The Company''s CSR Policy has been approved by the Board and is available on the website of the Company (www.
dynamatics.com).
Pursuant to the provisions of section 135, 198 & other applicable provisions of the Companies Act read with applicable rules,
although CSR initiatives are not mandatory for the Company for the time being in force, it has voluntarily conducted skill
development training for the Industrial Training Institute (ITI), Devanahalli, Bengaluru. The said training program was arranged
for 10 days and included the topics from both non-core areas like building soft skills & work ethics and core areas like
engineering drawing, hand tools/cutting tools, drilling, fastening, riveting, sealant/adhesive application and bonding.
The Company supports Shirish Saraf Scholarship for meritorious students between 13 to 16 years'' age to study at the Charterhouse
School, England.
In an initiative to fight the menace of ''Dengue'', the Company has donated ''Fumigation Machine'' to Government High School, Pottery
Town, Bangalore.
RISK MANAGEMENT POLICY
The Company believes that managing risks goes hand-in- hand with maximising returns. To this effect, there is a robust process in
place to identify key risks across the Group and prioritise relevant action plans to mitigate these risks. The Audit & Risk
Management Committee has been entrusted with the responsibility to assist the Board members about the risk assessment and its
minimization procedures, which includes discussing the management submissions on risks, prioritising key risks and approving
action plans to mitigate such risks.
The objective of this Policy is to have a well-defined approach to risk. The Policy suggests framing an appropriate response
action for the key risks identified, so as to make sure that risks are adequately compensated or mitigated.
The main objectives of the said policy are:
i. To ensure that all the current and future material risk exposures of Dynamatic Technologies are identified, assessed,
quantified, appropriately mitigated and managed;
ii. To establish a framework for Dynamatic Technologies'' risk management process and to ensure company-wide implementation;
iii. To ensure systematic and uniform assessment of risks related with each of the units of Dynamatic Technologies;
iv. To enable compliance with appropriate regulations, wherever applicable, through the adoption of best practices; and
v. To assure business growth with financial stability.
The said policy has been uploaded on Company''s website (www.dynamatics.com)
WHISTLE BLOWER POLICY AND VIGIL MECHANISM
The Company has adopted a Whistle Blower Policy and Vigil Mechanism through which all stakeholders including Directors and
employees may report unethical behavior, malpractices, wrongful conduct, fraud, violation of the Company''s code of conduct
without fear of reprisal. Details of complaints received and the action taken are reviewed by the Audit & Risk Management
Committee. The said policy has been uploaded on the Company''s website (www.dynamatics.com)
POLICY FOR SAFETY AND WELL BEING OF WOMEN
Dynamatic Technologies has zero tolerance for sexual harassment at workplace and has adopted a Policy on prevention, prohibition
and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013 and the Rules thereunder for prevention and redressal of complaints of sexual
harassment at workplace. There have been no complaints of sexual harassment received during the year.
AUDITORS
Statutory Auditors
M/s. B S R & Co. LLP, Chartered Accountants are the Statutory Auditors of the Company for a period of five years with effect from
14 th August, 2014. M/s. B S R & Co., LLP have confirmed to the Company that they are not disqualified under section 141 of the
Companies Act, 2013, or any other applicable provisions for the time being in force and are eligible for being appointed as
statutory auditors of the Company. M/s. B S R & Co., LLP have also confirmed to the Company that, their appointment, if
ratified, would be within the limits prescribed under the Companies Act, 2013.
The report of the Statutory Auditors alongwith notes to Schedules is enclosed to this report. The observations made in the
Auditors'' Report are self-explanatory and therefore do not call for any further comments. The Auditor''s Report does not contain
any qualification, reservation or adverse remark.
Cost Auditors
M/s Rao, Murthy & Associates were appointed as Cost Auditors of the Company for the Financial Year 2015-16.
Internal Auditors
The Internal Audit function is responsible for assisting the Audit & Risk Management Committee on an independent basis with a
full status of the risk assessments and management. M/s. Ernst & Young, LLP were appointed as Internal Auditors of the Company
for the FY2016.
Secretarial Auditor
The Company had appointed Mr. R Vijayakumar, Company Secretary in practice in Bangalore, to conduct its Secretarial Audit for the
financial year ended 31st March, 2016. The Secretarial Auditors have submitted their report, confirming compliance by the Company
of all the provisions of the applicable corporate laws. The Report does not contain any qualification, reservation or adverse
remark. The Secretarial Audit Report is annexed as Annexure 4 to this report.
Tax Auditors
M/s BVS & Associates, Chartered Accountants, are the Tax Auditors of the Company. The Tax Auditor''s Report does not contain any
qualification, reservation or adverse remark.
INTERNAL CONTROLS SYSTEMS AND THEIR ADEQUACY
According to Section 134(5)(e) of the Companies Act, 2013, the term Internal Financial Control (IFC) means the policies and
procedures adopted by a company for ensuring the orderly and efficient conduct of its business, including adherence to the
company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and
completeness of the accounting records, and the timely preparation of reliable financial information.
The Company has a well-placed, proper and adequate internal financial control system which ensures that all assets are
safeguarded and protected and that the transactions are authorised, recorded and reported correctly. The Company''s internal
financial control system also comprises due compliances with Company''s policies, standard operating procedures and audit and
compliance by an in-house internal audit division, supplemented by internal audit checks from M/s. Ernst & Young, LLP, the
Internal Auditors and various transaction auditors.
The Internal Auditors independently evaluate the adequacy of internal controls and concurrently audit the majority of the
transactions in value terms. Independence of the audit and compliance is ensured by direct reporting to the Audit & Risk
Management Committee of the Board. A CEO and CFO Certificate, forming part of the Corporate Governance Report, further confirms
the existence and effectiveness of internal controls and reiterates their responsibilities to report deficiencies to the Audit &
Risk Management Committee and rectify the same. During the year, such controls were tested and no reportable material weaknesses
in the design or operation were observed.
OTHER DISCLOSURES
Events Subsequent to the Date of the Financial Statements
There were no material changes / commitments affecting the financial position of the Company or that may require disclosure,
between 31st March, 2016 and the date of Board''s Report.
Change in the Nature of Business, if any
The Company continues to focus on its key business segments and looks for selective growth / expansion opportunities. There was
no change in the nature of business during the year under review. State of the affairs of the Company and future plan of action
and outlook is discussed in this report.
Significant & Material Orders Passed by the Regulators
During the year under review, no significant / material orders were passed by the regulators or the Courts or the Tribunals
impacting the going concern status and the Company''s operations in future.
Extract of the Annual Return
Pursuant to the provisions of section 92(3) of the Companies Act, 2013 and rule 12(1) of the Companies (Management and
Administration) Rules, 2014, an extract of annual return in form MGT 9 is enclosed as Annexure 5 to this Annual Report.
Listing with Stock Exchanges
The Company confirms that it has paid the Annual Listing Fees for the year FY2017 to the NSE and the BSE where the Company''s
equity shares are listed.
Consolidated Financial Statements
The Directors have pleasure in attaching the Consolidated Financial Statements prepared by the Company in accordance with the
relevant Accounting Standards issued by the Institute of Chartered Accountants of India, which form part of the Annual Report.
RELATED PARTY TRANSACTIONS
With reference to Section 134(3)(h) of the Companies Act, 2013, all contracts and arrangements with related parties under Section
188(1) of the Act, entered into by the Company during the financial year, were in the ordinary course of business and on an arm''s
length basis.
As per the Listing Regulations, all related party transactions are placed before the Audit & Risk Management Committee for
approval. Prior omnibus approval of the Audit & Risk Management Committee has been obtained for the transactions which are of
foreseen and repetitive nature. The transactions entered into pursuant to the omnibus approval are presented to the Audit & Risk
Management Committee by way of a statement giving details of all related party transactions. The Company has developed a Related
Party Transactions Manual for the purpose of identification and monitoring of such transactions. Particulars of Contracts or
Arrangements with Related parties referred to in Section 188(1) is disclosed in Form AOC- 2 as Annexure 6.
ENVIRONMENTAL PROTECTION MEASURES
In view of the corporate responsibility on environmental protection, the Company has adopted a number of measures to improve in
the field of environment, safety and health. Measures like standard operating procedures, training programmes for all levels of
employees regarding resource conservation, housekeeping, Green Belt development and onsite emergency plan have been taken.
Sustainable living is a part of long-term business strategy and your Company continuously strives to reduce our environmental
footprint, while enhancing the livelihood of people across our product value chain.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS & OUTGO
The information relating to conservation of energy and technology absorption are appended hereunder:
Conservation of Energy
All our facilities in India and abroad are built with the environment in mind and the processes are designed for efficiency,
energy conservation and to ensure that no waste is transmitted into the environment. The industrial complexes are highly energy
efficient and completely non-polluting. This is being systematized and quantifiable by implementing ISO 14000.
Technology Absorption
Research & Development plays a vital role in developing and adopting new technologies to enhance our operational efficiencies.
The Company owns the world''s best hydraulic technologies such as Plessey and Dowty Technologies, both of which are from England.
The Company acquired the Dowty technology during its collaboration with Dowty in 1973 and it obtained the Plessey technology
through the acquisition of Dynamatic Limited, UK, in 2007.
The Aerospace and Hydraulics units in India and the UK; Automotive units in India and Germany work together in resolving
engineering challenges leading to better synergies across the group.
Research & Development (R&D)
R&D and Innovation continues to be an integral part of the Company''s growth strategy, business profitability, sustainability and
as a part of its contribution towards the building of the Nation. Dynamatic Science Lab, created by consolidating various
research and technology functions, helps to enhanced value delivery by leveraging skills and competencies to create new business
opportunities. The Company''s Research & Development is actively driven by a Board level committee constituted as the Technology
Development Committee.
The Technology Development Committee of the Board provides direction to the Company''s R&D strategy and on key issues pertaining
to R&D technology. The Committee regularly reviews and updates the skills and competencies required, the structure and the
processes needed to ensure that the R&D initiatives of today result in products necessary for the sustained and long term growth
of the Company.
Expenditure on Research & Development
(Rs. in lacs)
Particulars 31st March, 2016 31st March, 2015
A. Capital 52 92
B. Recurring 635 448
687 540
FOREIGN EXCHANGE EARNINGS AND OUTGO
Particulars of foreign exchange earnings and outgo are as follows:
(Rs. in lacs)
31st 31st
March, March,
2016 2015
a. Total Foreign Exchange Earned 16,608 16,932
b. Total Foreign Exchange Used 7,439 3,759
- Import of Raw materials,
components, stores and 5,840 3,048
spares
- Foreign Travel 85 40
- Interest 121 30
- Capital Expenditure 1,336 611
- Others 57 30
MANAGEMENT''S DISCUSSION & ANALYSIS REPORT
Pursuant to regulation 34 of the Listing Regulations, Management''s Discussion & Analysis Report for the year is presented in a
separate section forming part of the Annual Report.
CORPORATE GOVERNANCE
Corporate Governance is a set of principles, processes and systems which govern a company. The key principles on which a sound
Corporate Governance system is based are independence, transparency, accountability, responsibility, compliance, ethics, values
and trust. Corporate Governance enables an organization to perform efficiently and ethically generate long term wealth and
create value for all its stakeholders.
Dynamatic Technologies is committed to maintain the best standards of Corporate Governance and adopted many ethical and
transparent governance practices even before they were mandated by law. The Company has always strived towards building trust
with shareholders, employees, customers, suppliers and other stakeholders based on the principles of good corporate governance.
A separate section on Corporate Governance forming part of the Directors'' Report and the certificate from the Practicing Company
Secretary confirming compliance of the Corporate Governance norms as stipulated in the Listing Regulations is included in the
Annual Report.
PROMOTERS
The list of the promoters is disclosed for the purpose of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,
2011. Mr. Udayant Malhoutra is the promoter of the Company within the definition of ''Promoter'' for the purpose of regulations
2(1)(s) of the SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
Details of the promoter group are appended as under:
No. Name of the entity / person
1. JKM Holding Private Limited
2. Udayant Malhoutra and Company Private Limited
3. JKM Offshore India Private Limited
4. Wavell Investments Private Limited
5. Mrs. Barota Malhoutra
6. Vita Private Limited
7. Christine Hoden (India) Private Limited
8. Primella Sanitary Products Private Limited
9. Greenearth Biotechnologies Limited
DIRECTORS'' RESPONSIBILITY STATEMENT
Pursuant to the section 134 (5) of the Companies Act, 2013, the Board of Directors, to the best of knowledge and belief and
according to the information and explanations obtained by them, hereby confirm that:
a. in the preparation of accounts for the financial year ended 31st March, 2016, the applicable Accounting Standards have been
followed with proper explanation relating to material departures if any.
b. the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were
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 & Loss Account of the Company for the year under review,
c. the Directors have taken proper and sufficient care for the maintenance of adequate 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 accounts for the financial year ended 31st March, 2016, on a ''going concern'' basis.
e. the Directors have laid down internal financial controls to be followed by the company and that the internal financial
controls are adequate and are operating effectively.
f. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and the systems are
adequate and operating effectively,
g. Pursuant to the provisions of the Companies Act, 2013 (as amended from time to time), dividends which remained unclaimed for
a period of seven years, have been transferred by the Company to the Investor Education and Protection Fund.
ACKNOWLEDGMENTS
Your Directors would like to wish their sincere appreciation to the Investors, Financial Institutions and Banks for their
continued support during the year. Your Directors would like to thank the Regulatory Authorities and Government authorities and
agencies for their continued guidance and support. Your Directors also wish to place on record their deep sense of appreciation
to employees and executives at all levels for their efforts and dedication. Their hard work and commitment has enabled the
Company to be on the forefront of the industry. We also take this opportunity to thank all our customers without whom our success
story would not have been possible,
For and on behalf of the Board of Directors
Udayant Malhoutra Hanuman Kumar Sharma
CEO & Managing Director CFO & Executive Director
DIN :00053714 DIN:07012725
Place : Bangalore
Date : 27th May, 2016
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting the Fortieth Annual
Report together with the Audited Statement of Accounts for the year
ended March 31,2015.
1. FINANCIAL RESULTS
The Financial Results of the Company for the year ended March 31,2015,
were as follows:
(Rs. in Lacs)
Standalone Consolidated
Particulars Year Ended Year Ended Year Ended Year Ended
31 March 2015 31 March
2014 31 March 31 March
2015 2014
Gross Sales 48,727 47,194 166,825 163,859
Net Sales 45,653 42,892 162,883 158,754
Profit (Before Interest,
Depreciation &
Taxation) (EBITDA) 6,701 7,481 15,106 16,293
Other Income 781 290 1,062 353
Interest & Finance
Charges 5,373 5,957 7,995 9,973
Depreciation 2,850 2,816 5,091 5,126
Net Profit Before
Taxation and Exceptional
Items (741) (1,002) 3,082 1,547
Exceptional Items 3,719 1,033 1,909 1,033
Net Profit Before Taxation
and after Exceptional
Items 2,978 31 4,992 2,580
Provision for Taxation:
- Current Tax 1,451 - 2,781 893
- Minimum Alternative
Tax Charge - 23 - 23
- Minimum Alternate Tax
Credit Entitlement - (23) - (23)
- Deferred Tax Charge (578) - (654) 310
- Wealth Tax - - - -
Net Profit After Tax 2,105 31 2,865 1,377
Balance brought forward
from previous year 3,735 3,704 5,689 4,312
Amount available for
appropriation 5,840 3,735 8,554 5,689
Appropriations
Dividend on Equity Shares
- Interim - - - -
Proposed Final Dividend
on Equity Shares - - - -
Tax on Dividend - - - -
Transfer to General Reserve - - - -
Balance carried to
Balance Sheet 5,840 3,735 8,554 5,689
Notes: Previous year figures have been recast wherever necessary.
DIVIDEND
During the year under review, your Directors do not propose to declare
any dividends due to poor economic conditions and paucity of profits.
TRANSFER TO RESERVES
During the year under report, your Directors do not propose to transfer
any amount to General Reserve. The Company has hedged a part of its
future foreign currency receivables to mitigate its foreign exchange
fluctuation risks. The same has been designated as a cash flow hedge
with effect from April 1, 2008, applying the hedging criteria. The
movement in the Mark To Market (MTM), subsequent to the designation as
a cash flow hedge, amounting to Rs.417 lacs (Standalone), and Rs.631 lacs
(Consolidated) has been accounted under Hedge Reserve Account.
CAPITAL EXPENDITURE
During the year under review, your Company incurred capital expenditure
of Rs.4,395 lacs for physical infrastructure and Rs.176 lacs for
procurement of intangible assets. Significant investments have been
made in building infrastructure, state-of-the-art machinery, design
software, data security, information systems, and design and
development activities; for the future benefits of your Company.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS
Loans, guarantees and investments covered under 186 of the Companies
Act, 2013 form part of the notes to the financial statements provided
in this Annual Report.
DEPOSITS
The Company has not accepted any deposits during the year under review.
There were no deposits remaining unpaid/ unclaimed as at the end of the
year 2015.
There has been no default in repayment of deposits or payment of
interest there on during the year under review and there are no
deposits which are not in compliance with the requirements of Chapter V
of the Companies Act, 2013.
PROCEEDS FROM PUBLIC ISSUE, RIGHTS ISSUE, PREFERENTIAL ISSUE, ETC.,
Pursuant to a resolution passed in the Extraordinary General Meeting of
shareholders dated 25 March 2013, amounts aggregating Rs.675 lacs and
Rs.575 lacs (being 25% of the total value of warrants at the date of
allotment) has been brought in by Mr. Udayant Malhoutra in his capacity
as Promoter and by Wavell Investments Private Limited, being a Promoter
group company, towards subscription of 338,440 and 288,300 convertible
warrants of Rs.797.78 each respectively. These warrants give the right to
the warrant holders to subscribe for one equity share of Rs.10 each in
the Company per warrant which is exercisable within 18 (eighteen)
months from the date of allotment i.e. 26 March 2013.
Out of these 288,300 and 338,440 convertible warrants, the Company
after receiving balance 75% consideration issued 125,347 equity shares
to Wavell Investments Private Limited during the year ended 31 March
2014 and 338,440 equity shares and 162,953 equity shares to Mr. Udayant
Malhoutra and Wavell Investments Private Limited respectively during
the year ended 31 March 2015.
The Board of Directors of the Company vide its meeting dated 8
September 2014 has delegated its power to the Finance Committee to act
as deemed necessary in relation to the issue of equity shares by way of
Qualified Institutional Placement (QIP) in accordance with Chapter VIII
of Securities and Exchange Board of India ("Issue of Capital and
Disclosure Requirements") Regulations, 2009, as amended and Section 42
of the Companies Act, 2013 read with Rule 14 of the Companies
(Prospectus and Allotment of Securities) Rules, 2014 and other relevant
provisions in connection with this QIP. The Finance Committee in its
meeting dated 13 September 2014 has accorded its approval to create,
issue, offer and allot equity shares subject to Shareholders' approval.
The Company had obtained the Shareholders' approval by way of special
resolution passed in Extraordinary General Meeting dated 11 October
2014. The Finance Committee on 17 October 2014 has approved the
allotment of 300,000 equity shares pursuant to the QIP on the receipt
of funds aggregating Rs.5,400 lacs. The said shares were allotted on 17
October 2014.
DETAILS OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS
The Company has adequate internal financial controls during the year
under review. This has been confirmed on a periodical basis by both the
internal and statutory auditors of the Company.
DISCLOSURE ABOUT COST AUDIT
M/s Rao, Murthy & Associates were appointed as Cost Auditors of the
Company for the Financial Year 2014-15. Form CRA-2 towards appointment
of Cost Auditors was filed on March 31, 2015.
CONSOLIDATED FINANCIAL STATEMENTS
The Directors have pleasure in attaching the Consolidated Financial
Statements prepared by the Company in accordance with the relevant
Accounting Standards issued by the Institute of Chartered Accountants
of India, which form part of the Annual Report.
