Mar 31, 2023
Your Directors have pleasure in presenting this Integrated Annual Report (âAnnual Report'') of the Escorts Kubota Limited (Escorts/ Company) along with Company''s audited financial statements (standalone and consolidated) for the financial year ended on March 31, 2023.
Financial Results
('' crores) |
||||
Standalone |
Consolidated |
|||
Particulars |
Year ended on March 31, 2023 |
Year ended on March 31, 2022 |
Year ended on March 31, 2023 |
Year ended on March 31,2022 |
Revenue from operations |
8,344.95 |
7,196.90 |
8,428.69 |
7,282.65 |
Other income |
280.56 |
168.80 |
280.93 |
173.80 |
Total income |
8,625.51 |
7,365.70 |
8,709.62 |
7,456.45 |
Profit from operations before Interest, Depreciation, Exceptional Items & Tax |
1,060.98 |
1,164.33 |
1,050.97 |
1,139.86 |
Finance Cost |
10.26 |
12.70 |
13.27 |
14.97 |
Profit from operations before Depreciation, Exceptional Items & Tax |
1,050.72 |
1,151.63 |
1,037.70 |
1,124.89 |
Depreciation & Amortisation |
148.43 |
129.75 |
150.06 |
132.06 |
Profit from operations before Tax and exceptional items |
902.29 |
1,021.88 |
887.64 |
992.83 |
Less: Exceptional Items |
97.16 |
- |
53.05 |
- |
Profit Before Tax |
805.13 |
1,021.88 |
834.59 |
992.83 |
Tax Expense |
198.15 |
256.27 |
197.94 |
257.22 |
Net Profit for the period |
606.98 |
765.61 |
636.65 |
735.61 |
Financial Performance/ State of Company Affairs
The brief highlights of the Company''s performance (Standalone) for the financial year (âFY'') ended March 31, 2023 are:
J8,625.51 Crores Total income of the Company for FY 2023 stood at H8,625.51 crores (''7,365.70 crores in FY 2022) J1,060.98 Crores Profit from operations before Interest, Depreciation, Exceptional Items & Tax stood at '' 1,060.98 crores. J805.13 Crores Profit from operations before Tax (PBT) stood at H805.13 crores. Net profit for the period stood at H606.98 crores. |
Our Company sold 1,03,290 tractors during the year under review as against 94,228 tractors sold during the last financial year.
The brief highlights of the Company''s performance (Consolidated) for the financial year ended March 31,2023 are:
⢠Total income of the Company for FY 2023 stood at ''8,709.62 crores (''7,456.45 crores in FY 2022).
⢠Profit from operations before Interest, Depreciation, Exceptional Items & Tax stood at ''1,050.97 crores.
⢠Profit from operations before Tax (PBT) stood at ''834.59 crores. Net profit for the period stood at ''636.65 crores.
The details on the individual businesses of the Company are provided in the Management Discussion & Analysis section provided in this Annual Report.
Management Discussion & Analysis
In terms of the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as the âSEBI Listing Regulations"), the Management Discussion and Analysis is set out in this Annual
Report and provides a detailed analysis on the performance of individual businesses and their outlook.
Based on the Company''s performance, your Directors are pleased to recommend, for approval of the members, Dividend @70% per share of face value of C10/- each (i.e. C7.00 per share) for the financial year ended March 31, 2023, payable on all outstanding shares except on the equity shares held by âEscorts Benefit & Welfare Trust''.
The dividend payout is subject to the approval of members at the ensuing Annual General Meeting (AGM).
The dividend payout for the period under review has been formulated in accordance with shareholders'' aspirations and the Company''s Dividend Distribution Policy to pay sustainable dividend linked to long-term growth objectives of the Company to be met by internal cash accruals.
The record date for the purpose of dividend will be June 30, 2023.
The dividend distribution policy is available on our website at https://www.escortsgroup.com/investors/governance.
During the FY ended March 31, 2023, no amount (previous year: C0.07 crores on account of vested employees stock options lapsed) transferred to general reserves.
Employee Stock Option Scheme (ESOS)
The Escorts Employees Stock Option Scheme (âSchemeâ) is in line with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 (âSBEB Regulationsâ) and there were no material changes to the scheme during the financial year 2022-23.
The Scheme is being implemented in accordance with the SBEB Regulations and the resolution(s) passed by the members. The
Secretarial Auditors Certificate would be available during the Annual General Meeting for inspection by the members. The details as required to be disclosed under the Act and/ or SBEB Regulations would be available on the Company''s website at www.escortsgroup.com.
During the FY 2022-23, there is no change in the share capital of the Company. However, the members of the Company had approved, the âscheme of reduction of share capital'' (âSecond Capital Reduction''), vide postal ballot notice dated July 6, 2022 for reduction of 2,14,42,343 Equity Shares of nominal value C10/- each of the Company held by the Escorts Benefits and Welfare Trust (EBWT) without payment of any consideration, and the same has been filed before Hon''ble National Company Law Tribunal (NCLT), Chandigarh Bench, however, the order of the NCLT awaited.
Based on recommendations of the Audit Committee and the Committee of Independent Directors, the Board of Directors, in their meeting held on September 15, 2022, has approved the scheme of amalgamation (the âSchemeâ) under Sections 230 to 232 and other applicable provisions of the Companies Act, 2013 and the rules framed thereunder. The Scheme, inter-alia, provides for amalgamation of Escorts Kubota India Private Limited, joint venture company of the Company, and Kubota Agricultural Machinery India Private Limited, joint venture company of the Company, with the Company. The same has been filed with BSE Limited and National Stock Exchange of India Limited on September 26, 2022 and September 27, 2022, respectively to get no objection letters as required under Regulation 37 of the SEBI Listing Regulations.
The reporting of the utilisation of funds, as on March 31,2023, raised through the preferential allotments are as follows:
the appointment of Mr. Seiji Fukuoka as Whole-time Director designated as Deputy Managing Director.
Further, the Board of Director, on recommendation of Nomination Remuneration and Compensation Committee (NRC) has appointed Mr. Bharat Madan as an additional director and Whole-time Director of the Company, designated as Whole-time Director and Chief Financial Officer, effective from February 8, 2023. Subsequently, the shareholders of the Company has approved the such appointment through postal ballot notice dated March 15, 2023.
