Home  »  Company  »  Dynamatic Techno  »  Quotes  »  Directors Report
Enter the first few characters of Company and click 'Go'

Directors Report of Dynamatic Technologies Ltd.

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 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 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 Aerospace™, 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 Aerospace™, 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 Hydraulics™

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 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. 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 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 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 Hydraulics™.

- 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 Security™ 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-à-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'' – 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 – 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

 
Subscribe now to get personal finance updates in your inbox!