REPORT ON SUBSIDIARY COMPANIES
Company has one or more subsidiaries, and Company in addition to its
own Financial Statements, prepare Consolidated Financial Statements
incorporating therein the Financial Statements of all of its
subsidiaries in the same form and manner as that of its own, which
shall be laid before the Shareholders at the Annual General Meeting of
the Company.
Consolidated Financial Statements forms part of this Annual Report.
Statement containing the salient feature of the financial statement of
a company's subsidiary or subsidiaries, associate company or companies
and joint venture or ventures is enclosed as ANNEXURE-1 in form AOC-1.
Copy of this Annual Report will be published on our website at
www.dynamatics.com
EVENTS SUBSEQUENT TO THE DATE OF FINANCIAL STATEMENTS
There were no material changes / commitments affecting the financial
position of the company between March 31, 2015 and the date of Board's
Report.
2. BUSINESS
COMPANY PERFORMANCE
Total income on a consolidated basis is Rs.162,883 lacs as against
Rs.158,754 lacs in 2013-14. EBITDA on a consolidated basis is Rs.15,106
lacs as against Rs.16,293 lacs in 2013-14. Net Profit Before Tax on a
consolidated basis is Rs.4,992 lacs as against Rs.2,580 lacs in 2013-14.
Net Profit After Tax on a consolidated basis is Rs.2,865 lacs as against
Rs.1,377 lacs in 2013-14.
The Hydraulics and Precision Engineering business decreased to Rs.29,215
lacs from Rs.30,953 lacs in 2014. Profit (Before Interest & Tax)
decreased from Rs.3,342 lacs to Rs.2,602 lacs. This includes the turnover
from the Hydraulics division of Dynamatic Limited, UK, a subsidiary of
your Company, to the extent of Rs.11,369 lacs and Profit (Before Interest
& Tax) of Rs.261 lacs.
The Aerospace business grew from Rs.22,333 lacs to Rs.26,175 lacs and
Profit (Before Interest & Tax) decreased from Rs.5,713 lacs to Rs.5,265
lacs. This includes the turnover from the Aerospace division of
Dynamatic Limited, UK, a subsidiary of your Company, to the extent of
Rs.14,591 lacs and Profit (Before Interest & Tax) of Rs.1,580 lacs.
The Automotive business increased from Rs.105,468 lacs to Rs.107,493 lacs
while Profit (Before Interest & Tax) increased to Rs.2,149 lacs from
Rs.2,112 lacs. This includes the turnover from Eisenwerk Erla GmbH, a
subsidiary of your Company to the extent of Rs.91,685 lacs and Profit
(Before Interest & Tax) of Rs.5,348 lacs. Exports from India have gone up
by 44% with sales of Rs.15,655 lacs against the previous year's Rs.10,847
lacs.
SUBSIDIARIES
Your Company has eight subsidiaries, the brief particulars of which are
given below:
The structure of Dynamatic Technologies Limited and its subsidiaries as
on March 31, 2015 is as appended hereunder:
INDIAN, WHOLLY OWNED SUBSIDIARIES
JKM Research Farm Limited, India, (JKMRF) is a Wholly Owned subsidiary
of the Company. It continues to be the Research & Development
facilitator to the Company.
JKM Erla Automotive Limited, India (JKM Erla)
JKM Erla continues to be a wholly owned subsidiary of the Company.
JKM Ferrotech Limited, India (JFTL)
JFTL is into manufacturing of ferrous alloy and castings, having its
operations in Gummidipoondi, Tamil Nadu. The facility has expertise in
producing High Si-Mo automotive components and is certified to the
highest quality standards specified by the Automotive Industry. The
expertise in producing intricately shaped castings as well as the skill
in handling ferrous alloys, particularly High Si-Mo and Ni-Resis makes
JFTL a strong development partner for prototypes in Ferrous Alloy
castings.
OVERSEAS, WHOLLY OWNED SUBSIDIARIES
JKM Global Pte. Limited, Singapore, is a wholly Owned subsidiary of
your Company. It continues as an investment hub for overseas
businesses.
Dynamatic Limited, Swindon, UK, (DLUK) is a wholly owned subsidiary of
your Company held through JKM Global Pte. Limited, Singapore. The UK
facilities have been restructured by way of merging Oldland Aerospace
with Dynamatic Limited.
Yew Tree Investments Limited and Dynamatic Limited are the subsidiaries
of JKM Global Pte Limited. Post restructure, DLUK has its Hydraulics
unit in Swindon and its Aerospace unit, Dynamatic-Oldland AerospaceÂ
in Bristol.
The Hydraulics unit of DLUK located in Swindon, England, produces high
performance engineered hydraulic products. The plant has over 50 years
of experience in gear pump design and manufactures and caters to
agriculture, construction and highway vehicle manufacturers. Products
include combined variable and fixed displacement pump packages,
temperature controlled fan drive systems and fixed displacement pumps
in Aluminium and Cast iron with a range of additional integrated valve
options.
Dynamatic-Oldland AerospaceÂ, a division of Dynamatic Limited UK is
located in Bristol & Swindon, and is a leader in Aeronautical Precision
Engineering and is currently working on components for most of the
Airbus family of aircraft.
Yew Tree Investments Limited, Bristol, UK is a wholly owned subsidiary
of Dynamatic Limited, UK.
JKM Erla Holdings GmbH, Germany (JKM Erla GmbH) is engaged in the
business of setting up automotive components processing/manufacturing
units.
Eisenwerk Erla GmbH, Germany (Eisenwerk) became a subsidiary of the
Company, subsequent to its holding company, JKM Erla GmbH, becoming a
subsidiary of the Company. Eisenwerk has been in business for over 630
years and is a preferred supplier to leading global OEMs including
Audi, BMW, Volkswagen, to name a few.
RESEARCH & DEVELOPMENT
The Company has emerged as one of India's leading Research &
Development organisations, with numerous inventions and patents to its
credit. The Company has defined an Intellectual Property (IP) strategy
to build an effective portfolio for future monetisation, collaboration
and risk mitigation, focusing on future technologies.
The Company owns the following Patents for various Products:
- From India
Five - (One from India, One Patent from the United States & three from
the European Union).
- From England
Thirteen - (11 UK, 1 Italian and 1 US patent).In addition, the Company
has 2 patents pending in multiple jurisdictions, awaiting registration.
The Company has 9 trademarks registered and 11 trademark applications
pending, awaiting registration. Eisenwerk owns 1 trademark and 2
patents in Germany. The Company employs over 60 Scientists and 600
engineers and technicians with expertise in Mechanical Engineering,
Advanced Computer Aided Engineering, Computer Aided Manufacture,
Materials & Metallurgical Engineering, Fluid Dynamics, Defence&
Aerospace Research. The state-of-the-art JKM Science Center brings
together Design Engineering, Development, Prototyping, Metallurgical
and Manufacturing Infrastructure enabling your Company to
comprehensively address the needs of its global customers.
The Dynamatic Hydraulics Research Laboratory, (Refer page D-4) in
Swindon, England, has advanced design knowledge focused on the Mobile
Hydraulics Sector, excellent engineering capabilities and ownership of
intellectual property.
This facility operates a comprehensive product testing and validation
laboratory. This facility has completed testing and validation of new
products for various customers like Cummins - Daventry, John Deere -
USA, CNH, JCB, Terex, Mahindra& Mahindra and recently for Macdon and
Manitou Gehl in the U.S. The Company has already successfully launched
these new products in India and globally.
The Dynamatic-Oldland AerospaceÂ, in Bristol, England possesses
people having specialised skill sets who are one of the few specialists
in CNC Programming, globally. Improving process run times, reduction
in cycle time, optimising machining strategies and high feed tooling
have been achieved to optimise component by using new processes, use of
latest cutting tools and fresh approach to the product.
The Dynamatic Hydraulics Research Laboratory, in Swindon, England,
has advanced design knowledge focused on the Mobile Hydraulics Sector,
excellent engineering capabilities and ownership of intellectual
property.
This facility operates a comprehensive product testing and validation
laboratory.
This facility has completed testing and validation of new products for
various customers like Cummins - Daventry, John Deere - USA, CNH, JCB,
Terex, Mahindra & Mahindra, etc. The Company has already successfully
launched these new products in India and globally.
The Dynamatic-Oldland AerospaceÂ, in Bristol, England possesses
people having specialised skill sets who are one of the few specialists
in CNC Programming, globally. Improving process run times, reduction
in cycle time, optimising machining strategies and high feed tooling
have been achieved to optimise component by using new processes, use of
latest cutting tools and fresh approach to the product.
The Company's Wholly Owned Subsidiary, JKM Research Farm Limited,
operates a unique facility for testing and analysing complete
aggregates and systems for mobile equipment.
QUALITY MANAGEMENT SYSTEM (QMS)
Dynamatic HydraulicsÂ
During the year, your Company has successfully completed
re-certification audits to ISO: 9001 specifications for Quality
Management System and also to ISO: 14001 specifications for its
Environmental Management System. Your Company's QMS which is compliant
to ISO standards since 1999, has evolved and matured and is highly
system driven. This year, these two management systems are merged in to
one called Integrated Management System (IMS) and was audited by UL
India. The re-certification audit which was for 11 man days was
successfully completed and your company has been awarded certification
by UL India for the next 3 years.
Your Company has continued its efforts in addressing and complying with
health and safety requirements. The activities are focused on health &
safety of its employees on the shop floor. Awareness campaigns have
been undertaken to enforce the use of Personnel Protective Equipment
(PPE) at work. The medical check for all the employees has been
completed with the guidance of company Medical Officer. At the same
time, the Company has been successful in merging the EMS & OHSAS
requirements into a common management system called Integrated
Management System. This has avoided unnecessary duplication of work in
monitoring and maintenance of records.
The Dynamatic Quality Management System (DQMS) addresses the quality
requirements and management expectations set out by the global major
players such as John Deere, Cummins, CNH, Mahindra & Mahindra etc. DQMS
utilises some of the best tools such as 5S,
Business Process Re-engineering, Overall Equipment Effectiveness, Root
cause analysis, Six Sigma, Statistical Process Control, Total
Productive Maintenance, Visual Control, Learning-by-doing, Employee
Participation Program (EPP) etc.
Lean Management concepts together with 5S tools are being used on the
shop floor to increase the Overall Equipment Effectiveness (OEE) of the
operations. This is achieved by reducing rejections, set ups, cycle
time and through effective material management. The Employee
Participation Program has resulted in the participation of employees in
innovative activities and their contributions have resulted in
continual improvements to work and work processes.
During this financial year, special attention is paid towards risk
assessment and mitigation activities. Disaster recovery plan is
revisited and meticulously followed.
SUPPLY CHAIN MANAGEMENT AND PRODUCTIVITY
To enhance its competitive edge, your company has taken up many
measures to sustain the growth, more so to make it totally system
driven. During this year focus was laid on making the purchase process
stronger and reliable.
- Dual sources were developed for most of the critical parts. New
aluminium GDC sources were developed.
- New source for aluminium extrusion was established. Alternate
source for steel bar stock was introduced.
- The entire purchase group was restructured and empowered to
purchase RM and child parts for the respective units.
- All purchase transactions are made through ERP to facilitate quick
data retrieval.
- Work order concept is being introduced to ensure control over
material purchase in time and absolute control over inventory.
- A finished goods despatch procedure is documented to ensure the
accumulated cenvat utilisation.
These measures have helped us to have control over creditors and smooth
cash flow during the challenging days.
The Company's supply chain program aims at upgrading the vendors so as
to enable them meet the demanding requirements of Quality, Cost &
Delivery. Vendor training & audits are being conducted at regular
intervals.
The vendors have been advised to be cautious and cost effective to
address the recession in the market. New suppliers have been identified
to ensure dual source and most cost effective supplies.
NEW OPERATIONAL MODEL
The market scenario offers a tough competition and working towards
target costing is imminent. To contain the operational costs, as a
drive towards lean management, many measures have been initiated. Such
a step will help us to institutionalise the good shop floor practices
that have been evolved and tested successfully in the past.
Dependency on the agri-sector has its own disadvantages. Monsoon,
govt. subsidies, etc., play a seasonal role and hence it is always
better to widen our product range beyond agri-sector. Attempt to
develop new products is contemplated so that series production can
eventually happen in the coming years.
The Marketing strategy meet with key distributors has given insight on
the market requirement and need for new products. Your company will
take up new product development with all enthusiasm and vigor. During
this Meet, an updated product catalogue was released. A special book
let 'Pumps User's Guide' was released and distributed to all
distributors as an educational tool.
All efforts are put to increase the total turnover and at the same time
the operational margins. New OEMs have been added and new products are
productionised and released to market. To contain the operational
costs, man power cost is being monitored.
As a part of new operational requirement, new products are being
developed through outsourcing rather than adding resources in house.
This keeps the operations lean and flexible.
Dynamatic Limited, Hydraulics, UK, is accredited to ISO 9001:2008
standards and has through recently passing the latest quality audit
renewed its certification from British Standards Institute (BSI) for a
further three years through to 2018. Dynamatic Limited's lean
initiatives, continuous improvement activities and employee engagement
continue to be the focus of all employees. The UK facilities recently
reached partner status in the John Deere Achieving Excellence results
and has passed the latest BSI quality audit.
JKM AutomotiveTM and Dynametal® have gone through a very significant
change in operation as a result of several strategic initiatives taken
by the Company in the last two years.
There were multiple products manufactured and supplied by the Company
to Hyundai and other customers which were having no synergy with the
Dynamatic strategic vision of focusing on two foundries viz Aluminium
and Ferrous Foundry and associated machining of components. All the
products which does not fall into this category have been surrendered
back to customer and we could make a smooth transition to the new
suppliers without having a single minute line stoppage at customers. We
could make one machine shop redundant in this process, cut down losses
by running non-profitable products and could also monetise the
redundant plant.
Currently JKM automotive is predominantly running turbo charger
compressor housing, inlet Manifolds and Exhaust manifolds which
constitute 80% of sales is fed by the Company's own foundries in
Chennai.
Dynamatic-Oldland AerospaceÂ, India has the largest infrastructure in
the Indian private sector for the manufacture of exacting Air Frame
Structures and Precision Aerospace Components, having its manufacturing
facilities in Bangalore and Nasik. This Division is one of the first to
have NADCAP approval for Heat Treatment and Non-Destructive-Test
Facilities in India and is well supported by its AS 9100 'C' - Annual
certification by UL covering both the manufacturing facilities. The
division successfully got NADCAP appointed for spot welding of Alum
Titanium items. This Division is also a certified supplier for major
OEMs like Airbus, Boeing & Bell Helicopters, for supply of aircraft
components and assemblies.
Dynamatic-Oldland AerospaceÂ, UK a division of Dynamatic Limited, UK
is a unique state- of-the-art aeronautical manufacturing facility in
Bristol & Swindon UK, possessing complex 5 axis machining capabilities
for the manufacture of Aerospace components and tooling. This Division
is a certified supplier to Airbus UK, GKN Aerospace Europe & USA,
Spirit AeroSystems, Boeing, Magellan Aerospace, GE Aviation Systems,
Lockheed Martin & Augusta Westlands. We are supported by BSI ISO
9001:2000 and AS 9100 revc. Dynamatic-Oldland AerospaceTM has been
accredited with Environmental Management System (EMS) certification
ISO: 14001.
Powermetric® Design, has approval of Certification from the Center for
Military Airworthiness & Certification (CEMILAC), has proposed its
design capabilities to Indian as well as foreign aerospace
organisations. The CEMILAC certification which is mandatory for
defence& aerospace design will enable Powermetric® to undertake
design, validation and development activities of aerospace parts/
products using various sophisticated computational tools newly and
indigenously designed and developed foldable strut has been certified
by CEMILAC for its air worthiness. Powermetric design team has executed
the digital engineering program for BELL helicopter, using the legacy
engineering data and delivering digitised 3-D model of parts on high
end CAD platform.
Powermetric is also focusing on new research areas viz., Clean and
Green Energy management and application.
Powermetric has also designed and developed special sheet metal stretch
forming machines for aerospace industry for producing accurate and
repeatable parts for fuselage skins of aircrafts. The curved profile of
aircraft's sub-structure or frame can also be produced by these
machines.
Dynamatic Homeland Security Designs and Develops cutting edge
Security Solutions to enhance the Nation's capabilities in countering
modern day Security Threats. Our strong Research and Development
capabilities combined with the powerful partnerships we have forged
with leading "global security technology" companies enable us to offer
potential customers like National Defense Forces, Police, Para Military
& Disaster Management Agencies, solutions for Intelligence,
Surveillance and Reconnaissance (ISR) missions that will enhance their
abilities to prepare and plan for emergencies as well as their response
and recovery skills.
Tactical Un-Manned Aerial Vehicles
Dynamatic Technologies has teamed with AeroVironment, Inc., a world
leader in Unmanned Aircraft Systems, to address the growing global
demand for Unmanned Aerial Vehicles (UAVs). Over 30000 operational UAVs
worldwide and millions of Combat hours of Operation make these
platforms most reliable and mission capable tool for our Security
Forces. Dynamatic has the license to produce largest quantities of UAVs
in India in the Private Sector.
Dynamatic has indigenously developed a Vertical Take Off and Landing
UAV "Patang" for ISR missions for Police and Para Military. With over
60 minutes of endurance, Patang provides the security forces the
longest Mission Tme in this class of UAVs.
Mobile Command and Control Vehicles
Dynamatic's "Prahari "is custom designed vehicle based ISR platform for
Surveillance in urban areas by the law enforcement agencies. Prahari's
unique architecture facilitates the monitoring; control and recording
of ongoing activities from the integral payloads on the vehicle as well
as from wireless IP based payloads located remotely. This makes it the
ideal surveillance platform for the Police Forces.
Prahari is currently in use by a State Police Department.
AWARDS, RECOGNITION AND IMPORTANT MILESTONES
- Dynamatic Hydraulics UK has recently on January 1st 2015 signed
a Long Term Agreement with John Deere which enables the business to
quote for additional J-D business within the Deere organisation.
- Received certification for foldable strut used for ALH. Recognised
by CEMILAC for design capabilities.
- JKM Automotive has received supplier appreciation award from
Hyundai Motors in vendor convention.
- Received award from John Deere for designing, developing and
sustaining the product quality of "Internal Gear Pump"
- Distributor's meet was held along with the key branch managers to
Bangalore on behalf of Dynamatic HydraulicsÂ.
- Two days session was conducted to brainstorm on measures to
increase sales and enhance Dynamatic Hydraulics brand equity.
- A new 1 MP series pump was also launched during the meet. The pump
was manufactured to focusing on the industrial sector where pumps below
150 bar pressure are being used. The advantage of the pump is that it
is lighter as it is fully made out of aluminium and also shorter as it
uses specially designed shorter bush bearings.
- The highest flow pump, 680 lpm, designed for the Indian Railways
has been approved by DLW, Varanasi. With this success, we remain as a
key supplier to Indian Railways.
- New Contracts:-Aircraft - Airbus single aisle FTB
- Contract long term extension Jan 1st 2016 - Dec 31st 2020 Customer
Spirit AeroSystems.
- Offering a 3% discount on our Value added.
- This Package feeds the Flap track beam assembly line in DTL
Bangalore.
- Aircraft - Airbus Long range FTB
- New Contract "Phase two" term Jan 1st 2015 - Dec 31st 2020 Customer
DTL Bangalore.
- Mahindra & Mahindra has awarded Dynamatic Hydraulics the
responsibility of production of pumps for their prestigious 'M' star
project which is named as CRUSADE and Dynamatic Hydraulics is the
single source for this customer.
CONSERVATION OF ENERGY AND TECHNOLOGY ABSORPTION
The information relating to conservation of energy and technology
absorption are appended hereunder:
a) CONSERVATION OF ENERGY
All our facilities in India and abroad are built with the environment
in mind and the processes are designed for efficiency, energy
conservation and to ensure that no waste is transmitted into our
environment. The industrial complexes are highly energy efficient and
completely non-polluting. This is being systematised and quantifiable
by implementing ISO 14000 and OHSAS 18000.
b) TECHNOLOGY ABSORPTION
Research & Development plays a vital role in developing and adopting
new technologies to enhance our operational efficiencies. The Company
owns the world's best Hydraulic Technologies viz. Plessey and Dowty
Technologies, both of which are from England.