During the year under review the tenure of second term as Independent Director of Mr. P.H. Ravikumar and Mrs. Vibha Paul Rishi had been completed on July 14, 2022. Further, the tenure of Dr. Sutanu Behuria, Independent Director is expiring in the ensuing AGM. Dr. Behuria was appointed as
Directors and Key Managerial Personnel
In accordance with the provisions of the Companies Act, 2013 (hereinafter referred as âthe Actâ) and Articles of Association of the Company, Ms. Nitasha Nanda (DIN: 00032660) and Mr. Yuji Tomiyama (DIN: 08779472), Directors of the Company, retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offer themselves for re-appointment.
The shareholders at the AGM held on July 14, 2022 had appointed Mr. Vimal Bhandari, Ms. Reema Rameshchandra Nanavaty and Mr. Manish Sharma as Independent Directors and Mr. Yasukazu Kamada as non-executive nominee director and approved the appointment of Mr. Ravindra Chandra Bhargava and Mr. Kenichiro Toyofuku as Independent Directors and Mr. Shiro Watanabe as non-executive nominee director. Further, the shareholders of the Company also approved
an Independent Director in 2015 and completing the second term which will be ending in the ensuing AGM.
Further, Mr. Shailendra Agarwal has resigned from the position of directorship effective from February 3, 2023, due to his health condition.
The Company has received declarations from all Independent Directors of the Company that they meet the criteria of independence as prescribed under sub-section (6) of Section 149 of the Act and under Regulations 16 and 25 of SEBI Listing Regulations and there has been no change in the circumstances affecting their status as Independent Directors of the Company. The Company has also received a declaration from all the Independent Directors that they have registered their names in the Independent Director data bank and pass/ exempt requisite proficiency test conducted by Ministry of Corporate Affairs.
The policy on Appointment and Removal of Director''s and Members of Senior Management was reviewed and amended by the Board at its meeting held on May 10, 2023. The said policy is annexed as Annexure - A and forms an integral part of this Report.
Annual performance evaluation of the Board, its committees and individual directors (including Independent Directors) pursuant to the provisions of the Act and the Corporate Governance requirements under SEBI Listing Regulations have been carried out. In accordance with the Policy, and the process, given in Report on Corporate Governance, was followed by the Board for evaluation of its own performance and its committees and individual directors including Independent Directors.
The remuneration policy for directors, key managerial personnel, senior management and other employees was reviewed and amended by the Board at its meeting held on May 10, 2023. The said policy is annexed as Annexure - B and forms an integral part of this Report.
The Company has devised a process whereby various presentations/ programs are being conducted to familiarise the directors with various developments at Industry level, new business initiatives and organisation strategies etc. The details of programme for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company - www.escortsgroup.com.
The Company recognises and embraces the importance of a diverse board in its success. Your Company believes 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 it retain its competitive advantage.
The brief resumes and other details relating to the directors who are proposed to be appointed/ re-appointed, as required to be disclosed as per the provisions of the SEBI Listing Regulations/ Secretarial Standard are given in the Annexure to the Notice of the 77th AGM.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 are provided as Annexure - C and forms an integral part of this Report.
Corporate Governance is about maximising shareholders value, ethically and sustainably. At Escorts Kubota the goal of corporate governance is to ensure fairness for every stakeholder. Your Company believes that strong corporate governance is critical to enhancing and retaining investor trust. Your Company also endeavours to enhance long term shareholder value and respect minority rights in all its business decisions.
Your Company reaffirms its commitment to the good corporate governance practices and has adopted the Code of Business Conduct which has set out the systems, processes and policies conforming to international standards. Pursuant to Regulation 34(3) of the SEBI Listing Regulations, Corporate Governance Report and a Certificate regarding compliance of conditions of Corporate Governance from Company Secretary in Practice are enclosed as Annexure - D and forms an integral part of this Report.
Corporate Social Responsibility (CSR)
The key philosophy of all CSR initiatives of the Company is to make CSR a key business process for sustainable development of the society. The initiatives aim at enhancing welfare measures of the society based on the immediate and long term social and environmental consequence of its activities. The Company intends to undertake other need-based initiatives in compliance with Schedule VII of the Act.
The CSR Policy and Impact Assessment Report may be accessed on the Company''s website www.escortsgroup. com under Investors Information Section. During the year, the Company has spent H17.30 crores. {Including amount transferred to unspent CSR account (refer note 29 of the standalone financial statements)}.
S. No. |
Name of the subsidiary / associate companies / joint ventures |
Relationship |
% of shares |
1. |
Escorts Crop Solutions Limited |
Subsidiary |
100% |
2. |
EKL CSR Foundation (Formerly Escorts Skill Development) |
Subsidiary |
100% |
3. |
Escorts Finance Limited |
Subsidiary |
67.87% |
4. |
Farmtrac Tractors Europe Spolka Z.o.o. |
Subsidiary |
100% |
5. |
Escorts Benefit and Welfare Trust |
Subsidiary |
100% |
6. |
Escorts Benefit Trust |
Subsidiary |
100% |
7. |
Adico Escorts Agri Equipments Private Limited |
Joint Venture |
40% |
8. |
Escorts Kubota India Private Limited |
Joint Venture |
40% |
9. |
Kubota Agricultural Machinery India Private Limited |
Joint Venture |
40% |
10. |
Escorts Consumer Credit Limited |
Associate |
29.41% |
The Annual Report on CSR activities is enclosed as Annexure - E and forms an integral part of this Report.
Consolidated Financial Statements
The Consolidated Financial Statements have been prepared in accordance with the Act and Indian Accounting Standard (IND AS) - 110 applicable to the Consolidated Financial Statements read with IND AS-28 on Accounting for Investments in Associates and IND AS-31 on Financial Reporting of Interests in Joint Ventures issued by The Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements along with the Auditors'' Report thereon are annexed with this Report.
Subsidiaries, Joint Ventures and Associate Companies
In accordance with Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the Subsidiary, Associates and Joint Venture Companies in Form AOC-1 is provided in this Report. The statement also provides details of performance and financial position of each of the Subsidiary, Associates and Joint Venture Companies. Audited Financial Statements together with related information and other reports of each of the subsidiary companies have also been placed on the website of the Company at https://www.escortsaroup.com/investors/annual-reports.
The details of the above investments/ disinvestment are provided in the note 7 of the notes to accounts of Standalone Financial Statements of the Company.
Contracts and Arrangements with Related Parties
All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length
html. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiaries, associate and joint venture companies.