The Company acquired the Dowty Technology during its collaboration with
Dowty in 1973 and it obtained the Plessey Technologies through the
acquisition of Dynamatic Limited, UK, in 2007. Our R&D effort is also
focused on the automotive products as a proprietary product.
(i) Efforts made in technology absorption:
Research & Development (R&D)
Research & Development, Technology Development and Innovation continues
to be an integral part of the Company for achieving growth, business
profitability, sustainability and as a part of its contribution towards
the building of a Nation. Dynamatic Science lab, created by
consolidating various research and technology functions, helps to
create enhanced value delivery by leveraging skills and competencies to
create new business opportunities. The Company's Research & Development
is actively driven by a Board-level Committee constituted as the
Technology Development Committee.
The Technology Development Committee of the Board provides direction to
the Company's Research and Development strategy and on key issues
pertaining to Research & Development technology. The Committee
regularly reviews and updates the skills and competencies required, the
structure and the processes needed to ensure that the Research &
Development initiatives of today result in products necessary for the
sustained and long term growth of the Company.
Specific areas in which Research & Development (R&D) is being carried
out by the Company Research & Development Activities in India and
Europe
Highlights:
- Development of new design for robust hydraulic gear pumps for
Earth-moving Sectors for both Domestic & Export market.
- Development of Fixed Clearance Gear Pump with Low Pressure High
Flow capability, catering to specific requirement of High HP Tractors.
- Design & Development of Value Enriched Global Gear Pump catering to
various Tractor applications.
- Development of Bi-Directional Gear Pump for Marine Engine
Transmission application for European & US based customers.
- Design and Development of Lubricating Oil Pumps for world renowned
Diesel Engine Manufacturers.
- Development of Lubricating & Scavenging Oil Pumps suitable for very
High H.P. Diesel Engines employed in Indian Railways.
- Development of various types of Hydraulic Gear Motors both for
Domestic & Export customers.
- Design & Development of Gear Pump-Motor Combo Unit for Hi-End
Agricultural Farm Mechanisation equipment catering to US Market.
- Design & Development of total Tractor Hydraulic aggregates
including Hitch Control Valve and Lift assembly with Draft Control
feature incorporated.
- Design & Development of Pressure & Flow controlled Compact Gear
Pump.
- Extensive deployment of Product Life Cycle Management Tools viz.
Windchill across various functional units of the Company at plant level
imparting fast and accurate engineering data transfer & project
management.
- Value Addition & Value Engineering for existing products and
processes.
- Interactive participation with both Domestic & Export customers
towards the Design & Development of New Gear Pumps & Gear Motors
suitable for customer's new equipment design.
- Regular usage of Hi-End Design Analytical tools, viz. ANSYS, CFD,
Pro-Mechanica, Fatigue analysis tools, etc. complemented with in-depth
Product Validation & Verification strategies.
- Dynamatic Hydraulics has also placed its footprint in the
community of International Research, by presenting research papers in
the field of Fluid Power & ANSYS related topics.
- Continuous synergy between Dynamatic, UK & Dynamatic, India Design
team towards new product design & development, product & process
optimisation, etc.
- Development of new Machine Tools, Machine Tools Structures
including CNC machines upgrade.
- Factory Automation.
- New projects for Defence sector. The Dynamatic Homeland SecurityÂ
team has responded to the requirement of Mini UAVs from the Artillery
wing of the Indian Armed forces and is also responding to a global
tender for Mini UAVs from CRPF.
- Design and Development of Electric Vehicle Charging Point for
charging electric cars across the world. Integration with electronics,
hardware, software, back office, network service provider and
man-machine interface is near completion.
- Design and Development of Mobile Surveillance Vehicle (MSV) for
Defence applications: Field trials and validation is completed and has
attracted lot of enquiries from various Government, as well as Private
agencies.
- The Company continues to participate in various collaborative
projects in India and overseas.
- Dynamatic Homeland Security has concluded
a contract for 5 numbers of Mobile Command and Control Vehicle (MCCV)
to a State Ministry of Home Affairs. This MCCV- "Prahari" is custom
designed for surveillance in urban areas by the law enforcement
agencies. Its unique architecture facilitates the monitoring, recording
and relaying of ongoing activities from the vehicle as well as from
remote locations. This makes Prahari an ideal surveillance and
reconnaissance tool for the Police Forces and Para Military. This
state government is going to use Prahari for: Mobile monitoring of
important events and public gatherings, keep an eye on VVIP Security,
general surveillance, monitoring and recording at the time of riots or
any other contingency, general patrolling of critical areas and
critical assets, assisting police officials for pre and post analysis
of any critical incident and assistance to emergency service Dynamatic
has entered in to a teaming agreement with M/s. AeroVironment Inc, USA
for the growing demand of Un-manned Aerial Vehicles in India.
- With over 23,000 UAVS delivered worldwide and currently
operational, AeroVironment is one of the largest UAV manufacturers in
the world and its products are extensively used by the military forces
of the United States and 17 other countries. The combination of
AeroVironment's technical capabilities in Unmanned Aerial Systems and
Dynamatic's precision engineering capabilities and strong brand equity
of both Companies will facilitate the availability of world- class UAVs
in India.
Benefits derived as a result of the above R&D
All the following efforts have led to innovative product and process
developments, leading to new market creation and higher value addition.
Few of the key mile-stones achieved, are mentioned below:
- Design and development of new products have resulted in new
business development and extending our R&D vision, for future market
requirements.
- Capitalising on new business opportunities in various verticals,
including Green power and Energy distribution technologies.
- Contributing to India's Defence indigenisation and technological
up-gradation program and also participating in India's security
programs.
- Design and development of new products for Indian aerospace program
- Participation in import substitution program of Indian defence
projects
- New process improvements through value engineering, towards cost
reduction and import substitution.
- Improvement of existing designs and ongoing testing of products and
materials with product value enrichment in perspective.
EXPENDITURE ON R&D
Rs. in lacs
31 March 31 March
Particulars 2015 2014
(a) Capital 92 21
(b) Recurring 448 258
Total 540 278
CHANGE IN THE NATURE OF BUSINESS, IF ANY
There was no change in the nature of business during the year under
review. The Department of Industrial Policy and Promotion, Ministry of
Commerce has permitted the Company to carry on activities.
FUTURE PLAN OF ACTION
The Company plans to increase its efforts in developing new and
cost-effective applications in the above sectors, through continuous
innovation.
MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year, as stipulated
under Clause 49 of the Listing Agreement with the Stock Exchanges in
India, is presented in a separate section forming part of the Annual
Report.
The Company is committed to maintain the best standards of Corporate
Governance and adheres to the Corporate Governance requirements set out
by Securities and Exchange Board of India (SEBI). The Company has also
implemented several best corporate governance practices prevalent
globally.
National Stock Exchange of India Limited (NSE), in association with
Credit Rating and Information Services of India Limited (CRISIL), has
initiated Independent Equity Research Report (IER), on certain
companies. IER is reckoned among the best practices globally in the
equity research-independence space. The Company has been covered under
an Independent Equity Research Report carried out by CRISIL under the
aegis of NSE-IPFT.
The reports can be viewed at www.ier.co.in or at National Stock
Exchange home page: at NSE-IPFT Sponsored Research Reports.
Mr. R. Vijaykumar, Company Secretary in Practice, had conducted the
Corporate Governance audit for the year under review. A separate
section on Corporate Governance and a certificate from Mr. R.
Vijaykumar, regarding compliance of conditions of Corporate Governance
as stipulated under Clause 49 of the Listing Agreement with Stock
Exchanges in India is presented in a separate section forming part of
this Annual Report.
a) BOARD MEETINGS
During the year 2014-15, 7 (seven) Board meetings were held. The
details of the Board Meetings are furnished in the Corporate Governance
Report which forms part of this Annual Report.
b) BOARD DIVERSITY
The Company recognises and embraces the importance of a diverse board
in its success. We believe that a truly diverse board will leverage
differences in thought, perspective, knowledge, skill, regional and
industry experience, cultural and geographical background, age,
ethnicity, race and gender, which will help us retain our competitive
advantage. The Board has adapted the policy on appointment,
continuation and cessation of Directors which sets out the approach to
diversity in the composition of the Board.
c) DIRECTORS AND KEY MANAGERIAL PERSONNEL: Appointments
During the year under review, the Board of Directors a their meeting
held on November 14, 2014, Mr. P S Ramesh and Mr. Hanuman Kumar Sharma
appointed as Directors of the Company. Mr. James Tucker was appointed
as additional Director in the Board Meeting held on February 14, 2015.
The appointment of Mr. P S Ramesh, Mr. Hanuman Sharma and Mr. James
Tucker have also been considered and approved by the Shareholders by
passing requisite resolutions by way of postal ballot.
Mr. Subodh Rajendra Babu was co-opted as an Additional Director at the
Board Meeting held on May 28, 2015. In terms of relevant provisions of
the Companies Act, 2013, Mr. Subodh Rajendra Babu holds office up to
the date of the forthcoming Annual General Meeting. The Company has
received a notice under Section 160 of the Companies Act, 2013 from a
member signifying his intention to propose the name of Mr. Subodh
Rajendra Babu for appointment as Director of the Company at the next
Annual General Meeting. This item has been included in the notice
convening the Annual General Meeting of the Company.
Re-appointments
Mr. Raymond Keith Lawton, Non-Executive Director of the Company would
retire by rotation in accordance with section 152 of the Companies Act,
2013 and eligible, offers himself for re-appointment.
None of the Directors of the Company are disqualified from being
appointed as Directors as specified under Section 264 of the Companies
Act, 2013.
Details of all the Directors have been covered in Corporate Governance
Report which forms part of the Annual Report.
d) DECLARATION FROM INDEPENDENT DIRECTORS
All Independent Directors of the Company meet the criteria of
Independence laid down in Section 149(6) of the Companies Act, 2013. In
line with the provisions of section 134(3)(d) of the Companies Act,
2013, the declaration from Independent Directors, confirming their
independence in terms of section 149 of the Companies Act, 2013 have
been obtained.
e) FORMAL ANNUAL EVALUATION
Formal evaluation of the Board is made based on the guidelines laid
down by the Nomination & Remuneration Committee.
f) REMUNERATION POLICY
The Nomination and Remuneration Committee has laid down remuneration
policy which is designed to attract, motivate, retain manpower and
improve productivity by creating a congenial work environment,
encouraging initiative, personal growth and teamwork besides offering
appropriate remuneration package.
The policy applies to Directors, senior management including its Key
Managerial Personnel and other employees of the Company.
Members can download the complete remuneration policy on the Company's
website at (http://www.dynamatics.
com/downloads/REMUNERATION_POLICY_2015. pdf).
RATIO OF REMUNERATION TO EACH DIRECTOR
Details / Disclosures of Ratio of Remuneration to each Director to the
median employee's remuneration forms part of this annual report as
ANNEXURE-2.
Disclosure of details in case of payment of remuneration to Managerial
Personnel under Schedule V Part II, Section II (A)
g) VIGIL MECHANISM
A vigil mechanism has been established by the Board of Directors and
employees. Equal opportunity of being heard is given to all employees
and Directors under the said vigil mechanism.
h) RISK MANAGEMENT POLICY
To incorporate the changes mandated under the Companies Act, 2013 and
the amended clause 49 of the Listing Agreement entered into between DTL
and National Stock Exchange of India Limited and Bombay Stock Exchange
Limited ('SEBI Circular'), the Board at their meeting held on August
14, 2014, decided to rename the Audit Committee as "Audit and Risk
Management Committee". The charter of new Audit and Risk Management
Committee have been amended suitably.
The Audit and Risk Management Committee of the Board has reviewed the
Risk Management Policy developed by your Company.
The main objective of the said policy are:
i. To ensure that all the current and future material risk exposures of
DTL are identified, assessed, quantified, appropriately mitigated and
managed;
ii. To establish a framework for DTL's risk management process and to
ensure Company-wide implementation;
iii. To ensure systematic and uniform assessment of risks related with
each of the units of DTL;
iv. To enable compliance with appropriate regulations, wherever
applicable, through the adoption of best practices; and
v. To assure business growth with financial stability.
The said policy has been uploaded on Company's website at
www.dynamatics.com
i) RELATED PARTY TRANSACTION
Particulars of contracts or arrangements with Related parties referred
to in Section 188(1) is disclosed in Form AOC- 2 as ANNEXURE-3.
j) JUSTIFICATION FOR ENTERING INTO RELATED PARTY TRANSACTIONS
All related party transactions are between wholly owned subsidiaries
and the Company and all these transactions are at arms' length basis.
k) DIRECTORS' RESPONSIBILITY STATEMENT
The Directors' Responsibility Statement as required under 134 (5) of
the Companies Act, 2013.
The Board of Directors do hereby confirm that:
I. In the preparation of accounts for the financial year ended March
31, 2015, the applicable Accounting Standards have been followed with
proper explanation relating to material departures if any.
II. We have selected such accounting policies and applied them
consistently and made judgments and estimates that were 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 & Loss
Account of the Company for the year under review.
III. We have taken proper and sufficient care for the maintenance of
adequate 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.
IV. We have prepared the accounts for the financial year ended March
31,2015, on a 'going concern' basis.
V. We have laid down internal financial controls to be followed by the
company and that the internal financial controls are adequate and are
operating effectively.
VI. We have devised proper systems to ensure compliance with the
provisions of all applicable laws and the systems are adequate and
operating effectively.
VII. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of the Companies Act, 2013 (as amended from
time to time), dividends which remained unclaimed for a period of seven
years, have been transferred by the Company to the Investor Education
and Protection Fund.
l) PROMOTERS
The list of the promoters is disclosed for the purpose of the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
Persons constituting promoters coming within the definition of
'Promoter' for the purpose of regulations 2(1)(s) of the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011
include the following:
Sl.
No. Name of the entity / person
1. JKM Holding Private Limited
2. Mr. Udayant Malhoutra
3. Udayant Malhoutra and Company Private
Limited
4. JKM Offshore India Private Limited
5. Wavell Investments Private Limited
6. Mrs. Barota Malhoutra
7. Vita Private Limited
8. Christine Hoden (India) Private Limited
9. Primella Sanitary Products Private Limited
10. Greenearth Biotechnologies Limited
m) DISCLOSURES REQUIRED UNDER LISTING AGREEMENT
Disclosures required under various clauses of the listing agreement,
are made elsewhere in this Annual Report. The Certification by CEO &
Managing Director and CFO of the Company forms part of this Annual
Report.
Listing With Stock Exchanges
The Company confirms that it has paid the Annual Listing Fees for the
year 2015-2016 to NSE and BSE where the Company's Shares are listed.
Significant & Material Orders Passed By The Regulators
During the year under review, no significant / material orders were
passed by the regulators or Courts or Tribunals impacting the going
concern status and the company's operations in future.
Pursuant to the provisions of section 92(3) of the Companies Act,2013
and rule 12(1) of the Companies (Management and Administration) Rules,
2014, an extract of annual return in form MGT 9 is enclosed as
ANNEXURE-4 to this Annual Report.
4. AUDITORS
Statutory Auditors
M/s BSR & Co. LLP are the Statutory Auditors of the Company for a
period of five years with effect from August 14, 2014.
M/s. B S R & Co., LLP have confirmed to the Company that they are not
disqualified under section 141 or any other applicable provisions for
the time being in force and are eligible for being appointed as
statutory auditors of the Company. M/s. B S R & Co., LLP have also
confirmed to the Company that, their appointment, if made, would be
within the limits prescribed under the Companies Act, 2013.
The Report of the Statutory Auditors on the Financial Statements forms
part of this Annual Report.
Cost Auditors
M/s Rao, Murthy & Associates were appointed as Cost Auditors of the
Company for the Financial Year 2014-15.
Secretarial Auditors
Mr. R Vijayakumar, Practising Company Secretary is the Secretary
Auditor of the Company.
Secretarial audit report as provided by Mr. R Vijayakumar, Practising
Company Secretary is enclosed to this Report as ANNEXURE-5
QUALIFICATIONS IN AUDIT REPORTS
Explanations or comments by the Board on every qualification,
reservation or adverse remark or disclaimer made-
(a) by the statutory auditor in his report; and
There are no qualifications, reservations or adverse remarks reported
by M/s. B S R & Co., LLP, statutory auditors in their report for the
year under review.
(b) by the company secretary in practice in his secretarial audit
report;
Mr. Vijayakumar, Company Secretary in practice, has made no
qualifications or reservations or adverse remark in the secretarial
audit report.
The auditors above mentioned have used appropriate disclaimers to limit
the scope of their audit to the documents provided by the management
and explanations/representations made by the management.
Although it is not mandatory to constitute Corporate Social
Responsibility Committee ('CSR Committee'), the Company on its own
initiative has constituted the CSR Committee for overseeing and
facilitating deliberation on the social and environmental consequences
of each of the decisions made by the Board; effectively factoring the
interests of all Shareholders, customers, employees, suppliers,
business partners, local communities and other organisations in the
Board's decision making; developing the CSR Policy and monitoring the
same from time to time. The Company has formulated the CSR Policy
under the guidance of Ernst & Young, international consultants taking
into consideration the requirements of the stakeholders of the Company.
The said policy has been approved by the Board and the same has been
posted on the website of the Company (www.dynamatics.com)
Reason For Not Spending
As said above, CSR initiatives are not mandatory under applicable law
for the time being in force. The CSR policy approved by the Board of
Directors is under implementation and a comprehensive report on the CSR
activities and the amount spent will be provided in the next Annual
Report.
ACKNOWLEDGMENTS
Your Directors would like to thank for the co-operation received from
the Financial Institutions, Banks, Government Authorities, Customers,
Vendors, Shareholders and Investors during the year under review.
Your Directors also wish to place on record their deep sense of
appreciation for the committed services of Executives, Managers, Staff
and Workers of the Company and look forward to their continued support
in the future.
For and on behalf of the Board of Directors
Vijai Kapur
Chairman
DIN No.: 00056415
Place : Bangalore
Date : May 28, 2015
Mar 31, 2013
The Directors have pleasure in presenting the Thirty Eighth Annual
Report together with the Audited Statement of Accounts for the year
ended March 31, 2013.
1. FINANCIAL RESULTS
The Financial Results of the Company for the year ended March 31, 2013,
were as follows:
(Rs. in Lacs)
Standalone Consolidated
Particulars Year Ended 31 Year Ended 31 Year Ended 31 Year Ended
31
March 2013 March 2012 March 2013 March 2012
Gross Sales 44,944 48,244 149,298 1,54,173
Net Sales 40,622 44,369 143,717 1,49,715
Profit (Before
Interest,
Depreciation &
Taxation)
(EBITDA) 7,397 6,867 14,324 15,181
Interest &
Finance
Charges 4,625 3,948 8,456 7,145
Depreciation 2,629 2,511 4,638 4,340
Net Profit
Before
Taxation and
Exceptional
Items 143 408 1,230 3,696
Exceptional Items - 175 - 175
Net Profit
Before
Taxation and
after Exceptional
Items 143 233 1,230 3,521
Provision for
Taxation:
- Current Tax - - 1,124 1,388
-Minimum
Alternative
Tax Charge - 89 - 89
- Minimum
Alternate
Tax Credit
Entitlement - (89) - (89)
- Deferred Tax
Charge 113 68 1,297 (331)
- Wealth Tax - - - -
Net Profit
After Tax 30 165 (1,191) 2,464
Balance
brought
forward from
previous year 3,674 4,031 5,503 3,561
Amount
available for
appropriation 3,704 4,196 4,312 6,025
Appropriations
Dividend on
Equity Shares -
Interim - 325 - 325
Proposed Final
Dividend on
Equity Shares - 108 - 108
Tax on Dividend - 72 - 72
Transfer to
General Reserve - 17 - 17
Balance carried
to Balance Sheet 3,704 3,674 4,312 5,503
Notes: Previous year fgures have been recast wherever necessary.
DIVIDEND
During the year under review, your Directors do not propose to declare
any dividend due to poor economic conditions and paucity of profits.
TRANSFER TO RESERVES
During the year under report, your Directors do not propose to transfer
any amount to General Reserve.
The Company has hedged a part of its future foreign currency
receivables to mitigate its foreign exchange fluctuation risks. The
same has been designated as a cash flow hedge with effect from April 1,
2008, applying the hedging criteria. The movement in the Mark To Market
(MTM), subsequent to the designation as a cash flow hedge, amounting to
Rs.1,495 lacs (Standalone), and Rs.2,299 lacs (Consolidated) has been
accounted under Hedge Reserve Account.
Pursuant to Notification No. G.S.R. 225(E) dated March 31, 2009 issued
by the Ministry of Corporate Affairs, the Company had opted (on March
31, 2009) to adjust the exchange differences relating to long term
monetary items with retrospective effect from April 1, 2007 vis-Ã -vis
recognition of aforesaid exchange differences as income/ expense in the
profit and loss account in the earlier years.
Accordingly, foreign exchange loss amounting to Rs.120 lacs and foreign
exchange gain amounting to Rs.51 lacs for the year ended March 31, 2012
and March 31, 2013 respectively, has been adjusted to the cost of fixed
assets.
COMPANY PERFORMANCE
Total income on a consolidated basis was Rs.145,758 lacs as against
Rs.151,850 lacs in 2011-12. EBITDA on a consolidated basis was Rs.14,324
lacs as against Rs.15,181 lacs in 2011-12. Net Profit Before Tax on a
consolidated basis was Rs.1,230 lacs as against Rs.3,521 lacs in 2011-12.
Net Profit After Tax on a consolidated basis was Rs.(1,191) lacs as
against Rs.2,464 lacs in 2011-12.
The Hydraulics and Precision Engineering business increased to Rs.31,139
lacs from Rs.30,388 lacs in 2012. Profit (Before Interest & Tax) declined
from Rs.3,706 lacs to Rs.2,083 lacs. This includes the turnover from the
Hydraulics division of Dynamatic Limited, UK, a subsidiary of your
Company, to the extent of Rs.12,838 lacs and Profit (Before Interest &
Tax) of (Rs.61) lacs.
The Aerospace business grew from Rs.14,123 lacs to Rs.17,151 lacs and
Profit (Before Interest & Tax) grew from Rs.4,573 lacs to Rs.4,885 lacs.
This includes the turnover from the Aerospace division of Dynamatic
Limited, UK, a subsidiary of your Company, to the extent of Rs.10,722
lacs and Profit (Before Interest & Tax) of Rs.2,437 lacs.
The Aluminium Castings business declined from Rs.5,484 lacs to Rs.4,488
lacs and Profit (Before Interest & Tax) declined from (Rs.854) lacs to a
loss of (Rs.635) lacs.
The Automotive business declined from Rs.113,513 lacs to Rs.107,964 lacs
while Profit (Before Interest & Tax) declined from Rs.3,112 lacs to
Rs.2,337 lacs. This includes the turnover from Eisenwerk Erla GmbH, a
subsidiary of your Company to the extent of Rs.76,844 lacs and Profit
(Before Interest & Tax) of Rs.4,448 lacs.
Exports from India have gone down by 9% with sales of Rs.10,210 lacs
against the previous year''s Rs.11,249 lacs.
Capital expenditure
During the year, your Company incurred capital expenditure of Rs.8,784
lacs for physical infrastructure and Rs.1,213 lacs for procurement of
intangible assets.
Significant investments have been made in building infrastructure,
state-of-the-art machinery, design software, data security, information
systems, design and development activities; for the future benefits of
your Company.
2. SUBSIDIARIES
Your Company has eight subsidiaries, the brief particulars of which are
given below.
The structure of Dynamatic Technologies Limited and its subsidiaries as
on March 31, 2013
INDIAN, WHOLLY OWNED SUBSIDIARIES
JKM Research Farm Limited, India, (JKMRF) is a Wholly Owned subsidiary
of the Company. It continues to be the Research & Development
facilitator to the Company.
JKM Erla Automotive Limited, India (JKM Erla)
Demerger of automotive division of the Company with JKM Erla is under
evaluation.
JKM Ferrotech Limited, India (JFTL)
JFTL is into manufacturing of ferrous alloy and castings, having its
operations in Gummidipoondi, Tamil Nadu. The facility has expertise in
producing High Si-Mo automotive components and is certified to the
highest quality standards specified by the Automotive Industry. The
expertise in producing intricately shaped castings as well as the skill
in handling ferrous alloys, particularly High Si-Mo and Ni-Resis makes
JFTL a strong development partner for prototypes in Ferrous Alloy
castings.
OVERSEAS, WHOLLY OWNED SUBSIDIARIES
JKM Global Pte. Limited, Singapore, is a Wholly Owned subsidiary of
your Company. It continues as an investment hub for overseas
businesses.
Dynamatic Limited, Swindon, UK, (DLUK) is a Wholly Owned subsidiary of
your Company held through JKM Global Pte. Limited, Singapore.
The UK facilities have been restructured by way of merging Oldland
Aerospace with Dynamatic Limited.
Yew Tree Investments Limited and Dynamatic Limited are the subsidiaries
of JKM Global Pte Limited. Post restructure, DLUK has its Hydraulics
unit in Swindon and its Aerospace unit, Dynamatic-Oldland AerospaceTM
in Bristol.
The Hydraulics unit of DLUK located in Swindon, England, produces high
performance engineered hydraulic products. The plant has over 50 years
of experience in gear pump design and manufactures and caters to
agriculture, construction and highway vehicle manufacturers. Products
include combined variable and fixed displacement pump packages,
temperature controlled fan drive systems and fixed displacement pumps
in Aluminium and Cast iron with a range of additional integrated valve
options.
Dynamatic-Oldland AerospaceTM, a division of Dynamatic Ltd UK is
located in Bristol & Swindon, and is a leader in Aeronautical Precision
Engineering and is currently working on components for most of the
Airbus family of aircraft.
Yew Tree Investments Limited, Bristol, UK is a Wholly Owned subsidiary
of Dynamatic Limited, UK.
JKM Erla Holdings GmbH, Germany (JKM Erla GmbH) is engaged in the
business of setting up automotive components processing/manufacturing
units.
Eisenwerk Erla GmbH, Germany (Eisenwerk) became a subsidiary of the
Company, subsequent to its holding company, JKM Erla GmbH, becoming a
subsidiary of the Company. Eisenwerk has been in business for over 630
years and is a preferred supplier to leading global OEMs including
Audi, BMW, Volkswagen, to name a few.
REPORT ON SUBSIDIARY COMPANIES
As per Section 212 of the Companies Act, 1956, it is required to attach
Directors'' Report, Balance Sheet and Profit & Loss Account of the
subsidiary companies to this Report. The Ministry of Corporate Affairs,
Government of India, vide its Circular No. 2/2011 dated February 8,
2011, has provided an exemption to the Companies from complying with
Section 212 of the Companies Act, 1956, provided such companies publish
audited consolidated financial statements in the Annual Report.
However, a statement showing the relevant details of the subsidiaries
is enclosed as ANNEXURE - II, forming part of this report. Accordingly,
the Annual Report does not contain the financial statements of the
subsidiaries. The audited annual accounts and related information of
the subsidiaries, where applicable, will be made available on request.
The financial performance and the review of Business of DLUK, JKMRF,
JFTL and Eisenwerk Erla are forming part of this Report.
These documents will also be available for inspection at the registered
office during business hours at Bangalore, India. The same will also be
published on our website at www.dynamatics.com
3. RESEARCH & DEVELOPMENT
Your Company is a repository of diverse technologies and has
transformed itself into a knowledge-based organization through
sustained Research & Development efforts. All technology development
efforts are guided at the Board level through the Technology
Development Committee.
Your Company''s focus on Research & Development has resulted in strong
development initiatives; enabling the Company to foray into providing
new services, launching new products and enhancing product value to our
customers.
JKM Science Center at Bangalore, spread over an area of 40,000 sq. ft.
houses design laboratories viz. Dynamatic® Research & Development
Center and Powermetric® Design; a sophisticated Material Science
Laboratory; a prototype manufacturing unit and a Training Center.
Your Company''s Design efforts are focused on
- Design, Validation and Prototyping of new products.
- New Project Management employing Product Life Cycle Management Tool
through APQP approach
- Effective deployment of analytical tools, viz. ANSYS, CFD,
Pro-Mechanica, & Automation Studio, etc.
- Improvement of existing designs.
- Continuous improvement of existing processes.
- Ongoing testing of products and materials.
Intellectual Property
The Company has emerged as one of India''s leading Research &
Development organisations, with numerous inventions and patents to its
credit. The Company has defined an Intellectual Property (IP) strategy
to build an effective portfolio for future monetization, collaboration
and risk mitigation, focussing on future technologies. The Company
owns the following Patents for various Products:
- From India
Four - (One International Patent, three from the European Union).
- From England
Eleven - (11 UK, 1 Italian and 1 US patent).
In addition, the Company has 2 patents pending in multiple
jurisdictions, awaiting registration.
The Company has 10 trademarks registered and 4 trademark applications
pending, awaiting registration.
Eisenwerk owns 1 trademark and 2 patents in Germany.
The Company employs over 60 Scientists and 600 engineers and
technicians with expertise in Mechanical Engineering, Advanced Computer
Aided Engineering, Computer Aided Manufacture, Materials &
Metallurgical Engineering, Fluid Dynamics, Defence & Aerospace
Research. The state-of-the-art JKM Science Center brings together
Design Engineering, Development, Prototyping, Metallurgical and
Manufacturing Infrastructure enabling your Company to comprehensively
address the needs of its global customers.
The Dynamatic® Hydraulics Research Laboratory, in Swindon, England, has
advanced design knowledge focused on the Mobile Hydraulics Sector,
excellent engineering capabilities and ownership of intellectual
property.
This facility operates a comprehensive product testing and validation
laboratory.
This facility has completed testing and validation of new products for
various customers like Cummins - Daventry, John Deere - USA, CNH, JCB,
Terex, Mahindra & Mahindra, etc. The Company has already successfully
launched these new products in India and globally. The
Dynamatic-Oldland AerospaceTM, in Bristol, England possesses people
having specialized skill sets who are one of the few specialists in CNC
Programming, globally. Improving process run times, reduction in cycle
time, optimizing machining strategies and high feed tooling have been
achieved to optimize component by using new processes, use of latest
cutting tools and fresh approach to the product.
The Company''s Wholly Owned subsidiary, JKM Research Farm Limited,
operates a unique facility for testing and analysing complete
aggregates and systems for mobile equipment.
4. QUALITY MANAGEMENT SYSTEM (QMS)
Dynamatic® Hydraulics
During the year, your Company, has successfully completed surveillance
audits to ISO:9001 specifications for, Quality Management System and
also to ISO:14001 specifications for its Environmental Management
System. Your Company''s QMS which is compliant to ISO standards since
1999, has evolved and matured and is highly system driven.
The Company has started addressing and implementing health and safety
activities for certification to Occupational Health & Safety Assessment
Series (OHSAS) standards. The activities are focused on health &
safety of its employees on the shop floor. Awareness campaigns have
been undertaken to enforce the use of Personnel Protective Equipment
(PPE) at work. At the same time, the Company has been attempting to
merge the EMS & OHSAS requirements into a common management system
called Integrated Management System. This will avoid unnecessary
duplication of work in monitoring and maintenance of records. The
audits for both systems can also be combined and carried out at the
same time.
The Dynamatic® Quality Management System (DQMS) addresses the quality
requirements and management expectations set out by the global major
players such as John Deere, Cummins, CNH, Mahindra & Mahindra etc. DQMS
utilises some of the best tools such as 5S, Business Process
Re-engineering, Overall Equipment Effectiveness, Root cause analysis,
Six Sigma, Statistical Process Control, Total Productive Maintenance,
Visual Control, Learning-by-doing, Employee Participation Program (EPP)
etc.
Lean Management concepts together with 5S tools are being used on the
shop floor to increase the Overall Equipment Effectiveness (OEE) of the
operations. This is achieved by reducing rejections, set ups, cycle
time and through effective material management. The Employee
Participation Program has resulted in the participation of employees in
innovative activities and their contributions have resulted in
continual improvements to work and work processes. Quality tools viz.
5S, Six Sigma etc, have resulted in enhanced product quality,
innovation and cost effectiveness.
The learning in establishing the green field units-JKM pump division
and The Center for Bush Excellence, are imbibed into the existing main
Unit in Dynamatic Park.
Automating the processes and de-skilling them has helped us to move
from operator''s domain to machine domain. Fresh recruits also can learn
quickly and manage the operations. Thrust is always on reducing
paperwork by using electronic means to communicate and store data.
Supply Chain Management and Productivity
The Company''s supply chain program aims at upgrading the vendors so as
to enable them meet the demanding requirements of Quality, Cost &
Delivery. Vendor training & audits are being conducted at regular
intervals.
The demand for hydraulic pumps has been growing rapidly and keeping
pace with this demand has been a challenging task. Your Company''s
investment in the capital equipment has been the highest in this year.
New generation CNC machines have been added to the production line to
increase its capacity. The production capacity has been ramped up by
30% in the past two quarters. To create space for the new machines and
test rigs, a new unit is being set-up close to the main factory. All
efforts have been made to keep the operational costs as low as
possible.
New Operational Model:
The market scenario offers a tough competition and working towards
target costing is imminent. To contain the operational costs, as a
drive towards lean management, it is being contemplated to fragment the
operations into optimally sized multiple units. Such a step will help
us to institutionalize the good shop floor practices that have been
evolved and tested successfully in the II and III units.
Dynamatic Limited, Hydraulics, UK is accredited to ISO 9001:2008
standards and certification from British Standards Institute (BSI).
Dynamatic Limited''s lean initiatives continue to be the focus of cost
reduction initiatives and projects. The UK facilities continue to have
0 (zero) defects per million and 100% on time delivery.
JKM Automotive and Dynametal® continues to strengthen its Quality and
Safety standards by upgrading to the latest versions of existing
certifications. The divisions are certified to Quality, Occupational
Health and Safety and Environmental Management Systems such as ISO
Systems such as ISO / TS 16949, OHSAS 18000, ISO 14000 and FORD Q1. JKM
Automotive has also been audited and approved by various global OEM''s
such as Hyundai, Ford, Fiat, Nissan, Daimler, Cummins, John Deere, etc.
As a part of continuous internal improvement program, we have
successfully implemented Quality controls and kept at single digit PPM
levels with Hyundai supplies. The unit initiated manufacture of
Pressure Die Castings inhouse. We started enjoying uninterrupted power
supply for our units which is bringing savings in our power costs.
Dynamatic-Oldland AerospaceTM, India has the largest infrastructure in
the Indian private sector for the manufacture of exacting Air Frame
Structures and Precision Aerospace Components, having its manufacturing
facilities in Bangalore and Nasik.
This Division is one of the first to have NADCAP approval for Heat
Treatment and Non-Destructive-Test Facilities in India and is well
supported by its AS 9100 ''C'' Â Annual certification by UL covering both
the manufacturing facilities.
This Division is also a certified supplier for major OEMs like Airbus,
Boeing, Bell Helicopters and Northrop Grumman for supply of aircraft
components and assemblies.
Dynamatic-Oldland AerospaceTM, UK a division of Dynamatic Limited UK is
a unique state-of-the-art aeronautical manufacturing facility in
Bristol & Swindon UK, possessing complex 5 axis machining capabilities
for the manufacture of Aerospace components and tooling.
This Division is a certified supplier to Airbus UK, GKN Aerospace
Europe & USA, Spirit Aerosystems, Boeing, Magellan Aerospace, GE
Aviation Systems, Lockheed Martin & Augusta Westlands. We are supported
by BSI ISO 9001:2000 and AS 9100 revc. Dynamatic-Oldland AerospaceTM
has been accredited with Environmental Management System (EMS)
certification ISO:14000.
Powermetric® Design, after obtaining Design Approval Certification from
the Center for Military Airworthiness
& Certification (CEMILAC), has proposed its design capabilities to
Indian as well as foreign aerospace organisations. The CEMILAC
certification which is mandatory for defence & aerospace design, will
enable Powermetric® to undertake design, validation and development
activities of aerospace parts/products using various sophisticated
computational tools.
Powermetric is also focusing on new research areas viz., Clean and
Green Energy management and application.
Dynamatic Homeland Security offers cutting edge solutions to enhance
the nation''s capabilities in countering modern day security
threats-internal as well as external.
Our strong research and development capabilities, combined with
powerful partnerships we have forged with leading global security
technology companies ike Blue- Bird Aero systems for UAVs, Elgo team
for crash rated Bollards and Barriers, Gatekeeper Inc for Under vehicle
scanners enables us to offer potential customers like the Ministry of
Defense, Ministry of Home Affairs, solutions that will help them
prepare and plan for emergencies as well as boost their response and
recovery skills.
5. AWARDS, RECOGNITION AND IMPORTANT MILESTONES
- Dynamatic® Hydraulics UK has received the ''Highest CNH Business
Growth Award'' which was presented at the 1st CNH and IVECO P & S
Suppliers Convention in France during April 2012.
- During 2011, Dynamatic® Hydraulics UK conducted a ''Gear Pump Seminar''
to John Deere engineers in Waterloo. This seminar was to increase the
understanding of gear pump operation and application.
- Dynamatic-Oldland AerospaceTM Division, UK -
Successful re-negotiations on existing business contracts has resulted
in long term agreements for a further 5 years.
6. DEPOSITS
As on March 31, 2013, the Company has no unclaimed deposits by the
deposit holders of the Company.
7. DIRECTORS
Mr. Dietmar Hahn was co-opted as an Additional Director at the Board
Meeting held on November 8, 2012. In terms of relevant provisions of
the Companies Act, 1956, Mr. Dietmar Hahn holds office up to the date
of the forthcoming Annual General Meeting. The Company has received a
notice under Section 257 of the Companies Act, 1956 from a member
signifying her intention to propose the name of Mr. Dietmar Hahn for
appointment as Director of the Company at the next Annual General
Meeting. This item has been included in the notice convening the Annual
General Meeting of the Company.
Mr. V. Sunder resigned as the President & Group CFO of the Company with
effect from September 30, 2012 and was re- designated as Non-Executive
Director of the Company, liable to retire by rotation with effect from
the same date. Mr. V. Sunder placed his resignation as the
Non-Executive Director on the Board with effect from June 3, 2013.
Under Section 256 read with Section 255 of the Companies Act, 1956, Mr.
S. Govindarajan and Dr. K. Aprameyan, Directors of the Company retire
by rotation at the ensuing Annual General Meeting, and are not being
re-appointed as Directors of the Company as per Company''s policy on age
criteria for election to the Board. Ms. Malavika Jayaram who also
retires by rotation at the ensuing Annual General Meeting, being
eligible, offers herself for re-appointment.
None of the Directors of the Company are disqualified for being
appointed as Directors as specified under Section 274 of the Companies
Act, 1956 as amended by the Companies (Amendment) Act, 2000.
Details of all the Directors have been covered in Corporate Governance
Report forming part of the Annual Report.
8. DIRECTORS'' RESPONSIBILITY STATEMENT
The Directors'' Responsibility Statement as required under Section
217(2AA) of the Companies (Amendment) Act, 2000.
The Board of Directors hereby confirms that:
i) In the preparation of accounts for the financial year ended March
31, 2013, the applicable Accounting Standards have been followed with
proper explanation relating to material departures if any.
ii) We have selected such accounting policies and applied them
consistently and made judgments and estimates that were 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 & Loss
Account of the Company for the year under review.
iii) We have taken proper and sufficient care for the maintenance of
adequate records in accordance with the provisions of the Companies
Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
iv) We have prepared the accounts for the financial year ended March
31, 2013, on a Rs.going concern'' basis.