In terms of the Company''s Policy on determining âmaterial subsidiaryâ, during the financial year ended March 31, 2023, there is no material subsidiary of the Company whose income exceeds 10% of the consolidated income of the Company in the immediately preceding financial year.
During the FY ended on March 31, 2023, the Company has sold its entire 49% stake i.e. 7,27,65,000 equity shares of H10/-each of Tadano Escorts India Private Limited (TEIPL), a joint venture between the Company and Tadano Limited, Japan (Tadano), to Tadano, at H0.01 Cr. on November 9, 2022.
Further, the Company has also acquired the entire equity share capital of Escorts Corp Solutions Limited (ECSL), apart from the existing equity shares already held by the Company. Consequently, ECSL has become the wholly owned subsidiary of the Company w.e.f. January 18, 2023.
The complete list of subsidiaries, joint ventures and associate companies as on March 31,2023, in terms of the Act and IND-AS is provided herein below: basis. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on the materiality of related party transactions.
The particulars of contracts or arrangements, with related parties referred to in Section 188(1) of the Act, in the prescribed Form AOC-2, is appended as Annexure - F to this report.
The Policy on materiality of related party transactions and dealing with related party transactions may be accessed on the Company''s website at https://www.escortsgroup.com/ investors/governance.html.
Your Directors draw attention of the members to note 45 in the notes to accounts in the Standalone Financial Statements and to note 44 in the notes to accounts in the Consolidated Financial Statements which sets out related party disclosures.
Auditors and Auditorsâ Report Statutory Auditors
Pursuant to the provisions of Section 139 of the Act read with rules thereunder, the shareholders of the Company at the 76th AGM held on July 14, 2022 had re-appointed M/s. Walker Chandiok & Co LLP, Chartered Accountants, New Delhi (Firm Registration No. 001076N/ N500013) as Statutory Auditors of the Company for a period of 5 years i.e. upto the conclusion of AGM to be held in the year 2027.
The comments given by M/s. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors, in their report read together with notes to accounts for the FY ended March 31, 2023 are self-explanatory and hence, do not call for any further explanations or comments under Section 134 of the Act.
Pursuant to provisions of the Section 143(12) of the Companies Act, 2013 neither the Statutory Auditors nor Secretarial Auditors nor Cost Auditors have reported any incident of fraud to the Audit Committee or the Board during the year under review.
Pursuant to the Section 148 of the Act read with rules thereunder, your Company is required to maintain the cost records and the said cost records are required to be audited.
The Company is maintaining all the aforesaid cost records.
The Board of Directors, on the recommendation of Audit Committee, has re-appointed M/s. Ramanath Iyer and Co., Cost Accountants (Firm Registration No. 000019), as Cost Auditors of the Company for conducting the audit of cost records for the FY 2023-24.
The due date of filing the Cost Audit Report for the year ended on March 31, 2022 was September 30, 2022 and the same had been filed on August 23, 2022.
The Board had appointed M/s. Jayant Gupta and Associates, Practicing Company Secretaries, as Secretarial Auditors to conduct secretarial audit of the Company for the FY 2022-23.
The Secretarial Audit Report of the Company as prescribed under Section 204 of the Act is annexed herewith as Annexure - G and forms an integral part of this Report.
The Secretarial Audit Report does not contain any qualification, reservation and adverse remarks and the comments given by the Secretarial Auditors in their report are self-explanatory and hence, do not call for any further explanations or comments under Section 204(3) of the Act.
The Board has also re-appointed M/s. Jayant Gupta and Associates, Practicing Company Secretaries to conduct secretarial audit of the Company for the FY 2023-24.
The Risk Management Committee of the Board has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Company''s enterprise wide risk management framework; and (b) Overseeing that all the risks that the organisation faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.
The Company has laid down a Risk Management Policy and the same is available on the website of the Company at https:// www¦escortsaroup¦com/investors/aovernance¦html.
The details of constitution of Risk Management Committee of the Company is provided in Report on Corporate Governance at Annexure - D of the Directors'' Report.
Internal Financial Control and its Adequacy
The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Company''s policies, the safeguarding of its assets, the prevention and detection of fraud, error reporting mechanisms, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.
The Company has in place adequate internal financial controls for ensuring the orderly and efficient conduct of its business.
During the year, such controls were tested and no reportable material weakness in the design or operation was observed.
DisclosuresMeetings of the Board
Six meetings of the Board of Directors were held during the year. For further details, please refer Report on Corporate Governance annexed as Annexure - D to this Report.
For constitution and other details of the Audit Committee, please refer Report on Corporate Governance annexed as Annexure - D to this Report.
All the recommendations made by the Audit Committee were accepted by the Board.
For constitution and other details of the CSR Committee, please refer Report on Corporate Governance annexed as Annexure - D to this Report.
The Annual Return for Financial Year 2022-23 is available on the Company''s website at https://www.escortsgroup.com/ other-documents.
The Company has adopted a Whistle Blower Policy establishing vigil mechanism for Directors and Employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct. The mechanism provides for adequate safeguards against victimisation of effected Director(s) and Employee(s). In exceptional cases, Directors and Employees have direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.
The Whistle Blower Policy is available on Company''s website at https://www.escortsgroup.com/investors/governance.html.
Registrar and Share Transfer Agent
The Share Transfer and related activities are being carried out by M/s. KFin Technologies Limited (earlier KFin Technologies Private Limited), Registrar and Share Transfer Agent from the following address:
M/s. KFin Technologies Limited Selenium Building, Tower B, Plot No. 31-32,
Financial District, Nanakramguda, Serilingampally, Hyderabad, Rangareddy, Telangana - 500032
Particulars of Loans given, Investments made, Guarantees given and Securities provided
A statement regarding Loans/ Guarantees given and Investments covered under the provisions of the Section 186 of the Act is made in the notes to the financial statement.
Particulars of Employees and related disclosures
In terms of provisions of Section 197(12) of the Act, read with 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 prescribed limits are available with the Company Secretary.
In terms of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company and the same will be furnished on request.
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 annexed as Annexure - H and forms an integral part of this Report.
The Company has not accepted/ renewed any Fixed Deposit during the financial year under review and as such no amount of principal or interest was outstanding as of the Balance Sheet date.
Investor Education and Protection Fund (IEPF)
Pursuant to the applicable provisions of the Act, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (âthe Rules''), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Central Government, after the completion of seven years. Accordingly, the Company has transferred H16.06 lakhs, pertaining to unclaimed dividend, during the period under review, to IEPF.