9. CONSOLIDATED FINANCIAL STATEMENTS
The Directors have pleasure in attaching the Consolidated Financial
Statements prepared by the Company in accordance with the relevant
Accounting Standards issued by the Institute of Chartered Accountants
of India, which form part of the Annual Report.
10. AUDITORS
M/s. B S R & Associates, Chartered Accountants, Statutory Auditors of
the Company retire at the ensuing Annual General Meeting and offer
themselves for re- appointment.
They have confirmed to the Company that their re- appointment, if made,
would be within the prescribed limits under Section 224(1B) of the
Companies Act, 1956 and that they are not disqualified for
re-appointment within the meaning of Section 226 of the said Act.
The Report of the Statutory Auditors on the Financial Statements forms
part of this Annual Report.
M/s. Rao Murthy & Associates, have been appointed as the Cost Auditors
of the Company with effect from May 30, 2013.
11. PARTICULARS OF EMPLOYEES
The Company places a high premium on the development and retention of
its Human Resources as well as in providing employees with safe and
healthy work environments. The Corporate Human Resource Department
under the leadership of the Head - Group HR continues to focus on
formulating HR practices and strategic policies which will enable the
Company to continue with its talent identification, recruitment, and
development initiatives, thereby creating a merit oriented, values
based work culture across the organization. The Performance Management
System which was introduced in 2011 has helped the Company design
programmes to train and develop employees for improved performance,
through skill-sets development and attitudinal changes. The Company
continues to remain focused on the maintenance of cordial industrial
relations with its work force and in fostering a system of
participative management, which enhances the employees'' sense of
belonging within the Company.
Information required under Section 217(2A) of the Companies Act, 1956,
read with the Companies (Particulars of Employees) Rules, 1975, as
amended is forming part of this Report. However, as per provisions of
Section 219(1)(b)(iv), the Report and Accounts are being sent to all
shareholders of the Company excluding the statement of particulars of
employees. Any shareholder interested in obtaining such particulars,
may inspect the same at the Registered Office of the Company.
12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGOING
The information relating to conservation of energy, technology
absorption, foreign exchange earnings and outgo required to be
disclosed under the Companies (Disclosure of Particulars in the Report
of Board of
Directors) Rules, 1988 is given in ANNEXURE Â I, forming part of this
report.
13. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Section 205A(5) of the Companies Act,
1956, dividends which remained unclaimed for a period of seven years,
have been transferred by the Company to the Investor Education and
Protection Fund.
14. MANAGEMENT''S DISCUSSION AND ANALYSIS REPORT
Management''s Discussion and Analysis Report for the year, as stipulated
under Clause 49 of the Listing Agreement with the Stock Exchanges in
India, is presented in a separate section forming part of the Annual
Report.
15. CORPORATE GOVERNANCE
The Company is committed to maintain the best standards of Corporate
Governance and adheres to the Corporate Governance requirements set out
by Securities and Exchange Board of India (SEBI). The Company has also
implemented several best corporate governance practices prevalent
globally.
National Stock Exchange of India Limited (NSE), in association with
Credit Rating and Information Services of India Limited (CRISIL), has
initiated Independent Equity Research Report (IER), on certain
companies. IER is reckoned among the best practices globally in the
equity research-independence space. The Company has been covered under
an Independent Equity Research Report carried out by CRISIL under the
aegis of NSE-IPFT.
The reports can be viewed at www.ier.co.in or at National Stock
Exchange home page: at NSE-IPFT Sponsored Research Reports.
M/s. VEV and Co., Company Secretaries, had conducted the Corporate
Governance audit for the year under review.
A separate section on Corporate Governance and a Certificate from M/s.
VEV and Co., Company Secretaries, regarding compliance of conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement with Stock Exchange/s in India is presented in a separate
section forming part of this Annual Report.
16. PROMOTERS
The list of the promoters is disclosed for the purpose of the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
Persons constituting promoters coming within the definition of
''Promoter'' for the purpose of regulations
2(1)(s) of the SEBI (Substantial Acquisition of Shares and Takeovers)
Regulations, 2011 include the following:
Sl. No. Name of the Entity
1 JKM Holdings Pvt. Ltd.
2 Mr. Udayant Malhoutra
3 Udayant Malhoutra and Company Pvt. Ltd.
4 JKM Offshore India Pvt. Ltd.
5 Wavell Investments Pvt. Ltd.
6 Mrs. Barota Malhoutra
7 Vita Pvt. Ltd.
8 Christine Hoden (India) Pvt. Ltd.
9 Primella Sanitary Products Pvt. Ltd.
17. DISCLOSURES REQUIRED UNDER LISTING AGREEMENT
Disclosures required under various clauses of the listing agreement,
are made elsewhere in this Annual Report.
The Certification by CEO & Managing Director and CFO of the Company is
attached in ANNEXURE - IV, forming part of this report.
ACKNOWLEDGMENTS
Your Directors would like to thank for the co-operation received from
the Financial Institutions, Banks, Government Authorities, Customers,
Vendors, Shareholders and Investors during the year under review.
Your Directors also wish to place on record their deep sense of
appreciation for the committed services of Executives, Managers, Staff
and Workers of the Company and look forward to their continued support
in the future.
For and on behalf of the Board of Directors
Vijai Kapur
Chairman
Place : Bangalore
Date : August 8, 2013
Mar 31, 2012
The Directors have pleasure in presenting the Thirty Seventh Annual
Report together with the Audited Statement of Accounts for the year
ended March 31, 2012.
1. FINANCIAL RESULTS
The Financial Results of the Company for the year ended March 31, 2012,
were as follows:
(Rs. in Lacs)
Standalone Consolidated
Particulars Year Ended 31 Year Ended Year Ended Year Ended
March 2012 31 March
2011 31 March
2012 31 March
2011
Gross Sales 48,244 38,479 1,54,173 52,543
Net Sales 44,369 35,430 1,49,715 49,495
Profit (Before
Interest, Depreciation
& Taxation) (EBITDA) 6,867 6,620 15,181 8,283
Interest & Finance
Charges 3,948 2,405 7,145 2,746
Depreciation 2,511 2,041 4,340 2,504
Net Profit Before
Taxation and
Exceptional Items 408 2,174 3,696 3,033
Exceptional Items 175 - 175 -
Net Profit Before
Taxation and after
Exceptional Items 233 2,174 3,521 3,033
Provision for Taxation:
- Current Tax - 442 1,388 629
- Minimum Alternative
Tax Charge 89 - 89 -
- Minimum Alternate
Tax Credit Entitlement (89) (64) (89) (64)
- Deferred Tax Charge 68 312 (331) 300
- Wealth Tax - - - -
Net Profit After Tax 165 1,484 2,464 2,168
Balance brought forward
from previous year 4,031 3,325 3,561 2,172
Amount available for
appropriation 4,196 4,809 6,025 4,340
Appropriations
Dividend on
Equity Shares -
Interim 325 325 325 325
Proposed Final
Dividend on Equity Shares 108 216 108 217
Tax on Dividend 72 89 72 89
Transfer to
General Reserve 17 148 17 148
Balance carried to
Balance Sheet 3,674 4,031 5,503 3,561
Notes: Previous year figures have been recast wherever necessary.
DIVIDEND
During the year, your Directors, based on the performance of the
Company, declared an Interim Dividend of Rs.6/- (Rs..3/- on each instance)
per share of face value Rs.10/- each at its Board meetings held on
November 14, 2011 and February 13, 2012 and paid on 5,414,703 Equity
Shares absorbing Rs.32,488,218/-. Your Directors recommend a Final
Dividend of Rs.2/- per share of face value Rs.10/- each on 5,414,703 Equity
Shares of Rs.10/- each, absorbing Rs.10,829,406/- for the year under
report. Hence the Total Dividend payout for the year under review is
Rs.43,317,624/- (exclusive of tax).
TRANSFER TO RESERVES
Your Directors propose to transfer Rs.17 lacs to General Reserve, during
the year under report.
The Company has hedged a part of its future foreign currency
receivables to mitigate its foreign exchange fluctuation risks. The
same has been designated as a cash flow hedge with effect from 1st
April, 2008, applying the hedging criteria. The movement in the Mark To
Market (MTM), subsequent to the designation as a cash flow hedge,
amounting toRs.1,600 lacs, has been accounted under Hedge Reserve
Account.
Pursuant to Notification No. G.S.R. 225(E) dated March 31, 2009 issued
by the Ministry of Corporate Affairs, the Company had opted (on March
31, 2009) to adjust the exchange differences relating to long term
monetary items with retrospective effect from April 1, 2007 vis-a-vis
recognition of aforesaid exchange differences as income/ expense in the
profit and loss account in the earlier years.
Accordingly, foreign exchange loss amounting to Rs.34 lacs and foreign
exchange loss amounting to Rs.122 lacs for the year ended March 31, 2011
and March 31, 2012 respectively, has been adjusted to the cost of fixed
assets.
COMPANY PERFORMANCE
Total income on a consolidated basis was Rs.151,850 lacs, as against
Rs.50,368 lacs in 2010-11. EBITDA on a consolidated basis was Rs.15,181
lacs as against Rs.8,283 lacs in 2010-11. Net Profit Before Tax on a
consolidated basis was Rs.3,521 lacs, as against Rs.3,033 lacs in 2010-11.
Net Profit After Tax on a consolidated basis was Rs.2,464 lacs, as
against Rs.2,168 lacs in 2010-11.
The Hydraulics and Precision Engineering business grew to Rs.30,038 lacs
from Rs.23,037 lacs in 2011. Profit (Before Interest & Tax) grew from
Rs.1,957 lacs to Rs.3,706 lacs. This includes the turnover from the
Hydraulics division of Dynamatic Limited, UK, a subsidiary of your
Company, to the extent of Rs.9,810 lacs and Loss (Before Interest & Tax)
of (Rs.119) lacs.
The Aerospace business grew from Rs.10,242 lacs to Rs.14,118 lacs and
Profit (Before Interest & Tax) grew from Rs.3,185 lacs to Rs.4,573 lacs.
This includes the turnover from the Aerospace division of Dynamatic
Limited, UK, a subsidiary of your Company, to the extent of Rs.8,931 lacs
and Profit (Before Interest & Tax) of Rs.2,356 lacs.
The Aluminium Castings business grew from Rs.3,371 lacs to Rs.5,116 lacs
and Loss (Before Interest & Tax) declined from (Rs.72) lacs to a loss of
(Rs.854) lacs.
The Automotive business grew from Rs.19,249 lacs to Rs.113,099 lacs while
Profit (Before Interest & Tax) grew from Rs.206 lacs to Rs.3,112 lacs. This
includes the turnover from Eisenwerk Erla GmbH, a subsidiary of your
Company to the extent of Rs.90,600 lacs and Profit (Before Interest &
Tax) of Rs.4,030 lacs.
Exports from India have grown at 67% with sales of Rs.11,247 lacs against
the previous year's Rs.6,728 lacs.
Capital expenditure
During the year, your Company incurred capital expenditure of Rs.1,321
lacs for physical infrastructure, Rs.8,454 lacs for technological
infrastructure and Rs.1,140 lacs for procurement of intangible assets.
Significant investments have been made in building infrastructure,
state-of-the-art machinery, design software, data security, information
systems, design and development activities; for the future benefits of
your Company.
2. SUBSIDIARIES
Your Company has seven Subsidiaries, the brief particulars of which are
given below.
The structure of Dynamatic Technologies Limited and its Subsidiaries as
on March 31, 2012
INDIAN, WHOLLY OWNED SUBSIDIARIES
JKM Research Farm Limited, India, (JKMRF) is a Wholly Owned Subsidiary
of the Company. It continues to be the Research & Development
facilitator to the Company.
JKM Erla Automotive Limited, India (JKM Erla)
During the year, the Company, through its Wholly Owned Subsidiary, JKM
Erla Automotive Limited, acquired Eisenwerk Erla GmbH Germany from the
Chennai based SANMAR Group.
Post acquisition, JKM Erla Holdings GmbH, Eisenwerk Erla GmbH and JKM
Ferrotech Limited became the wholly owned subsidiaries of JKM Erla
Automotive Limited.
Eisenwerk Erla GmbH generates revenues in excess of Euro 100 million
between its two units located in Germany and India.
The Company had entered the automotive business in 1997 through its 73%
owned joint-venture with Daerim Enterprise Company Limited, Korea. JKM
Daerim Automotive Limited commenced business as a supplier of critical
engine and transmission parts to Hyundai Motor India Limited and has
grown to be a partner to all major automotive Original Equipment
Manufacturers (OEM's) in the country. In 2008, this Subsidiary was
merged with the Company.
The Board of Directors of the Company, at its meeting held on May 7,
2011, had decided to demerge the 'Automotive Division' of the Company
into JKM Erla Automotive Limited with effect from April 1, 2011 and
also received 'No Objection Letter' from the stock exchanges. Taking
into consideration the tight timelines available for integration of
multiple corporate structures within the automotive business, as well
as the financial / tax implications, the Board of Directors of the
Company, at its meeting held on February 13, 2012, decided to withdraw
the Scheme of Arrangement. It is proposed to evaluate an appropriate
scheme during the following year.
JKM Ferrotech Limited, India (JFTL)
JFTL became a subsidiary of the Company subsequent to its holding
company Eisenwerk Erla GmbH, Germany, becoming a subsidiary of the
Company.
JFTL is into manufacturing of ferrous alloy and castings, having its
operations in Gummudipundi, Chennai. The facility has expertise in
producing High Si-Mo automotive components and is certified to the
highest quality standards specified by the Automotive Industry. The
expertise in producing intricately shaped castings as well as the skill
in handling ferrous alloys, particularly High Si-Mo and Ni-Resis makes
JFTL a strong development partner for prototypes in Ferrous Alloy
castings.
OVERSEAS, WHOLLY OWNED SUBSIDIARIES
JKM Global Pte. Limited, Singapore, (JKMGB) is a Wholly Owned
Subsidiary of your Company. It continues as an investment hub for
overseas businesses.
Dynamatic Limited, Swindon, UK, (DLUK) is a Wholly Owned Subsidiary of
your Company held through JKM Global Pte. Limited, Singapore.
The UK facilities have been restructured by way of merging Oldland
Aerospace with Dynamatic Limited.
Yew Tree Investments Limited and Dynamatic Limited are
the subsidiaries of JKM Global Pte Limited. Post restructure, DLUK has
its Hydraulics unit in Swindon and its Aerospace unit, Dynamatic
Oldland Aerospace in Bristol.
The Hydraulics unit of DLUK located in Swindon, England, produces high
performance engineered hydraulic products. The plant has over 50 years
of experience in gear pump design and manufactures and caters to
agriculture, construction and highway vehicle manufacturers. Products
include combined variable and fixed displacement pump packages,
temperature controlled fan drive systems and fixed displacement pumps
in Aluminium and Cast iron with a range of additional integrated valve
options.
Dynamatic Oldland Aerospace a division of Dynamatic Ltd UK is located
in Bristol & Swindon, and is a leader in Aeronautical Precision
Engineering and is currently working on components for most of the
Airbus family of aircraft including the A300/310, A320, A330/340, A380,
A400M, C130J and future Lynx Helicopter. Central to the Dynamatic
Oldland Aerospace approach is their commitment to a continual
improvement program based on Lean & Agile innovative engineering
principles.
Yew Tree Investments Limited, Bristol, UK (YTIL) is a Wholly Owned
Subsidiary of Dynamatic Limited, UK.
JKM Erla Holdings GmbH, Germany (JKM Erla GmbH)
became a subsidiary of the Company, subsequent to its holding company,
JKM Erla Automotive Limited, becoming a subsidiary of the Company. It
is engaged in the business of setting up automotive components
processing/manufacturing units.
Eisenwerk Erla GmbH, Germany (Eisenwerk) became a subsidiary of the
Company, subsequent to its holding company, JKM Erla GmbH, becoming a
subsidiary of the Company. Eisenwerk has been in business for over 630
years and is a preferred supplier to leading global OEMs including
Audi, BMW, Volkswagen, to name a few.
REPORT ON SUBSIDIARY COMPANIES
As per Section 212 of the Companies Act, 1956, we are required to
attach Directors' Report, Balance Sheet and Profit & Loss Account of
our Subsidiaries to this Report. The Ministry of Corporate Affairs,
Government of India vide its Circular No. 2/2011 dated February 8,
2011, has provided an exemption to the companies from complying with
Section 212, provided such companies publish audited consolidated
financial statements in the annual report. However, a statement showing
the relevant details of the Subsidiaries is enclosed as ANNEXURE - II,
forming part of this report. Accordingly, the Annual Report does not
contain the financial statements of our Subsidiaries. The audited
annual accounts and related information of our subsidiaries, where
applicable, will be made available on request.
The financial performance and the review of Business of DLUK, JKMRF,
JFTL and Eisenwerk Erla are forming part of this Report.
These documents will also be available for inspection at the registered
office during business hours at Bangalore, India. The same will also be
published on our website at www.dynamatics.com
3. RESEARCH & DEVELOPMENT
Your Company is a repository of diverse technologies and has
transformed itself into a knowledge-based organization through
sustained Research & Development efforts. All technology development
efforts are guided at the Board level through the Technology
Development Committee.
Your Company's focus on Research & Development has resulted in strong
development initiatives; enabling the Company to foray into providing
new services, launching new products and enhancing product value to our
customers.
JKM Science Center at Bangalore, spread over an area of 40,000 sq. ft.
houses design laboratories viz. Dynamaticî Research & Development
Center and Powermetricî Design;
a sophisticated Material Science Laboratory; a prototype manufacturing
unit and a Training Center.
Your Company's Design efforts are focused on
- Design, Validation and Prototyping of new products.
- New Project Management employing Product Life Cycle Management Tool
through APQP approach
- Effective deployment of analytical tools, viz. ANSYS, CFD,
Pro-Mechanica, & Automation Studio, etc.
- Improvement of existing designs.
- Continuous improvement of existing processes.
- Ongoing testing of products and materials.
Intellectual Property
The Company has emerged as one of India's leading Research
& Development organisations, with numerous inventions and patents to
its credit. The Company has defined an Intellectual Property (IP)
strategy to build an effective portfolio for future monetization,
collaboration and risk mitigation, focussing on future technologies.
The Company owns the following Patents for various Products:
- From India
Four - (One International Patent, three from the European Union).
- From England
Eleven - (11 UK, 1 Italian and 1 US patent).
In addition, the Company has 2 patents pending in multiple
jurisdictions, awaiting registration.
The Company has 10 trademarks registered and 4 trademark applications
pending, awaiting registration.
Eisenwerk owns 1 trademark and 2 patents in Germany.
The Company employs over 60 Scientists and 600 engineers and
technicians with expertise in Mechanical Engineering, Advanced Computer
Aided Engineering, Computer Aided Manufacture, Materials &
Metallurgical Engineering, Fluid Dynamics, Defence & Aerospace
Research. The state-of-the- art JKM Science Center brings together
Design Engineering, Development, Prototyping, Metallurgical and
Manufacturing Infrastructure enabling your Company to comprehensively
address the needs of its global customers.
The Dynamaticî Hydraulics Research Laboratory, in
Swindon, England, has advanced design knowledge focused on the Mobile
Hydraulics Sector, excellent engineering capabilities and ownership of
intellectual property.
This facility operates a comprehensive product testing and validation
laboratory.
This facility has completed testing and validation of new products for
various customers like Cummins - Daventry, John Deere - USA, CNH, JCB,
Terex, Mahindra & Mahindra, etc. The Company has already successfully
launched these new products in India and globally.
The Dynamatic Oldland Aerospace, in Bristol, England possesses people
having specialized skill sets who are one of the few specialists in CNC
Programming, globally. Improving process run times, reduction in cycle
time, optimizing machining strategies and high feed tooling have been
achieved to optimize component by using new processes, use of latest
cutting tools and fresh approach to the product.
The Company's Wholly Owned Subsidiary, JKM Research Farm Limited,
operates a unique facility for testing and analysing complete
aggregates and systems for mobile equipment.
4. QUALITY MANAGEMENT SYSTEM (QMS)
Dynamaticî Hydraulics
During the year your Company has successfully completed surveillance
audits to ISO:9001 specifications for, Quality Management System and
also to ISO:14001 specifications for its Environmental Management
System. Your Company's QMS which is compliant to ISO standards since
1999, has evolved and matured and is highly system driven.
The Company has started addressing and implementing health and safety
activities for certification to Occupational Health & Safety Assessment
Series (OHSAS) standards. The activities are focused on health & safety
of its employees on the shop floor. Awareness campaigns have been
undertaken to enforce the use of Personnel Protective Equipment (PPE)
at work. At the same time, the Company has been attempting to merge the
EMS & OHSAS requirements into a common management system called
Integrated Management System. This will avoid unnecessary duplication
of work in monitoring and maintenance of records. The audits for both
systems can also be combined and carried out at the same time.
The Dynamaticî Quality Management System (DQMS) addresses the quality
requirements and management expectations set out by the global major
players such as John Deere, Cummins, CNH, Mahindra & Mahindra etc. DQMS
utilises some of the best tools such as 5S, Business Process
Re-engineering, Overall Equipment Effectiveness, Root cause analysis,
Six Sigma, Statistical Process Control, Total Productive Maintenance,
Visual Control, Learning-by-doing, Employee Participation Program (EPP)
etc.
Lean Management concepts together with 5S tools are being used on the
shop floor to increase the Overall Equipment Effectiveness (OEE) of the
operations. This is achieved by reducing rejections, set ups, cycle
time and through effective material management. The Employee
Participation Program has resulted in the participation of employees in
innovative activities and their contributions have resulted in
continual improvements to work and work processes. Quality tools viz.
5S, Six Sigma etc, have resulted in enhanced product quality,
innovation and cost effectiveness.
The learning in establishing the green field units-JKM pump division
and The Center for Bush Excellence, are imbibed into the existing main
Unit in Dynamatic Park.
Automating the processes and de-skilling them has helped us to move
from operator's domain to machine domain. Fresh recruits also can learn
quickly and manage the operations.
Thrust is always on reducing paperwork by using electronic means to
communicate and store data.
Supply Chain Management and Productivity
The Company's supply chain program aims at upgrading the vendors so as
to enable them meet the demanding requirements of Quality, Cost &
Delivery. Vendor training & audits are being conducted at regular
intervals.
The demand for hydraulic pumps has been growing rapidly and keeping
pace with this demand has been a challenging task. Your Company's
investment in the capital equipment has been the highest in this year.
New generation CNC machines have been added to the production line to
increase its capacity. The production capacity has been ramped up by
30% in the past two quarters. To create space for the new machines and
test rigs, a new unit is being set-up close to the main factory. All
efforts have been made to keep the operational costs as low as
possible.
Dynamatic Limited, Hydraulics, UK, is accredited to ISO 9001:2008
standards and has recently renewed its certification from British
Standards Institute (BSI). Dynamatic Limited's lean initiatives
continue to be the focus of all employees using 5S techniques. The UK
facilities continue to have 0 (zero) Defects per million and 100% on
time delivery as reported in the John Deere supplier web site JDSN.
JKM Automotiveà and Dynametalî continues to strengthen its Quality and
Safety standards by upgrading to the latest versions of existing
certifications. The divisions are certified to Quality, Occupational
Health and Safety and Environmental Management Systems such as ISO / TS
16949, OHSAS 18000, ISO 14000 and FORD Q1. JKM Automotiveà has also
been audited and approved by various global OEM's such as Hyundai,
Ford, Fiat, Nissan, Daimler, Cummins, John Deere, etc.
As a part of continuous internal improvement program, we have
successfully implemented Quality controls and kept at single digit PPM
levels with Hyundai supplies. We have improved on Material cost ratio
enjoying a reduction by 3% through better material control and buying
efficiency. The unit initiated manufacture of Pressure Die Castings
inhouse and Alloy making for its requirements, as part of backward
integration. This would further bring down our present material cost
ratio by 3%. We started enjoying uninterrupted power supply for our
units which would bring savings in our power costs.
Dynamatic Oldland Aerospace, India has the largest infrastructure in
the Indian private sector for the manufacture of exacting Air Frame
Structures and Precision Aerospace Components, having its manufacturing
facilities in Bangalore and Nasik.
This Division is one of the first to have NADCAP approval for Heat
Treatment and Non-Destructive-Test Facilities in India and is well
supported by its AS 9100 'C' - Annual certification by UL covering both
the manufacturing facilities.
This Division is also a certified supplier for major OEMs like
Airbus, Boeing, Bell Helicopters, Northrop Grumman for supply of
aircraft components and assemblies.
Dynamatic Oldland Aerospace, UK a division of Dynamatic Limited UK is a
unique state-of-the-art aeronautical manufacturing facility in Bristol
& Swindon UK, possessing complex 5 axis machining capabilities for the
manufacture of Aerospace components and tooling.
This Division is a certified supplier to Airbus UK, GKN Aerospace
Europe & USA, Spirit Aerosystems, Boeing, Magellan Aerospace, GE
Aviation Systems, Lockheed Martin & Augusta Westlands. We are supported
by BSI ISO 9001:2000 and AS 9100 revc. Dynamatic Oldland Aerospace has
been accredited with Environmental Management System (EMS)
certification ISO:14000.
Powermetricî Design, after obtaining Design Approval Certification from
the Center for Military Airworthiness & Certification (CEMILAC), has
proposed its design capabilities to Indian as well as foreign aerospace
organisations. The CEMILAC certification which is mandatory for defence
& aerospace design, will enable Powermetricî to undertake design,
validation and development activities of aerospace parts/products using
various sophisticated computational tools.
Powermetric is also focusing on new research areas viz., Clean and
Green Energy management and application.
Dynamatic Homeland Securityà offers cutting edge solutions to enhance
the nation's capabilities in countering modern day security
threats-internal as well as external.
Our strong research and development capabilities, combined with
powerful partnerships we have forged with leading global security
technology companies like Blue- Bird Aero systems for UAVs, Elgo team
for crash rated Bollards and Barriers, Gatekeeper Inc for Under vehicle
scanners enables us to offer potential customers like the Ministry of
Defense, Ministry of Home Affairs, solutions that will help them
prepare and plan for emergencies as well as boost their response and
recovery skills.
5. AWARDS, RECOGNITION AND IMPORTANT MILESTONES
- Dynamaticî Hydraulics UK has received the 'Highest CNH Business
Growth Award' which was presented at the 1st CNH and IVECO P & S
Suppliers Convention in France during April 2012.
- During 2011, Dynamaticî Hydraulics UK conducted a 'Gear Pump Seminar'
to John Deere engineers in Waterloo. This seminar was to increase the
understanding of gear pump operation and application.
- Dynamatic Oldland Aerospace Division, UK - Successful re-negotiations
on existing business contracts has resulted in long term agreements for
a further 5 years.
6. DEPOSITS
As on March 31, 2012, the Company has no unclaimed deposits by the
deposit holders of the Company.
7. DIRECTORS
Ms. Claire Louise Tucker was co-opted as an Additional Director at the
Board Meeting held on August 13, 2011. In terms of relevant provisions
of the Companies Act, 1956, Ms. Claire Louise Tucker holds office up to
the date of the forthcoming Annual General Meeting. The Company has
received a notice under Section 257 of the Companies Act, 1956 from a
member signifying her intention to propose the name of Ms. Claire
Louise Tucker for appointment as Director of the Company at the next
Annual General Meeting. This item has been included in the notice
convening the next Annual General Meeting of the Company.
Under Section 256 of the Companies Act, 1956, Air Chief Marshall S.
Krishnaswamy (Retd.), Mr. Vijay Kapur and Mr. Raymond Keith Lawton,
Directors of the Company retire by rotation at the ensuing Annual
General Meeting, and being eligible, offer themselves for
re-appointment.
Mr. B. Seshnath-Executive Director & Chief Marketing Officer of the
Company placed his resignation, which the Board of Directors, at its
meeting held on August 3, 2012, accepted and his resignation would be
effective August 10, 2012.
None of the Directors of the Company are disqualified for being
appointed as Directors as specified under Section 274 of the Companies
Act, 1956 as amended by the Companies (Amendment) Act, 2000.
Details of all the Directors has been covered in Corporate Governance
Report forming part of the Annual Report.
8. DIRECTORS' RESPONSIBILITY STATEMENT
The Directors' Responsibility Statement as required under Section
217(2AA) of the Companies (Amendment) Act, 2000.
The Board of Directors hereby confirms that:
i) In the preparation of accounts for the financial year ended March
31, 2012, the applicable Accounting Standards have been followed with
proper explanation relating to material departures if any.
ii) We have selected such accounting policies and applied them
consistently and made judgments and estimates that were 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 & Loss
Account of the Company for the year under review.
iii) We have taken proper and sufficient care for the maintenance of
adequate records in accordance with the provisions of the Companies
Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities.
iv) We have prepared the accounts for the financial year ended March
31, 2012, on a 'going concern' basis.
9. CONSOLIDATED FINANCIAL STATEMENTS
The Directors have pleasure in attaching the Consolidated Financial
Statements prepared by the Company in accordance with the relevant
Accounting Standards issued by the Chartered Accountants of India,
which form part of the Annual Report and Accounts.
10. AUDITORS AND AUDITORS' REPORT
M/s. B S R & Associates, Chartered Accountants, Statutory Auditors of
the Company retire at the ensuing Annual General Meeting and offer
themselves for re-appointment.
They have confirmed to the Company that their re-appointment, if made,
would be within the prescribed limits under Section 224(1B) of the
Companies Act, 1956 and that they are not disqualified for
re-appointment within the meaning of Section 226 of the said Act.
The Report of the Auditors on the Financial Statements forms part of
this Annual Report.
11. PARTICULARS OF EMPLOYEES
The Company places a high premium on the development and retention of
its Human Resources as well as in providing employees with safe and
healthy work environments. The Corporate Human Resource Department
under the leadership of the Head - Group HR continues to focus on
formulating HR practices and strategic policies which will enable the
Company to continue with its talent identification, recruitment, and
development initiatives, thereby creating a merit oriented, values
based work culture across the organization. The Performance Management
System which was introduced in 2011 has helped the Company design
programmes to train and develop employees for improved performance,
through skill-sets development and attitudinal changes. The Company
continues to remain focused on the maintenance of cordial industrial
relations with its work force and in fostering a system of
participative management, which enhances the employees' sense of
belonging within the Company.
Information required under Section 217(2A) of the Companies Act, 1956,
read with the Companies (Particulars of Employees) Rules, 1975, as
amended is forming part of this Report. However, as per provisions of
Section 219(1)(b)(iv), the Report and Accounts are being sent to all
shareholders of the Company excluding the statement of particulars of
employees. Any shareholder interested in obtaining such particulars,
may inspect the same at the Registered Office of the Company.
12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGOING
The information relating to conservation of energy, technology
absorption, foreign exchange earnings and outgo required to be
disclosed under the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 is given in ANNEXURE - I, forming
part of this report.
13. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Section 205A(5) of the Companies Act,
1956, dividends which remained unclaimed for a period of seven years,
have been transferred by the Company to the Investor Education and
Protection Fund.
14. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year, as stipulated
under Clause 49 of the Listing Agreement with the Stock Exchanges in
India, is presented in a separate section forming part of the Annual
Report.
15. CORPORATE GOVERNANCE
The Company is committed to maintain the best standards of Corporate
Governance and adheres to the Corporate Governance requirements set out
by Securities and Exchange Board of India (SEBI). The Company has also
implemented several best corporate governance practices prevalent
globally.
National Stock Exchange of India Limited (NSE), in association with
Credit Rating and Information Services of India Limited (CRISIL), has
initiated Independent Equity Research Report (IER), on certain
companies. IER is reckoned among the best practices globally in the
equity research-independence space. The Company has been covered under
an Independent Equity Research Report carried out by CRISIL under the
aegis of NSE-IPFT.
The reports can be viewed at www.ier.co.in or at National Stock
Exchange home page: at NSE-IPFT Sponsored Research Reports.
M/s. VEV and Co, Company Secretaries, had conducted the Corporate
Governance audit for the year under review.
A separate section on Corporate Governance and a Certificate from M/s.
VEV and Co, Company Secretaries, regarding compliance of conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement with Stock Exchange/s in India is presented in a separate
section forming part of this Annual Report
16. PROMOTERS
The list of the promoters is disclosed for the purpose of the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011.
Persons constituting promoters coming within the definition of
'Promoter' for the purpose of regulation 2(1) (s) of the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011
include the following:
SL.
No. Name of the Entity
1 Mrs. Barota Malhoutra
2 Christine Hoden (India) Pvt.Ltd
3 JKM Holdings Pvt. Ltd
4 JKM Offshore India Pvt.Ltd
5 Primella Sanitary Products Pvt.Ltd
6 Mr.Udayant Malhoutra
7 Udayant Malhoutra and Company Pvt.Ltd
8 Vita Pvt.Ltd
9 Wavell Investments Pvt.Ltd
17. DISCLOSURES REQUIRED UNDER LISTING AGREEMENT
Disclosures required under various clauses of the listing agreement,
are made elsewhere in this Annual Report.
The Certification by CEO & Managing Director and President & Group CFO
of the Company is attached in ANNEXURE - IV, forming part of this
report.
ACKNOWLEDGMENTS
Your Directors would like to thanks for the co-operation received from
the Financial Institutions, Banks, Government Authorities, Customers,
Vendors, Shareholders and Investors during the year under review.
Your Directors also wish to place on record their deep sense of
appreciation for the committed services of Executives, Managers Staff
and Workers of the Company and look forward to their continued support
in the future.
For and on behalf of the Board of Directors
DR. K. APRAMEYAN
Chairman
Place : Bangalore Date : August 3, 2012
Mar 31, 2011
Dear Members,
The Directors have pleasure in presenting the Thirty Sixth Annual
Report together with the Audited Statement of Accounts for the year
ended 31st March, 2011.
1. FINANCIAL RESULTS
The Financial Results of the Company for the year ended 31st March,
2011, were as follows:
(Rs. in Lacs)
Standalone Consolidated
Particulars Year Ended Year Ended Year Ended Year Ended
31 March 2011 31 March
2010 31 March
2011 31 March
2010
Gross Sales 38,478.30 32,067.61 52,552.38 46,284.31
Net Sales 35,429.87 29,772.27 49,503.95 43,988.97
Profit (Before
Interest, Depreciation
& Taxation) (EBITDA) 6,621.86 5,393.46 8,329.51 6,329.60
Interest & Finance
Charges 2,405.43 2,142.65 2,745.66 2,492.25
Depreciation 2,040.65 1,856.63 2,504.33 2,253.90
Net Profit Before
Taxation and Extra
ordinary item 2,175.78 1,394.18 3,079.52 1,583.45
Extraordinary items - - 46.68
Net Profit Before
Taxation and after
Extraordinary item 2,175.78 1,394.18 3,032.84 1,583.45
Provision of Taxation:
- Current Tax 441.70 218.17 615.34 438.88
- Minimum Alternate
Tax Credit Entitlement (64.32) (119.28) (64.32) (119.28)
- Deferred Tax Charge 310.76 211.26 310.76 210.10
- Wealth Tax 3.43 2.29 3.43 2.29
Net Profit After Tax 1,484.21 1,081.74 2,167.63 1,051.46
Balance brought forward
from previous year 3,324.83 2,826.38 2,172.41 1,704.24
Amount available for
appropriation 4,809.04 3,908.12 4,340.04 2,755.70
Appropriations
Dividend on Equity
Shares - Interim 324.88 243.66 324.88 243.66
Proposed Final Dividend
on Equity Shares 216.59 162.44 216.59 162.44
Tax on Dividend 89.09 69.01 89.09 69.01
Transfer to General
Reserve 148.42 108.18 148.42 108.18
Balance carried to
Balance Sheet 4,030.06 3,324.83 3,561.06 2,172.41
Notes: Previous year fgures have been recast wherever necessary.
DIVIDEND
During the year, your Directors, based on the performance of the
Company, declared an Interim Dividend of 60% and paid on 5,414,703
Equity Shares absorbing Rs.32,488,218/-. Your Directors recommend a Final
Dividend of 40% on 5,414,703 Equity Shares of Rs.10/- each, absorbing
Rs.21,658,812/- for the year under report. Hence the Total Dividend
payout for the year under review is Rs.54,147,030/- (exclusive of tax).
TRANSFER TO RESERVES
Your Directors propose to transfer Rs.148.42 lacs to General Reserve,
during the year under report. An amount of Rs.705.23 lacs is proposed to
be retained in the profit and loss account.
The Company has hedged a part of its future foreign currency
receivables to mitigate its foreign exchange fluctuation risks.
The same has been designated as a cash flow hedge with effect from 1st
April, 2008, applying the hedging criteria. The movement in the Mark To
Market (MTM), subsequent to the designation as a cash flow hedge,
amounting to Rs.274.93 lacs, has been accounted under Hedge Reserve
Account.
Pursuant to Notification No. G.S.R. 225(E) dated 31st March, 2009
issued by the Ministry of Corporate Affairs, the Company had opted (on
31st March, 2009) to adjust the exchange differences relating to long
term monetary items with retrospective effect from 1st April, 2007
vis-ÃÂ -vis recognition of aforesaid exchange differences as income/
expense in the profit and loss account in the earlier years.
Accordingly, foreign exchange gain amounting to Rs.357.17 lacs and
foreign exchange loss amounting to Rs.33.81 lacs for the year ended 31st
March, 2010 and 31st March, 2011 respectively, has been adjusted to the
cost of fixed assets.
COMPANY PERFORMANCE
Your Directors are pleased to inform that your Company has shown a
significant growth in profitability and sales during the period under
review.
Total income on a consolidated basis was Rs.50,367.82 lacs, as against
Rs.44,515.89 lacs in 2009-10.
EBITDA on a consolidated basis was Rs.8,282.83 lacs as against Rs.6,329.60
lacs in 2009-10.
Net Profit Before Tax on a consolidated basis was Rs.3,032.84 lacs, as
against Rs.1583.45 lacs in 2009-10.
Net Profit After Tax on a consolidated basis was Rs.2,167.63 lacs, as
against Rs.1,051.46 lacs in 2009-10.
The Hydraulics and Precision Engineering business grew to Rs.23,037.31
lacs from Rs.19,357.84 lacs in 2010. Profit (Before Interest & Tax) grew
from Rs.985.45 lacs to Rs.1,956.53 lacs. This includes the turnover from
the Hydraulics division of Dynamatic Limited, UK, a subsidiary of your
Company, to the extent of Rs.8,534.08 lacs and Profit (Before Interest &
Tax) of Rs.17.52 lacs.
The Aerospace business grew from Rs.7,821.34 lacs to Rs.10,241.56 lacs and
Profit (Before Interest & Tax) grew from Rs.1,432.58 lacs to Rs.3,185.15
lacs. This includes the turnover from the Aerospace division of
Dynamatic Limited, UK, a subsidiary of your Company, to the extent of
Rs.5,875.99 lacs and Profit (Before Interest & Tax) of Rs.1,060.72 lacs.
The Aluminium Castings business declined from Rs.3,496.27 lacs to
Rs.3371.04 lacs and Profit (Before Interest & Tax) declined from Rs.201.48
lacs to a loss of Rs.71.73 lacs.
The Automotive business grew from Rs.19,004.49 lacs to Rs.19,249.28 lacs
while Profit (Before Interest & Tax) declined from Rs.1,051.00 lacs to
Rs.206.24 lacs.