Further, according to the rules, the shares in respect of which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account created by the IEPF Authority. Accordingly, the Company has transferred 38,732 shares, during the period under review, to IEPF. The detailed information is available at our website www.escortsgroup.com.
As on March 31, 2023, no unclaimed deposits are pending which required to be transferred to IEPF.
The present credit rating of the Company is as under:
CRISIL Limited and ICRA Limited granted long term rating as âAA with stable outlookâ and Short-Term rating as âA1 â
Material Changes and Commitment affecting the financial position
There are no material changes affecting the financial position of the Company subsequent to the closure of the FY 2023 till the date of this report.
Prevention of Sexual Harassment
The Company 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. The Company is committed to provide equal opportunities without regard to their race, caste, sex, religion, colour, nationality, disability, etc. All women associates (permanent, temporary, contractual and trainees) as well as any women visiting the Company''s office premises or women service providers are covered under this Policy. Though the Company''s policy is gender neutral. All employees are treated with dignity with a view to maintain a work environment free of sexual harassment whether physical, verbal or psychological.
The Company has also complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Your directors further state that during the year under review, there were two cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the same have now been resolved.
Our professionals are our most important assets. We are committed to hiring and retaining the best talent being among the industry''s leading employers. For this, we focus on promoting a collaborative, transparent and participative organisation culture, and rewarding merit and sustain high performance. Our human resources management focuses on
allowing our employees to develop their skills, grow in their career and navigate their next.
Secretarial Standards
The Company is in compliance with all the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
Integrated Report
The Company has provided Integrated Report, which includes non-financial and financial information to have a better understanding of the Company''s long-term strategy. This report covers six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital as per International
Business Responsibility and Sustainability Report (BRSR)
In November 2018, the Ministry of Corporate Affairs (MCA) constituted a Committee on Business Responsibility Reporting (BRR) (âthe Committeeâ) to finalize business responsibility reporting formats for listed and unlisted companies, based on the framework of the National Guidelines on Responsible Business Conduct (NGRBC). Through its report, the Committee recommended that BRR be rechristened BRSR, where disclosures are based on ESG Corporate Overview Management Discussion and Analysis Financial Statements parameters, compelling organizations to holistically engage with stakeholders and go beyond regulatory compliances in terms of business measures and their reporting. SEBI, vide its circular dated May 10, 2021, made BRSR mandatory for the top 1,000 listed companies (by market capitalization) from FY 2023. Further, pursuant to Regulation 34 of the SEBI Listing Regulations, the BRSR disclosures are enclosed as Annexure I and forms an integral part of this Report.
Application made or any proceeding pending under the Insolvency and Bankruptcy Code
As on the date of the report no application is pending under the Insolvency and Bankruptcy Code, 2016 against the Company and the Company did not file any application under (IBC) during the Financial Year 2022-23. Further, the Company has not made any one-time settlement.
Compliance by Large Corporate
Your Company does not fall under the category of large corporate, as defined under SEBI vide its circular SEBI/HO/ DDHS/CIR/P/2018/144 dated November 26, 2018, as such no disclosure is required in this regard.
Directorsâ Responsibility Statement
Pursuant to the requirement under Section 134(5) of the Act, with respect to Directors'' Responsibility Statement, your Directors, to the best of their knowledge and ability, hereby confirm that:
(i) i n the preparation of the annual accounts for the year ended March 31, 2023, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed along with proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the profit of the Company for the year ended on that date;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the annual accounts for financial year ended March 31, 2023 on a âgoing concern'' basis;
(v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
(vi) t he Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.
3. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future. However, members attention is drawn to note 32 in the notes to accounts in the Standalone Financial Statements and to note 33 in the notes to accounts in the Consolidated Financial Statements which sets out information on Commitments and Contingencies.
5. Details of difference between amount of valuation done at the time of one-time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.
Your Directors would like to express their sincere appreciation of the positive co-operation received from the Central Government, the Government of Haryana and Karnataka, Financial Institutions and the Company''s Bankers, Customers, Dealers and all other business associates.
The Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers, workers, employee unions and staff of the Company resulting in the successful performance of the Company during the year.
The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.
Mar 31, 2022
Your Directors have pleasure in presenting this Integrated Annual Report (âAnnual Reportâ) of the Company along with Companyâs audited financial statements (standalone and consolidated) for the financial year ended on March 31, 2022.
Financial Results
('' crores) |
||||
Standalone |
Consolidated |
|||
Particulars |
Year ended on March 31, 2022 |
Year ended on March 31, 2021 |
Year ended on March 31, 2022 |
Year ended on March 31, 2021 |
Revenue from operations |
7,152.68 |
6929.29 |
7,238.43 |
7014.42 |
Other income |
213.02 |
154.56 |
218.02 |
160.38 |
Total income |
7,365.70 |
7083.85 |
7,456.45 |
7174.80 |
Profit from operations before Interest, Depreciation & Tax |
1,164.33 |
1283.79 |
1,139.86 |
1286.40 |
Finance Cost |
12.70 |
10.98 |
14.97 |
13.34 |
Profit from operations before Depreciation & Tax |
1,151.63 |
1272.81 |
1,124.89 |
1273.06 |
Depreciation & Amortisation |
129.75 |
115.70 |
132.06 |
118.28 |
Profit from operations before Tax |
1,021.88 |
1157.11 |
992.83 |
1154.78 |
Tax Expense |
256.27 |
283.05 |
257.22 |
283.15 |
Net profit for the period |
765.61 |
874.06 |
735.61 |
871.63 |
Financial Performance/ State of Company Affairs
The brief highlights of the Companyâs performance (Standalone) for the financial year (âFYâ) ended March 31, 2022 are:-
our Company sold 94,228 tractors during the year under review as against 1,06,741 tractors sold during the last financial year.
The brief highlights of the Companyâs performance (Consolidated) for the FY ended March 31, 2022 are:-
⢠Total income of the Company for FY 2022 stood at '' 7,456.45 crores ('' 7,174.80 crores in FY 2021)
⢠Profit from operations before Interest, Depreciation & Tax stood at '' 1,139.86 crores.
⢠Profit from operations before Tax (PBT) stood at '' 992.83 crores. Net profit for the period stood at '' 735.61 crores.
The details on the individual businesses of the Company are provided in the Management Discussion & Analysis section provided in this annual report.
Management Discussion & Analysis
In terms of the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as the "SEBI Listing Regulationsâ), the Management Discussion and Analysis is set out in this Annual Report and provides a detailed analysis on the performance of individual businesses and their outlook.