Exports from India have grown at 87% with sales of Rs.6,728.18 lacs
against the previous year's Rs.3,604.12 lacs.
Capital expenditure
During the year, your Company incurred capital expenditure of Rs.847.49
lacs for physical infrastructure, Rs.4,952.75 lacs for technological
infrastructure and Rs.120.31 lacs for procurement of intangible assets.
Significant investments have been made in building infrastructure,
state-of-the-art machinery, design software, data security, information
systems, design and development activities; for the future benefits of
your Company.
2. SUBSIDIARIES
Your Company has five Subsidiaries, the brief particulars of which are
given below.
INDIAN, WHOLLY OWNED SUBSIDIARIES
JKM Research Farm Limited, India, (JKMRF) is a Wholly Owned Subsidiary
of your Company. It continues to be the Research & Development
facilitator to the Company.
JKM ERLA Automotive Limited, India (JKM ERLA)
During the year your Company, had promoted JKM ERLA Automotive limited,
India, a Wholly Owned Subsidiary of the Company.
Dynamatic Technologies Limited, through its Wholly Owned Subsidiary,
JKM Erla Automotive Limited, is in the process of acquiring Eisenwerk
Erla GmbH Germany from the Chennai based SANMAR Group.
Eisenwerk Erla GmbH generates revenues in excess of Euro 100 million
between its two units located in Germany and India.
This acquisition is an important milestone for your Company.
The potential advantages of the acquisition are:
- Global player in the exhaust and turbocharger segments of the
automotive industry.
- Manufacturing locations in Europe and Asia.
- Experienced management team.
- Provides the Company 100% ownership of one of the finest ferrous
foundries in Europe, capable of manufacturing extremely intricate
ferrous castings, from difficult-to-cast materials.
- Marquee customers in the Automotive and Turbocharger markets.
Dynamatic Technologies Limited had entered the automotive business in
1997 through its 73% owned joint-venture with Daerim Enterprise Company
Limited, Korea. JKM Daerim Automotive Limited commenced business as a
supplier of critical engine and transmission parts to Hyundai Motor
India Limited and has grown to be a partner to all major automotive
Original Equipment Manufacturers (OEM's) in the country. In 2008, this
Subsidiary was merged with your Company.
Your Company is in the process of de-merging its existing Automotive
business into JKM Erla Automotive Limited, a Wholly Owned Subsidiary of
the Company.
The Board of Directors have approved the Scheme of Arrangement by way
of the de-merger of the Automotive unit into the Company subject to the
approval of shareholders and compliance with the relevant provisions of
the Companies Act, 1956.
The Company will soon be sending you a separate Notice for your
approval in the said matter.
OVERSEAS, WHOLLY OWNED SUBSIDIARIES
JKM Global Pte. Limited, Singapore, (JKMGB) is a Wholly Owned
Subsidiary of your Company. It continues as an investment hub for
overseas businesses.
Dynamatic Limited, Swindon, UK, (DLUK) is a Wholly Owned Subsidiary of
your Company held through JKM Global Pte. Limited, Singapore.
During the year, the UK facilities have been re-structured by way of
merging Oldland Aerospace with Dynamatic Limited, effective from 31st
October, 2010. Yew Tree Investments Limited and Dynamatic Limited are
the subsidiaries of JKM Global Pte Limited. Post restructure, DLUK has
its Hydraulics unit in Swindon and its Aerospace unit, Dynamatic
Oldland
AerospaceTM in Bristol.
The Hydraulics unit of DLUK located in Swindon, England, produces high
performance engineered hydraulic products. The plant has over 50 years
of experience in gear pump design and manufactures and caters to
agriculture, construction and highway vehicle manufacturers. Products
include combined variable and fixed displacement pump packages,
temperature controlled fan drive systems and fixed displacement pumps
in Aluminium and Cast iron with a range of additional integrated valve
options.
Dynamatic Oldland AerospaceTM, located in Bristol, is a leader in
Aeronautical Precision Engineering and is currently working on
components for most of the Airbus family of aircraft including the
A300/310, A320, A330/340, A380 and A400M. Central to the
Dynamatic-Oldland's approach is their commitment to a continual
improvement program based on Lean & Agile engineering principles.
Yew Tree Investments Limited, Bristol, UK (YTIL) is a Wholly Owned
Subsidiary of Dynamatic Limited, UK.
With the restructuring of the UK Subsidiaries, Oldland Aerospace
Limited and DM 38 Limited have become dormant companies during the year
under review.
REPORT ON SUBSIDIARY COMPANIES
As per Section 212 of the Companies Act, 1956, we are required to
attach Directors Report, Balance Sheet and Profit and Loss Account of
our Subsidiaries to this Report. The Ministry of Corporate Affairs,
Government of India vide its Circular No. 2/2011 dated 8th February,
2011, has provided
an exemption to the companies from complying with Section 212, provided
such companies publish audited consolidated financial statements in the
annual report. However, a statement showing the relevant details of the
Subsidiaries is enclosed as ANNEXURE - II, forming part of this report.
Accordingly, the Annual Report does not contain the financial
statements of our Subsidiaries. The audited annual accounts and related
information of our subsidiaries, where applicable will be made
available on request.
The financial performance and the review of Business of DLUK and JKMRF
are attached forming part of this Report.
These documents will also be available for inspection at the registered
office during business hours at Bangalore, India. The same will also be
published on our website at
www.dynamatics.com
3. RESEARCH & DEVELOPMENT
Your Company is a repository of diverse technologies and has
transformed itself into a knowledge-based organization through
sustained Research & Development efforts. All technology development
efforts are guided at the Board level through the Technology
Development Committee.
Your Company's focus on Research & Development has resulted in strong
development initiatives; enabling the Company to foray into providing
new services, launching new products and enhancing product value to our
customers.
JKM Science Center at Bangalore, spread over an area of 40,000 sq. ft.
houses design laboratories viz. Dynamaticî Research & Development
Center and Powermetricî Design; a sophisticated Material Science
Laboratory; a
prototype manufacturing unit and a Training Center.
Your Company's Design efforts are focused on
- Design, Validation and Prototyping of new products.
- Improvement of existing designs.
- Continuous improvement of existing processes.
- Ongoing testing of products and materials.
Intellectual Property
Your Company has emerged as one of India's leading Research &
Development organisations, with numerous inventions and patents to its
credit.
Your Company has defined an Intellectual Property (IP) strategy to
build an effective portfolio for future monetization, collaboration and
risk mitigation, focussing on future technologies.
Dynamatic Technologies owns the following Patents for various Products:
- From India
Four - (One International Patent, three from the European Union).
- From England
Eleven - (11 UK, 1 Italian and 1 US patent).
In addition, your Company has two patents pending in multiple
jurisdictions, awaiting registration.
Dynamaticî employs over 60 Scientists and 600 engineers and technicians
with expertise in Mechanical Engineering, Advanced Computer Aided
Engineering, Computer Aided Manufacture, Materials & Metallurgical
Engineering, Fluid Dynamics, Defence & Aerospace Research. The
state-of-the- art JKM Science Center brings together Design
Engineering, Development, Prototyping, Metallurgical and Manufacturing
Infrastructure enabling your Company to comprehensively address the
needs of its global customers.
The Dynamaticî Hydraulics Research Laboratory, in Swindon, England, has
advanced design knowledge focused on the Mobile Hydraulics Sector,
excellent engineering capabilities and ownership of intellectual
property.
This facility operates a comprehensive product testing and validation
laboratory. During the year, this facility has completed testing and
validation of new products for various customers like Cummins, John
Deere, CNH Daventry, JCB, Terex, Mahindra & Mahindra etc. During the
year, your Company has successfully launched these new products in
India and globally.
The Dynamatic Oldland AerospaceTM, in Bristol, England possesses people
having specialized skill sets who are one of the few specialist in CNC
Programming, globally. Improving process run times, reduction in cycle
time, optimizing machining strategies and high feed tooling been
achieved to optimize component by using new processes, use of latest
cutting tools and fresh approach to the product.
Your Company's Wholly Owned Subsidiary, JKM Research Farm Limited,
operates a unique facility for testing and analysing complete
aggregates and systems for mobile equipment.
4. QUALITY MANAGEMENT SYSTEM (QMS)
Dynamaticî Hydraulics
During the year your Company has successfully completed surveillance
audits to ISO:9001 specifications for, Quality Management System and
also to ISO:14001 specifications for its Environmental Management
System. Your Company's QMS which is compliant to ISO standards since
1999, has evolved and matured and is system driven.
Your Company has started addressing and implementing health and safety
activities for certification to Occupational Health & Safety Assessment
Series (OHSAS) standards. The activities are focused on health & safety
of its employees on the shop floor. Awareness campaigns have been
undertaken to enforce the use of Personnel Protective Equipment (PPE)
at work. At the same time, the Company has been attempting to merge the
EMS & OHSAS requirements into a common management system called
Integrated Management System. This will avoid unnecessary duplication
of work in monitoring and maintenance of records. The audits for both
systems can also be combined and carried out at the same time.
The Dynamaticî Quality Management System (DQMS) addresses the quality
requirements and management expectations set out by the global major
players such as John Deere, Cummins, CNH, Mahindra & Mahindra etc. DQMS
utilises some of the best tools such as 5S, Business Process
Re-engineering, Overall Equipment Effectiveness, Root cause analysis,
Six Sigma, Statistical Process Control, Total Productive Maintenance,
Visual Control, Learning-by-doing, Employee Participation Program (EPP)
etc.
Lean Management concepts together with 5S tools are being used on the
shop floor to increase the Overall Equipment Effectiveness (OEE) of the
operations. This is achieved by reducing rejections, set ups, cycle
time and through effective material management. The Employee
Participation Program has resulted in the participation of employees in
innovative activities and their contributions have resulted in
continual improvements to work and work processes. Quality tools viz.
5S, Six Sigma etc, have resulted in enhanced product quality,
innovation and cost effectiveness.
Supply Chain Management and Productivity
Your Company's supply chain program aims at the up- gradation of
vendors to enable them to meet the demanding requirements of Quality,
Cost & Delivery. Vendor training & audits are being conducted at
regular intervals.
The demand for hydraulic pumps has been growing rapidly and keeping
pace with this demand has been a challenging task. Your Company's
investment in the capital equipment has been the highest in this year.
New generation CNC machines have been added to the production line to
increase its capacity. The production capacity has been ramped up by
30% in the past two quarters. To create space for the new machines and
test rigs, a new unit is being set-up close to the main factory. All
efforts have been made to keep the operational costs as low as
possible.
Dynamatic Limited, Hydraulics, UK, is accredited to ISO 9001:2008
standards and has recently renewed its certification from British
Standards Institute (BSI). Dynamatic Limited's lean initiatives,
continue to be the focus of all employees using 5S techniques. The UK
facilities continue to have 0 (zero) Defects per million and 100% on
time delivery as reported in the John Deere supplier web site JDSN.
JKM Automotiveà and Dynametalî continues to strengthen its Quality and
Safety standards by upgrading to the latest versions of existing
certifications. The divisions are certified to Quality, Occupational
Health and Safety and Environmental Management Systems such as ISO / TS
16949, OHSAS 18000, ISO 14000 and FORD Q1. JKM Automotiveà has also
been audited and approved by various global OEM's such as Hyundai,
Ford, Fiat, Nissan, Daimler, Cummins and John Deere, etc.
As a part of the worldwide supplier improvement program initiated by
Honeywell, JKM Automotiveà has been Honeywell's first supplier outside
Europe to implement Honeywell Operating System (HOS). This has been
guided by a dedicated team from Honeywell Global HOS team. JKM
Automotiveà has successfully implemented the first
3 phases and is currently working towards implementing phase 4 since
January 2011. Significant improvements have been witnessed at both
foundry and machine shop in areas such as setting time, through-put
time from pouring to despatch, output per employee, kaizen, strategic
deployment program and various other shop floor initiatives.
Dynamatic Oldland AerospaceTM, India has the largest infrastructure in
the Indian private sector for the manufacture of exacting Air Frame
Structures and Precision Aerospace Components, having its manufacturing
facilities in Bangalore and Nasik. The Division is well supported by
its AS 9100 'B' - Annual certification by UL covering Nasik work centre
& NADCAP approvals for Heat Treatment and Non-Destructive- Test
Facilities in India. This is the first time such capabilities have been
built in the Indian private sector. This Division is also certified by
industry majors like Airbus & Boeing for supply of aircraft components
and assemblies.
Dynamatic Oldland AerospaceTM, UK is supported by its ISO 9001:2000 and
AS 9100 from the BSI. During the year, the Company has successfully
completed customer audits by GKN, Yeovil, Spirit AeroSystems, G. E.
Aerospace, Westland Helicopters Limited.
Dynamatic Oldland AerospaceTM has been accredited with Environmental
Management System (EMS) certification ISO:14000.
Dynamatic Oldland AerospaceTM has received an award from the West of
England Aerospace Forum (WEAF) for its Lean Manufacturing and
Continuous Improvements initiatives.
Powermetricî Design, after obtaining Design Approval Certification from
the Center for Military Airworthiness & Certification (CEMILAC), has
proposed its design capabilities to Indian as well as foreign aerospace
organisations. The CEMILAC certification which is mandatory for defence
& aerospace design, will enable Powermetricî to undertake design,
validation and development activities of aerospace parts/products using
various sophisticated computational tools.
Powermetric is also focusing on new research areas viz., Clean and
Green Energy management / and application.
5. AWARDS, RECOGNITION AND IMPORTANT MILESTONES
- Dynamaticî Hydraulics has received the 'Best Performance Award' in
the Supply Chain Management Category from the Swaraj Tractor Division
of Mahindra & Mahindra for outstanding SCM performance.
- Dynamaticî has received an 'Award of Appreciation'
from Voltas Limited (A Tata Enterprise) for the consistent quality of
products supplied.
- Dynamatic Oldland Aerospace Division, UK, has been recognized by GKN
Aerospace for 'Excellent performance in the areas of delivery and
quality'.
- Dynamatic Technologies Limited was featured on the cover of the
Aviation Week, for the issue of the month of June 2010.
- Dynamatic Technologies has successfully achieved 'Single Source
Supplier' status for the Airbus 320 Flap Track Beams being supplied to
Spirit AeroSystems (Europe) Limited.
- Dynamatic Technologies Limited has conducted the Ground Breaking
Ceremony at its 35 acres site located in Karnataka Industrial Area
Development Board's (KIADB) Aerospace Park near the International
Airport in Bangalore, in the presence of Mr. S. V. Ranganath, Chief
Secretary to the Government of Karnataka, Mr. Klaus Richter, Executive
Vice President & Head of EADS / Airbus Procurement, Mr. V. P. Baligar,
Principal Secretary, Industries Department, Government of Karnataka and
Mr. Philippe Advani, Vice President, Head of EADS / Airbus Global
Sourcing Network.
- Dynamaticî Tech Day was conducted at Mahindra and Mahindra, where
Indra Pump was launched. This is the next generation hydraulic gear
pump designed and developed by Dynamaticî for Mahindra.
6. DEPOSITS
As on 31st March, 2011, your Company has no unclaimed Deposits by the
Deposit holders of the Company.
7. DIRECTORS
Under Section 256 of the Companies Act, 1956, Dr. K. Aprameyan, Mr.
Govind Mirchandani and Ms. Malavika Jayaram, Directors of the Company
retire by rotation at the ensuing Annual General Meeting, and being
eligible, offer themselves for re-appointment.
Details of Directors has been covered in Corporate Governance Report
forming part of the Annual Report.
8. DIRECTORS' RESPONSIBILITY STATEMENT
The Directors' Responsibility Statement as required under Section
217(2AA) of the Companies (Amendment) Act, 2000, in respect of the
financial statements is annexed as ANNEXURE - III, forming part of this
report.
9. CONSOLIDATED FINANCIAL STATEMENTS
Your Directors have pleasure in attaching the Consolidated Financial
Statements prepared by the Company in accordance with the relevant
Accounting Standards issued by the Chartered Accountants of India,
which form part of the Annual Report and Accounts.
10. AUDITORS AND AUDITORS' REPORT
M/s. B S R & Associates, Chartered Accountants, Statutory Auditors of
the Company retire at the ensuing Annual General Meeting and offer
themselves for re-appointment.
They have confirmed to the Company that their re-appointment, if made,
would be within the prescribed limits under Section 224(1B) of the
Companies Act, 1956 and that they are not disqualified for
re-appointment within the meaning of Section 226 of the said Act.
The Notes on Accounts referred to in the Auditors' Report are
self-explanatory and do not call for any further comments.
11 . SECRETARIAL AUDIT REPORT
As a measure of good corporate governance practice, your Company
underwent a Secretarial Audit for the financial year ended 31st March,
2011. An independent Practicing Company Secretary, conducted this
audit; who is a past member of Central Council of the Institute of
Company Secretaries of India.
12. PARTICULARS OF EMPLOYMENT
Your Company places a high premium on the development and retention of
its Human Resources as well as in providing employees with safe and
healthy work environments. With the establishment of the Corporate
Human Resource Department under the leadership of the Head - Group HR,
there is a renewed focus on formulating HR practices and strategic
policies which will enable your Company to continue with its talent
identification, recruitment, and development initiatives, thereby
creating a merit oriented, values based work culture across the
organization. A new Performance Management System has already been put
in place to help your Company train and develop employees for improved
performance, through skill-sets development and attitudinal changes.
Your Company continues to remain focused on the maintenance of cordial
industrial relations with its work force and in fostering a system of
participative management, which enhances the employees' sense of
belonging within the Company.
Information required under Section 217(2A) of the Companies Act, 1956,
read with the Companies (Particulars of Employees) Rules, 1975, as
amended is forming part of this Report.
13. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGOING
The information relating to conservation of energy, technology
absorption, foreign exchange earnings and outgo required to be
disclosed under the Companies (Disclosure of Particulars in the Report
of Board of Directors) Rules, 1988 is given in ANNEXURE Ã I, forming
part of this report.
14. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of Section 205A(5) of the Companies Act,
1956, dividends which remained unclaimed for a period of seven years,
have been transferred by the Company to the Investor Education and
Protection Fund.
15. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year is under
review, as stipulated under Clause 49 of the Listing Agreement with the
Stock Exchanges in India, is presented in a separate section forming
part of the Annual Report.
16. CORPORATE GOVERNANCE
Your Company is committed to maintain the best standards of Corporate
Governance and adheres to the Corporate Governance requirements set out
by Securities and Exchange Board of India (SEBI). The Company has also
implemented
several best corporate governance practices prevalent globally.
National Stock Exchange of India Limited (NSE), in association with
Credit Rating and Information Services of India Limited (CRISIL), has
initiated Independent Equity Research Report (IER), on certain
companies. IER is reckoned among the best practices globally in the
equity research-independence space. During the year, your Company has
been covered under an Independent Equity Research Report carried out by
CRISIL under the aegis of NSE-IPFT.
The reports can be viewed at www.ier.co.in or at National Stock
Exchange home page: at NSE-IPFT Sponsored Research Reports.
M/s. B S R & Associates, Chartered Accountants, Statutory Auditors of
the Company had conducted the Corporate Governance audit for the year
under review.
A separate section on Corporate Governance and a Certificate from the
Statutory Auditors of the Company regarding compliance of conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement with Stock Exchange/s in India is presented in a separate
section forming part of this Annual Report.
Your Company is taking all initiatives to implement the Corporate
Governance voluntary guidelines 2009 and Corporate Social
Responsibility voluntary guidelines 2009 issued by Ministry of
Corporate Affairs, Government of India.
17. PROMOTERS
The list of the promoters are disclosed for the purpose of the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997.