Based on the Companyâs performance, your Directors are pleased to recommend, for approval of the members, Dividend @ 70% per share of face value of '' 10/- each (i.e. '' 7 per share) for the FY ended March 31, 2022, payable on all outstanding shares except on the equity shares held by âEscorts Benefit & Welfare Trustâ .
The dividend payout is subject to the approval of members at the ensuing Annual General Meeting (AGM).
The dividend payout for the period under review has been formulated in accordance with shareholdersâ aspirations and the Companyâs Dividend Distribution Policy to pay sustainable dividend linked to long-term growth objectives of the Company to be met by internal cash accruals.
The record date for the purpose of dividend will be July 1, 2022.
The dividend distribution policy is available on our website at https://www.escortsgroup.com/investors/governance.html.
An amount of '' 0.07 crores (previous year: '' 0.21 crores) transferred to general reserves on account of vested employees stock options lapsed during the FY ended March 31, 2022.
For complete details on movement in Reserves and Surplus during the financial year ended March 31, 2022, please refer the Statement of Changes in Equity and note 17 of the Standalone and Consolidated Financial Statements.
The Escorts Employees Stock Option Scheme ("Schemeâ) is in line with the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 ("SBEB Regulationsâ) and there were no material changes to the scheme during the financial year 2021-22. However, during the year under review, the Members of the Company had approved the following 2 (two) key variations to the Scheme:
(i) Vesting period extended from 4 (four) to 5 (five) years from the date of grant of option (for new grants);
(ii) Exercise period extended from 3 (three) to 5 (five) years from the last date of vesting (for new grants).
The amendments to the Scheme also contain certain editorial changes, such as modifications/deletion of definitions and provisions so as to conform to the Companies Act, 2013 (âthe Actâ) and SBEB Regulations.: -
The Scheme is being implemented in accordance with the SBEB Regulations and the resolution passed by the members. The Secretarial Auditors certificate would be available during the AGM for inspection by the members. The details as required to be disclosed under the SBEB Regulations would be available on the Companyâs website at www.escortsgroup.com.
Change in Share Capital
During the FY 2021-22, the Company allotted 93,63,726 shares, on preferential allotment basis, of face value '' 10 each at a premium of '' 1990/- each for a total consideration of '' 1,872.75 crores. Your Company also extinguished/ cancelled 1,22,57,688 equity shares (âFirst Scheme of Reductionâ), held by Escorts Benefit and Welfare Trust (âEBWTâ or âTrustâ) pursuant to the scheme approved by the Honâble National Company Law Tribunal, Chandigarh Bench (NCLT), without payment of any consideration, vide its order dated December 23, 2021 and upon necessary filings with the Registrar of Companies, NCT of Delhi and Haryana, the First Scheme of reduction has become effective on December 27, 2021. Consequently, the paid-up equity shares capital of the Company as of March 31, 2022 stood at '' 131,94,06,040 consisting of 13,19,40,604 equity shares of '' 10/- each.
Further, the Audit Committee and Board of Directors, in their meeting held on February 18, 2022, had approved the scheme for reduction of share capital (âSecond Capital Reductionâ) for reduction of remaining 2,14,42,343 Equity Shares of '' 10/- each of the Company, held by the EBWT, without payment of any consideration. The same has been filed with BSE Limited and National Stock Exchange of India Limited to get no objection letter as required under Regulation 37 of the SEBI Listing Regulations.
The reporting of the utilisation of funds, as on March 31, 2022, raised through the above preferential allotment and the previous preferential allotment is as follows:
Original Object |
Modified Object, if any |
Original Allocation |
Modified allocation, if any |
Funds Utilised |
Amount of Deviation/Variation ^ _ , Remarks if for the quarter according to any applicable object |
For the Agri Machinery Business of the Not Company i.e. the business of manufacturing, Applicable assembly, sales, marketing, financing, servicing, research and development of: (a) tractors; (b) construction equipment (i.e., backhoe loaders and other items to be mutually agreed between Promoters and Kubota Corporation); (c) implements; (d) transmission for tractors, construction equipment (i.e., backhoe loaders and other items to be mutually agreed between the Promoters and Kubota Corporation) and implements; and (e) spare parts of the items referred in (a), (b), (c) and (d), and for the manufacture of engines by the Company |
'' 1,041.90 crores |
NIL |
'' 318.35 crores (Including '' 176.05 crores utilised during the year) |
NIL - |
|
For expansion of its agri-machinery business of manufacturing, assembly, sales, marketing, financing, servicing, research and development of: (a) tractors; (b) combine harvester & rice transplanter; (c) utility vehicles; (d) turf equipment; (e) construction machinery; (f) engines; (g) implements; (h) transmission for tractors, construction equipment and implements; (i) other farm mechanisation equipment; (j) spare parts of the items referred in (a) to (i) above |
Not Applicable |
'' 1,855.31 crores* |
NIL |
NIL |
NIL - |
* Net proceeds post deduction of expenditure of '' 17.44 crores incurred towards preferential issue and allotment.
Directors and Key Managerial Personnel
In accordance with the provisions of the Act and Articles of Association of the Company, Mr. Hardeep Singh (DIN: 00088096) and Mr. Dai Watanabe (DIN: 08736520), Directors of the Company, retire by rotation at the ensuing Annual General Meeting (AGM) and being eligible, offer themselves for re-appointment.
The Company has received the nomination letter for two more Nominee Directors from Kubota Corporation ( Kubota), pursuant to the terms of the Shareholdersâ Agreement (SHA) dated November 18, 2021, executed among and between the Company, Kubota, EBWT and the Specified Promoters (as specified in SHA), for appointment of following person as Directors of the Company :
a. Mr. Seiji Fukuoka - Whole Time Director to be designated as Deputy Managing Director
b. Mr. Shiro Watanabe - Non Executive Director
The Board of Directors, at its meeting held on May 13, 2022, has, on the recommendations of Nomination Remuneration and Compensation Committee ( NRC), appointed Mr. Seiji Fukuoka (DIN: 08786470), not liable to retire by rotation, and Mr. Shiro Watanabe (DIN: 09588547), liable to retire by rotation, as an Additional Directors of the Company. Mr. Seiji Fukuoka and Mr. Shiro Watanabe shall hold office of Director(s) upto date of ensuing AGM. However, the Company has also received requisite notices, in writing from Kubota, a member of the Company, proposing candidatures of Mr. Seiji Fukuoka and Mr. Shiro Watanabe for the said appointment. Accordingly, Board of Directors, based upon the recommendation of the NRC, had recommended the appointments, to shareholders for approval, of Mr. Seiji Fukuoka, as Whole Time Director designated as Deputy Managing Director for a period of 5 years w.e.f. May 13, 2022 along with his remuneration, not liable to retire by rotation, and Mr. Shiro Watanabe, as Non-Executive Director, liable to retire by rotation, in the ensuing AGM.
In order to meet the criteria of 50% independent directors on the Board, the Board of Directors, at its meeting held on
May 13, 2022, on the recommendations of NRC, appointed Mr. Ravindra Chandra Bhargava (DIN: 00007620) and Mr. Kenichiro Toyofuku (DIN: 08619076) as an âAdditional Independent Director. They shall hold office as an Additional Independent Director(s) of the Company upto the date of ensuing Annual General Meeting. However, the Company has also received requisite notices, in writing from a member of the Company, proposing candidatures of Ravindra Chandra Bhargava and Mr. Kenichiro Toyofuku for the said appointment. Accordingly, Board of Directors, based upon the recommendation of the NRC, had recommended the appointment to shareholders for approval for a period of 5 years w.e.f. May 13, 2022, not liable to retire by rotation, in the ensuing AGM.
The NRC and the Board at their respective meetings have assessed their candidature and are of view that Mr. Seiji Fukuoka, Mr. Shiro Watanabe, Mr. Ravindra Chandra Bhargava and Mr. Kenichiro Toyofuku possesses necessary competencies and skill identified by the Board of directors for effective managing its business.
The tenure of Mr. P.H. Ravikumar and Mrs. Vibha Paul Rishi, Independent Directors is expiring in the ensuing AGM. Mr. Ravikumar and Mrs. Rishi were appointed as an Independent Directors in 2014 and completing the second term which will be ending in the ensuing AGM. The Board of Directors upon recommendation of the NRC has recommended the appointment of Mr. Vimal Bhandari (DIN: 00001318) and Mrs. Reema Rameshchandra Nanavati (DIN: 00690270), as Independent Directors, not liable to retire by rotation, from the conclusion of ensuing Annual General Meeting for a period of 5 consequent years.
The Board of Directors, in its meeting held on May 13, 2022, has, on the recommendations of Nomination Remuneration and Compensation Committee (NRC), has recommended the re-appointment and remuneration of Mr. Nikhil Nanda (DIN: 00043432) as Managing Director, not liable to retire by rotation, for a period of 5 years w.e.f. September 19, 2022, for shareholders approval.
The Company has received declarations from all Independent Directors of the Company that they meet the criteria of independence as prescribed under subsection (6) of Section 149 of the Act and under Regulation 16 and 25 of SEBI Listing Regulations and there has been no change in the circumstances affecting their status as independent director of the Company. The Company has also received a declaration from all the independent directors that they have registered their names in the independent director data bank and pass/ exempt requisite proficiency test conducted by Ministry of Corporate Affairs.
The policy on Appointment and Removal of Directorâs and Members of Senior Management was reviewed and amended by the Board at its meeting held on May 13, 2022.
The said policy is annexed as Annexure - A and forms an integral part of this Report.
Annual performance evaluation of the Board, its committees and individual directors (including independent directors) pursuant to the provisions of the Act and the Corporate Governance requirements under SEBI Listing Regulations have been carried out. In accordance with the Policy, a process was followed by the Board for evaluation of its own performance and its committees and individual Directors including independent directors.
The remuneration policy for directors, key managerial personnel, senior management and other employees was reviewed and amended by the Board at its meeting held on May 13, 2022. The said policy is annexed as Annexure - B and forms an integral part of this Report.
The Company has devised a process whereby various presentations/ programs are being conducted to familiarise the Directors with various developments at Industry level, new business initiatives and organisation strategies etc. The details of programme for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company - www.escortsgroup.com.
The Company recognises and embraces the importance of a diverse board in its success. Your Company believes 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 it retain its competitive advantage.
The brief resumes and other details relating to the Directors who are proposed to be appointed/ re-appointed, as required to be disclosed as per the provisions of the SEBI Listing Regulations/ secretarial standard is given in the Annexure to the Notice of the 76th AGM.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 are provided as Annexure - C and forms an integral part of this Report.
Corporate Governance is about maximising shareholders value, ethically and sustainably. At Escorts the goal of corporate governance is to ensure fairness for every stakeholder. Your Company believes that strong corporate governance is critical to enhancing and retaining investor
trust. Your Company also endeavours to enhance long term shareholder value and respect minority rights in all its business decisions.
Your Company reaffirms its commitment to the good corporate governance practices and has adopted the Code of Business Conduct which has set out the systems, processes and policies conforming to international standards. Pursuant to Regulation 34(3) of the SEBI Listing Regulations, Corporate Governance Report and a Certificate regarding compliance of conditions of Corporate Governance from Company Secretary in Practice are enclosed as Annexure -D and forms an integral part of this Report.
Corporate Social Responsibility (CSR)
The key philosophy of all CSR initiatives of the Company is to make CSR a key business process for sustainable development of the society. The initiatives aim at enhancing welfare measures of the society based on the immediate and long term social and environmental consequence of its activities. The Company intends to undertake other need-based initiatives in compliance with Schedule VII of the Act.
The CSR Policy may be accessed on the Companyâs website www.escortsgroup.com under Investors Information Section. During the year, the Company has spent '' 15.83 crores. {Including amount transferred to unspent CSR account (refer note 29 of the Standalone Financial Statement)}.
During FY ended March 31, 2022, the Company has spent '' 6.91 crores on various projects. The balance of '' 8.92 crores, towards ongoing project, had been transferred to unspent CSR account and will be spent in accordance with the provisions of the Act.
The Annual Report on CSR activities is enclosed as Annexure - E and forms an integral part of this Report.
Consolidated Financial Statements
The Consolidated Financial Statements have been prepared in accordance with the Act and Indian Accounting Standard (IND AS)-110 applicable to the Consolidated Financial Statements read with IND AS-28 on Accounting for Investments in Associates and IND AS-31 on Financial Reporting of Interests in Joint Ventures issued by The Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements along with the Auditorsâ Report thereon are annexed with this Report.