Persons constituting promoters coming within the definition of
'Promoter' for the purpose of regulations 3(1) (e) (iii) (b) of the
SEBI (Substantial Acquisition of Shares and Takeovers) Regulations,
1997 include the following:
SL.No Name of the Entity / Person
1 Mrs. Barota Malhoutra
2 Christine Hoden (India) Pvt. Limited
3 JKM Holdings Pvt. Limited
4 JKM Offshore India Pvt. Limited
5 Primella Sanitary Products Pvt. Limited
6 Mr. Udayant Malhoutra
7 Udayant Malhoutra and Company Pvt. Limited
8 Vita Pvt. Limited
9 Wavell Investments Pvt. Limited
18. DISCLOSURES REQUIRED UNDER LISTING AGREEMENT
Disclosures required under various clauses of the listing agreement,
are made elsewhere in this Annual Report.
The Certification by CEO & Managing Director and President & Group CFO
of the Company is attached in ANNEXURE - V, forming part of this
report.
ACKNOWLEDGMENTS
Your Directors would like to thanks for the co-operation received from
the Financial Institutions, Banks, Government Authorities, Customers,
Vendors, Shareholders and Investors during the year under review.
Your Directors also wish to place on record their deep sense of
appreciation for the committed services of Executives, Managers Staff
and Workers of the Company and look forward to their continued support
in the future.
For and on behalf of the Board of Directors
Place : Bangalore VIJAI KAPUR
Date : 28th May, 2011 Chairman
Mar 31, 2010
The Directors have pleasure in presenting the Thirty Fifth annual
Report together with the audited statement of accounts for the year
ended 31st March 2010.
FINANCIAL RESULTS
The Financial Results of the company for the year ended 31st march,
2010, were as follows:
(Rs. in lacs)
Particulars Year Ended Year Ended
31.03.2010 31.03.2009
Gross profit (Before interest,
Depreciation & taxation) (EBITDA) 5,563.22 4,830.79
Interest & Finance charges 2,142.65 1,770.43
Depreciation 1,856.63 1,721.20
Net profit Before taxation and
Forex impact 1,563.94 1,339.16
Forex impact 169.76 218.04
Net profit Before taxation and
after Forex impact 1,394.18 1,121.12
Provision for current year taxation 218.17 56.45
MAT Credit entitlement (119.28) (121.45)
Provision for Deferred tax 211.26 646.88
Provision for Fringe Benefit tax - 49.25
Provision for Wealth tax 2.29 2.97
Net profit after tax 1,081.74 487.02
Balance brought forward from
previous year 2,826.38 2,641.46
Amount available for appropriation 3,908.12 3,128.48
Appropriations
Dividend on equity shares - interim 243.66 135.37
Proposed Final Dividend on
Equity shares 162.44 81.22
Tax on Dividend 69.01 36.81
Transfer to general Reserve 108.18 48.70
Balance carried to Balance sheet 3,324.83 2,826.38
Notes: Previous year figures have been recast wherever necessary.
DIVIDEND
During the year, your Directors, based on the performance of the
company, declared an interim Dividend of 45% and paid on 5,414,703
equity shares absorbing Rs.24,366,164/-. your Directors recommend a
Final Dividend of 30% on 5,414,703 equity shares of Rs.10/- each,
absorbing Rs.16,244,109/- for the year under report. hence the total
Dividend payout for the year under review is Rs.40,610,273/- (exclusive
of tax).
TRANSFER TO RESERVES
your Directors propose to transfer Rs.108.18 lacs to general Reserve,
during the year under report. an amount of Rs.498.45 lacs is proposed
to be retained in the profit and loss account.
The company has hedged a part of its future foreign currency
receivables to mitigate its foreign exchange fluctuation risks. the
same has been designated as a cash flow hedge with effect from april 1,
2008 applying the hedging criteria. the mark to market loss on this
contract at the date of designation of the hedge amounting to Rs.54.94
lacs (after discounting) has been credited to the profit and loss
account. the movement in the market to market (MTM) subsequent to the
designation as a cash flow hedge amounting to Rs.120.64 lacs has been
accounted under hedge Reserve account.
Pursuant to notification no. G.S.R. 225(e) dated march 31, 2009 issued
by the ministry of corporate affairs, the company had opted (on 31st
march 2009) to adjust the exchange differences relating to long term
monetary items with retrospective effect from April 1, 2007 vis-ÃÂ -vis
recognition of aforesaid exchange differences as income / expense in
the profit and loss account in the earlier years.
Accordingly, foreign exchange loss amounting to Rs.825.29 lacs and
foreign exchange gain amounting to Rs.357.17 lacs for the year ended
march 31, 2009 and march 31, 2010 respectively, has been adjusted to
the cost of fixed assets.
COMPANY PERFORMANCE
Your Directors are pleased to inform that your company has shown a
significant growth in profitability compared to the growth in sales of
your company.
Total income on a consolidated basis was Rs.44,515.89 lacs, as against
Rs.41,962.25 lacs in 2008-09.
EBITDA (before forex impact) on a consolidated basis was Rs.6,725.16
lacs as against Rs.5,278.87 lacs in 2008-09.
Net profit Before ta x (after forex impact) on a consolidated basis was
Rs.1,583.45 lacs, as against Rs.35.28 lacs in 2008-09.
Net profit after Ta x (after forex impact) on a consolidated basis was
Rs.1,051.46 lacs, as against a loss of Rs.522.83 lacs in 2008-09.
The hydraulics and precision engineering business remained at the same
level of Rs.19,357.84 lacs compared to Rs.19,425.60 lacs in 2009,
however, profit (Before interest & tax) grew from Rs.877.61 lacs to
Rs.985.45 lacs. this includes the turnover from Dynamatic limited, UK,
a subsidiary of your company, to the extent of Rs.8,114.26 lacs and
loss (Before interest & tax) of Rs.502.59 lacs.
The Aerospace business grew from Rs.3,771.96 lacs to Rs.7,821.34 lacs
and profit (Before interest & tax) grew from Rs.552.90 lacs to
Rs.1,432.58 lacs. this includes the turnover from Dm 38 limited, UK, a
subsidiary of your company, to the extent of Rs.6,236.19 lacs and
profit (Before interest & tax) of Rs.1,007.63 lacs.
The Aluminium castings business declined from Rs.4,094.63 lacs to
Rs.3,496.27 lacs and profit (Before interest & tax) declined from
Rs.230.43 lacs to Rs.201.48 lacs.
The Automotive business declined from Rs.21,425.45 lacs to Rs.19,004.49
lacs while profit (Before interest & tax) grew from Rs.903.29 lacs to
Rs.1051.00 lacs.
Exports from india have grown at 31% with sales of Rs.3,413.92 lacs
against the previous years Rs.2,615.71 lacs.
Capital expenditure
During the year, your company incurred capital expenditure of
Rs.1161.40 lacs for physical infrastructure, Rs.2256.39 lacs for
technological infrastructure, Rs.566.46 lacs for procurement of
intangible assets.
Significant investments have been made in Building infrastructure,
state-of-the-art machinery, Design software, Data security, information
systems and Design and Development activities for the future benefits
of your company.
RESEARCH & DEVELOPMENT
Your Company is a repository of diverse technologies and has
transformed itself into a knowledge-based organisation through
sustained Research & Development efforts. all technology development
efforts are guided at the Board level committee through the technology
Development committee.
Your Companys focus on Research & Development has resulted in strong
development initiatives; enabling the company to foray into providing
new services, launching new products and enhancing product value to our
customers.
JKM Science Center at Dynamatic park Peenya, Bangalore, spread over an
area of 40,000 sq. ft., houses design laboratories viz. Dynamaticî
Research & Development center and Powermetricî Design, a sophisticated
material science laboratory, a prototype manufacturing unit and a
training center.
Your Companys Design efforts are focused on
- Design, Validation and Prototyping of new products.
- Improvement of existing designs.
- Continuous improvement of existing processes.
- Ongoing testing of products and materials.
Your company has emerged as one of indias leading Research &
Development organisations, with numerous inventions and patents to its
credit.
Dynamaticî employs over 50 scientists and 500 engineers and technicians
with expertise in mechanical engineering, advanced computer aided
engineering, computer aided manufacture, materials & metallurgical
engineering, Fluid Dynamics, Defence & aerospace Research. this state-
of-the-art facility brings together Design engineering, Development,
prototyping, metallurgical and manufacturing infrastructure enabling
your company to comprehensively address the needs of its global
customers.
The Dynamaticî Hydraulics Research Laboratory in Swindon, England, has
advanced design knowledge focused on the mobile hydraulics sector,
excellent engineering capabilities and ownership of intellectual
property.
This facility operates a comprehensive product testing and validation
laboratory. During the year, this facility has completed testing and
validation of new products for various customers like cummins, John
Deere, CNH Daventry, JCB, Terex, etc. your company will be very
shortly launching these new products globally.
Your Companys wholly owned subsidiary, JKM Research Farm limited,
operates a unique facility for testing and analysing complete
aggregates and systems for mobile equipments.
QUALITY MANAGEMENT SYSTEM
Dynamaticî Hydraulics
During the year, your company has successfully completed the 2nd
surveillance audit to iso:9001 specifications for Quality management
system and also to iso:14001 specifications for environmental
management system. the Quality management system has been upgraded to
version ISO 9001:2008.
The Dynamaticî Quality management system (DMS) comprises of quality
requirements of global customers such as John Deere, cummins, CNH,
Mahindra & Mahindra etc. DMS utilises some of the best tools such as
5s, Business process re-engineering, overall equipment effectiveness,
Root cause analysis, six Sigma, statistical process control, total
productive maintenance, Visual control, learning-by- doing, EPP
(employee participation program) etc.
Lean Management concepts together with 5s tools are being used on the
shop floor to increase the OEE (overall equipment effectiveness) of the
operations. this is achieved by reducing rejections, set ups, cycle
time and through effective material management. employee participation
programs have resulted in the participation of employees in innovative
activities and their contributions have resulted in continual
improvements in work and work process. Quality tools viz. 5s, six sigma
etc have resulted in enhanced product quality, innovation and cost
effectiveness.
Your Companys supply chain program aims at up-grading vendors to
enable them to meet demanding requirements of Quality, cost & Delivery.
Vendor training & audits are being conducted at regular intervals.
Your Company has released its supplier Quality management (SQM) manual
at the Dynamaticî Vendor meet which was held on 13th march 2010 in
Bangalore. the manual, which forms an important part of the Dynamaticî
management system, captures the key tenets of the Dynamaticîs supplier
Quality system, which every Dynamaticî supplier is expected to meet or
exceed while undertaking work for your company. the SQM booklet links
the Dynamaticî suppliers to its customers and channelizes the flow of
information in the supply chain.
JKM AutomotiveTM and Dynametalî facilities are certified to the highest
quality and safety standards specified by the automotive industry
including ts:16949, ohsas:18000 and iso:14000, as well as, to Ford Q1
quality standards. your companys automotive division has been audited
and approved by various global automotive majors including Hyundai,
TATA motors, Fiat, Ford, Renault, Daimler, John Deere and cummins.
JKM Automotivetm supplies function-critical aluminium compressor
housings to honeywell turbo technologies. the castings are made at
Dynametalî, machined and tested at
JKM Automotivetm and supplied to honeywells plants in Pune, Italy and
France. Honeywell has developed its own operating system named
Honeywell operating system (HOS) and has implemented it in all its
manufacturing plants, across all the Honeywell group operations. as
part of extending this to the suppliers manufacturing facility, JKM
automotivetm is the only supplier outside Europe chosen by Honeywell to
implement HOS. a dedicated team from honeywells Hos group is guiding
JKM automotivetm and Dynametalî in understanding, implementing and
sustaining HOS. the whole operating system is implemented in 5 phases
and each of them signifies the maturity of operating system. JKM
automotivetm has already successfully implemented the first two phases
and is working on implementing phase 3 of HOS.
Dynamatic Aerospaceî has the largest infrastructure in the Indian
private sector for manufacture of exacting air Frame structures and
precision aerospace components. the division is well supported by its
as 9100 quality certification & NADCAP approvals for heat treatment and
Non-Destructive-test Facilities. this is the first time such
capabilities have been built in the Indian private sector. this
division is also certified by industry majors like airbus & Boeing for
supply of aircraft components and assemblies.
During The year, Powermetricî Design has successfully obtained the
Design approval certification from the center for military
airworthiness & certification (CEMILAC). CEMILAC was established in
1995 to consolidate air certification work, and, is one of DRDos
significant agencies vested with the responsibility of airworthiness
and certification of military aircraft and airborne stores. The CEMILAC
certification which is mandatory for defense & aerospace design, will
enable Powermetricî to undertake design and development in the areas of
static & Dynamic analysis, geometric modeling and manufacturing
Drawings, tooling Design, sheet metal processing and NC programming of
Air-Frame components.
Oldland Aerospace Limiteds quality approvals and standards includes
airbus UK, g.e. aerospace, GKN aerospace services (LOW & Yeovil),
Westland helicopters limited, Bs en ISO 9001:2000 and as 9100.
Oldland aerospace limited has been accredited with environmental
management system (ems) certification iso:14000.
Oldland aerospace has received an award from West of England aerospace
Forum (WEAF) for its lean manufacturing and continuous improvements
initiatives.
Dynamatic Limited, UK is accredited to ISO 9001:2008 standards and has
recently completed the BSI audit successfully. Dynamatic limiteds lean
initiatives continue to be the focus of all employees using 6s
techniques.
DEPOSITS
As On 31st march, 2010, your company has no unclaimed Deposits by the
Deposit holders of the company.
SUBSIDIARIES
Brief particulars of Subsidiaries are given below:
JKM Research Farm Limited, India, (JKMRF) is a Wholly owned subsidiary
of your company. it continues to be the Research & Development
facilitator to the Company.
JKM Global Pte. Limited, Singapore, (JKMGB) is a Wholly owned
subsidiary of your company. it continues as an investment hub for
overseas businesses.
Dynamatic Limited, Swindon, UK, (DLUK) is a Wholly owned subsidiary of
your company held through JKM global Pte. limited, Singapore. DlUK
located in Swindon, England produces high performance engineered
hydraulic products. the plant has over 50 years of experience in gear
pump design and manufacture, and caters to agriculture, construction
and highway vehicle manufacturers. products include combined variable
and fixed displacement pump packages, temperature controlled fan drive
systems and fixed displacement pumps in aluminium and cast iron with a
range of additional integrated valve options.
DM 38 Limited, Bristol, UK, (DM 38) is a Wholly owned subsidiary of
your company held through JKM Global Pte. limited, Singapore. it is
the company through which yew tree investments limited was acquired.
Yew Tree Investments Limited, Bristol, UK, (YTIL) is a Wholly owned
subsidiary of your company held through Dm 38 limited, uK. ytil has
been the holding company of oldland aerospace limited, and, owns the
land & Building in which oldland aerospace limited operates.
Oldland Aerospace Limited, (OAL), Bristol, UK, (Formerly Oldland CNC
Limited) is a Wholly owned subsidiary of your company held through yew
tree investments limited, uK. oal is a leader in aeronautical precision
engineering, currently working on components for most of the airbus
family of aircraft including a300/310, a320, a330/340, a380 and a400m.
central to the oldland approach is their commitment to a continual
improvement program based on lean & agile engineering principles.
REPORT ON SUBSIDIARY COMPANIES
The Company has obtained exemption from the government of india,
ministry of corporate affairs from attaching the Balance sheet, profit
and loss account and other documents of the subsidiary companies to
this Report pursuant to section 212 of the companies act, 1956.
however, a statement showing the relevant details of the subsidiaries
is enclosed and is a part of the annual Report. the company will make
available the annual accounts of the subsidiary companies and related
detailed information to any member of the company who may be interested
in obtaining the same. the annual accounts of the subsidiary companies
will also be kept open for inspection at the Registered office of the
company. the consolidated financial statements presented by the company
include financial results of its subsidiary companies.
DIRECTORS
Under Section 256 of the Companies act, 1956, Mr. Vijai Kapur, Mr.
Raymond Keith lawton and Mr. s. govindarajan, retire by rotation at the
ensuing annual general meeting and being eligible, offer themselves for
re-appointment.
Details of Directors are presented in corporate governance report
forming part of the annual Report.
DIRECTORS RESPONSIBILITY STATEMENT
The Directors Responsibility statement as required under section
217(2aa) of the companies (amendment) act, 2000, in respect of the
financial statements is annexed to this report.
CONSOLIDATED FINANCIAL STATEMENTS
Your Directors have pleasure in attaching the consolidated Financial
statements prepared by the company in accordance with the relevant
accounting standards issued by the chartered accountants of india,
which form part of the annual Report and accounts.
AUDITORS AND AUDITORS REPORT
M/s. B s R & Associates, chartered accountants, statutory auditors of
the company retire at the ensuing annual general meeting and offer
themselves for re-appointment.
They have confirmed to the company that their re- appointment, if made,
would be within the prescribed limits under section 224(1B) of the
companies act, 1956 and that they are not disqualified for
re-appointment within the meaning of section 226 of the said act.
The notes on accounts referred to in the auditors Report are
self-explanatory and do not call for any further comments.
SECRETARIAL AUDIT REPORT
As a measure of good corporate governance practise, your company
underwent a secretarial audit for the financial year ended 31st march,
2010. an independent practicing company secretary, conducted this
audit, who is a past member of central council of the institute of
company secretaries of india.
PARTICULARS OF EMPLOYMENT
Your Company believes that a well-trained, motivated and satisfied
employee base is a key to your companys competitive advantage. your
company has extremely cordial relations with all its employees and your
company strives on mutual trust created among the employees and the
management. the skill sets of its employees gives your company the
flexibility to adapt to the demanding needs of global customers.
Information Required under section 217(2a) of the companies act, 1956,
read with the companies (particulars of employees) Rules, 1975, as
amended is forming part of this Report.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGOING
The Information relating to conservation of energy, technology
absorption, foreign exchange earnings and outgo required to be
disclosed under the companies (Disclosure of particulars in the Report
of Board of Directors) Rules, 1988 is given in ANNEXURE Ã I forming
part of this report.
TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the provisions of section 205a(5) of the companies act,
1956, dividends which remained unclaimed for a period of 7 years have
been transferred by the company to the investor education and
protection Fund.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Managements Discussion and analysis Report for the year under review,
as stipulated under clause 49 of the listing agreement with the stock
exchanges in india is presented in a separate section forming part of
the annual Report.
CORPORATE GOVERNANCE
Your Company is committed to maintaining the best standards of
corporate governance and adheres to the corporate governance
requirements set out by seBi. the company has also implemented several
best corporate governance practices prevalent globally.
A separate section on corporate governance and a certificate from the
practicing company secretary, regarding compliance of conditions of
corporate governance as stipulated under clause 49 of the listing
agreement with stock exchange/s together with the management Discussion
and analysis of the financial position of the company, form part of
this Report.
PROMOTERS
The names of the Promoters are disclosed for the purpose of the SEBI
(Substantial Acquisition of Shares and Takeovers) Regulations, 1997:
Persons constituting promoters coming within the definition of
Ãpromoter for the purpose of Regulations 3(1)(e)(iii)(b) of the
securities and exchange Board of india (substantial acquisition of
shares and takeovers) Regulations, 1997, include the following:
Sl. No. Name of the Entity
1. Mrs. Barota malhoutra
2. Christine hoden (india) pvt. ltd.
3. JKm holdings pvt. ltd.
4. JKm offshore india pvt. ltd.
5. Primella sanitary products (pvt). ltd.
6. Mr. udayant malhoutra
7. Udayant malhoutra and company pvt. ltd.
8. Vita pvt. ltd.
9. Wavell investments pvt. ltd.
DISCLOSURES REQUIRED UNDER LISTING AGREEMENT
Disclosures required under various clauses of listing agreement are
made elsewhere in this annual Report.
ACKNOWLEDGMENT
Your Directors would like to express their grateful appreciation for
the co-operation received from the Financial institutions, Banks,
government authorities, customers, Vendors, shareholders and investors
during the year under review. your Directors also wish to place on
record their deep sense of appreciation for the committed services of
executives, managers staff and Workers of the company and look forward
their continued support in the future.
By order of the Board of Directors
PLACE : BANGALORE Dr. K. APRAMEYAN
DATE : 22nd JULY, 2010 Chairman of the Meeting
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