Subsidiaries, Joint Ventures and Associate Companies
In accordance with Section 129(3) of the Act, a statement containing salient features of the financial statements of the subsidiary companies in Form AOC-1 is provided in this report. The statement also provides details of performance and financial position of each of the subsidiaries. Audited financial statements together with related information and
other reports of each of the subsidiary companies have also been placed on the website of the Company at https:// www.escortsgroup.com/investors/annual-reports.html. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiaries, associate and joint venture companies.
In terms of the Companyâs Policy on determining "material subsidiaryâ, during the FY ended March 31, 2022, there is no material subsidiary of the Company whose income exceeds 10% of the consolidated income of the Company in the immediately preceding FY.
During the FY ended on March 31, 2022, the Company has infused additional equity capital in the following Companies:
1. Escorts Crop Solutions Limited, Subsidiary
2. Tadano Escorts India Private Limited, Joint Venture
Further, the Company has also acquired the remaining equity share capital of M/s Escorts Skill Development (ESD), apart from the existing equity shares already held by the Company. Consequently, ESD has become the wholly owned subsidiary of the Company w.e.f. November 1, 2021.
The complete list of subsidiaries, joint ventures and associate companies as on March 31, 2022, in terms of the Act and IND-AS is provided herein below:
Sl. No. |
Name of the subsidiary / associate companies / joint ventures |
Relationship |
% of shares |
1 |
Escorts Crop Solutions Limited |
Subsidiary |
*100% |
2 |
Escorts Skill Development |
Subsidiary |
100% |
3 |
Escorts Finance Limited |
Subsidiary |
69.42% |
4 |
Farmtrac Tractors Europe Spolka Z.o.o. |
Subsidiary |
100% |
5 |
Escorts Benefit and Welfare Trust |
Subsidiary |
100% |
6 |
Escorts Benefit Trust |
Subsidiary |
100% |
7 |
Adico Escorts Agri Equipments Joint Venture Private Limited |
40% |
|
8 |
Tadano Escorts India Limited |
Joint Venture |
40% |
9 |
Escorts Kubota India Private Limited |
Joint Venture |
40% |
10 |
Kubota Agricultural Machinery India Private Limited |
Joint Venture |
40% |
11 |
Escorts Consumer Credit Limited |
Associate |
29.4% |
* Rounded off to 100%
During the year under review , the Company along with other shareholders of Escorts Securities Limited ("ESLâ), has transferred the entire shareholding in ESL to M/s Choice Equity Broking Private Limited and their nominee consequently ESL ceased to be Subsidiary of the Company w.e.f. February 14, 2022.
The details of the above investments/ disinvestment are provided in the note 7 & 15 of the Notes to Accounts of Standalone Financial Statements of the Company.
Contracts and Arrangements with Related Parties
All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on the materiality of related party transactions. However, the Company has obtained the approval of shareholders, by way of Postal Ballot, for material related party transaction(s) with M/s Kubota Corporation and its subsidiary(ies)/ group company(ies), for a period of
5 years, effective from the date of commencement of SHA.
The particulars of contracts or arrangements, with related parties referred to in Section 188(1) of the Act, in the prescribed Form AOC-2, is appended as Annexure - F to this report.
The Policy on materiality of related party transactions and dealing with related party transactions may be accessed on the Companyâs website www.escortsgroup.com under Investors Information Section.
Your Directors draw attention of the members to note 45 in the notes to accounts in the Standalone Financial Statement and to note 45 in the notes to accounts in the Consolidated Financial Statement which sets out related party disclosures.
Auditors and Auditorsâ Report Statutory Auditors
Pursuant to the provisions of Section 139 of the Act read with rules thereunder, M/s Walker Chandiok & Co LLP, Chartered Accountants (Firm Registration No. 001076N/ N500013), were appointed as statutory auditors of the Company for a term of five (5) years from the conclusion of 71st AGM, held on September 21, 2017, till the conclusion of the 76th AGM to be held in the year 2022.
The Board of Directors, at its meeting held on May 13, 2022, on the recommendation of Audit Committee, had recommended the re-appointment of M/s. Walker Chandiok
6 Co LLP, Chartered Accountants (Firm Registration No. 001076N/N500013), as Statutory Auditors of the Company, for another period of five (5) years, to hold office from the conclusion of the ensuing AGM till the conclusion of the AGM to be held in the year 2027.
The Company has received a letter from M/s. Walker Chandiok & Co LLP, Chartered Accountants confirming that their appointment, if made, would be within the limits prescribed under Section 139 of the Act and that they are not disqualified for such appointment within the meaning of Section 141 of the Act, read with rules thereunder.
The comments given by M/s. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors, in their report read together with notes to Accounts for the FY ended March 31, 2022 are self-explanatory and hence, do not call for any further explanations or comments under Section 134 of the Act.
Pursuant to provisions of the Section 143(12) of the Act neither the statutory auditors nor Secretarial auditors nor Cost Auditors have reported any incident of fraud to the Audit Committee or the Board during the year under review.
Pursuant to the Section 148 of the Act read with rules thereunder, your Company is required to maintain the cost records and the said cost records are required to be audited.
Accordingly, maintaining of cost records is applicable to the Company and the Company is maintaining all the aforesaid cost records.
The Board of Directors, on the recommendation of Audit Committee, has re-appointed M/s. Ramanath Iyer and Co., Cost Accountants (Firm Registration No. 000019), as Cost Auditors of the Company for conducting the audit of cost records for the financial year 2022-23.
The due date of filing the Cost Audit Report for the year ended on March 31, 2021 was September 30, 2021 and the same had been filed on August 27, 2021.
The Board had appointed M/s. Jayant Gupta and Associates, Practicing Company Secretaries, as Secretarial Auditors to conduct secretarial audit of the Company for the financial year 2021-22.
The Secretarial Audit Report of the Company as prescribed under Section 204 of the Act is annexed herewith as Annexure - G and forms an integral part of this Report.
The Secretarial Audit report does not contain any qualification, reservation and adverse remarks and the comments given by the Secretarial Auditors in their report are self-explanatory and hence, do not call for any further explanations or comments under Section 204(3) of the Act.
The Board has also re-appointed M/s. Jayant Gupta and Associates, Practicing Company Secretaries to conduct secretarial audit of the Company for the FY 2022-23.
The Risk Management Committee of the Board has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Companyâs enterprise wide risk management framework; and (b) Overseeing that all the risks that the organisation faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal,
regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.
The Company has laid down a Risk Management Policy and the same is available on the website of the Company at https://www.escortsgroup.com/investors/governance.html
The details of constitution of Risk Management Committee of the Company is provided in Report on Corporate Governance at Annexure - D of the Directorsâ Report.
Internal Financial Control and its Adequacy
The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, the prevention and detection of fraud, error reporting mechanisms, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.
The Company has in place adequate internal financial controls for ensuring the orderly and efficient conduct of its business.
During the year, such controls were tested and no reportable material weakness in the design or operation was observed.
Disclosures Meetings of the Board
Eight meetings of the Board of Directors were held during the year. A detailed note on the composition of the Board including its committees are provided in the Corporate Governance Report.
For constitution and other details of the Audit Committee, please refer Report on Corporate Governance annexed as Annexure - D to this Report.
All the recommendations made by the Audit Committee were accepted by the Board.
For constitution and other details of the CSR Committee, please refer Report on Corporate Governance annexed as Annexure - D to this Report.
The Annual Return for Financial Year 2021-22 is available on the Companyâs website at www.escortsgroup.com.
The Company has adopted a Whistle Blower Policy establishing vigil mechanism for Directors and Employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Companyâs Code of Conduct. The mechanism provides for adequate
safeguards against victimisation of effected Director(s) and Employee(s). In exceptional or appropriate cases, Directors and Employees have direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.
The Whistle Blower Policy is available on Companyâs website at https://www.escortsgroup.com/investors/ governance.html.
Registrar and Share Transfer Agent
The Share Transfer and related activities are being carried out by M/s KFin Technologies Limited (earlier KFin Technologies Private Limited), Registrar and Share Transfer Agent from the following address:-
M/s KFin Technologies Limited
Tower B, Plot No. 31-32, Selenium Building,
Gachibowli, Financial District, Nanakramguda, Hyderabad-500032, Telangana
During the year, the Company, Kubota Corporation, Japan (âKubotaâ), Escorts Benefit and Welfare Trust (âEBWTâ or âTrustâ) and the Specified Promoter (as specified in the shareholdersâ agreement) had entered into an shareholdersâ agreement on November 18, 2021 (Shareholdersâ Agreement or SHA) with a common objective of making the Company a global leader in the manufacture, assembly, sales, marketing, financing, servicing, research and development of value-based tractors and relationship amongst them regarding their rights and obligations, and other matters in connection therewith including undertaking the specific obligations as set out in this SHA. The said SHA was become effective from April 11, 2022 post completion of Open Offer pursuant to the provisions of Securities and Exchange Board of India (Substantial Acquisition of Shares and Takeover) Regulations, 2011, consequently, Kubota acquired control over the Company and became the joint promoter of the Company.
Particulars of Loans given, Investments made, Guarantees given and Securities provided
A statement regarding Loans/ Guarantees given and Investments covered under the provisions of the Section 186 of the Act is made in the notes to the financial statement.
Particulars of Employees and related disclosures
In terms of provisions of Section 197(12) of the Act, read with 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 prescribed limits are available with the Company Secretary.
in terms of the first proviso to Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member
interested in obtaining such particulars may write to the Company Secretary of the Company and the same will be furnished on request.
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 annexed as Annexure - H and forms an integral part of this Report.
The Company has not accepted/ renewed any Fixed Deposit during the financial year under review and as such no amount of principal or interest was outstanding as of the Balance Sheet date.
Investor Education and Protection Fund (IEPF)
Pursuant to the applicable provisions of the Act, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (âthe Rulesâ), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Central Government, after the completion of seven years. Accordingly, the Company has transferred '' 9.08 lakhs, pertaining to unclaimed dividend, during the period under review, to IEPF.
Further, according to the rules, the shares in respect of which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account created by the IEPF Authority. The detailed information is available at our website www. escortsgroup.com.
As on March 31, 2022, no unclaimed deposits are pending which required to be transferred to Investor Education and Protection Fund.
The present credit rating of the Company is as under:
ICRA Limited has upgraded the long-term rating by one notch from "ICRA AAâ to "ICRA âAA â with revision in outlook from âwatch with developing implicationâ to âStableâ and reaffirmed Short-term rating at "ICRA A1 â.
CRISIL has upgraded the long term rating by one notch from âCRISIL AAâ to âCRISIL AA â with revision in outlook from "watch with positive implicationsâ to "Stableâ and reaffirmed Short-term rating at âCRISIL A1 â.
Material Changes and Commitment affecting the financial position
There are no material changes affecting the financial position of the Company subsequent to the closure of the FY 2022 till the date of this report.
Prevention of Sexual Harassment
The Company 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. The Company is committed to provide equal opportunities without regard to their race, caste, sex, religion, colour, nationality, disability, etc. All women associates (permanent, temporary, contractual and trainees) as well as any women visiting the Companyâs office premises or women service providers are covered under this Policy. All employees are treated with dignity with a view to maintain a work environment free of sexual harassment whether physical, verbal or psychological.
The Company has also complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Our professional are our most important assets. We are committed to hiring and retaining the best talent being among the industryâs leading employers. For this, we focus on promoting a collaborative, transparent and participative organisation culture, and rewarding merit and sustain high performance. Our human resources management focuses on allowing our employees to develop their skills, grow in their career and navigate their next.
The Company is in compliance with all the applicable Secretarial Standards issued by the Instituted of Company Secretary of India.
Integrated Report
The Company, has voluntarily provided Integrated Report, which includes non-financial and financial information to have a better understanding of the Companyâs long term strategy. This report covers six forms of capital viz. financial capital, manufactured capital, intellectual capital, human capital, social and relationship capital and natural capital as per International
Business Responsibility and Sustainability Report (BRSR)
In November 2018, the Ministry of Corporate Affairs (MCA) constituted a Committee on Business Responsibility Reporting (âthe Committeeâ) to finalize business responsibility reporting formats for listed and unlisted companies, based on the framework of the National Guidelines on Responsible Business Conduct (NGRBC). Through its report, the Committee recommended that BRR be rechristened BRSR, where disclosures are based on ESG
parameters, compelling organizations to holistically engage with stakeholders and go beyond regulatory compliances in terms of business measures and their reporting. SEBI, vide its circular dated May 10, 2021, made BRSR mandatory for the top 1,000 listed companies (by market capitalization) from FY 2023, while disclosure is voluntary for FY 2022 .
The Committee Report encourages companies to report their performance for FY 2022 to be better prepared to adopt this framework from the next FY. Escorts has adopted the BRSR voluntarily for FY 2022. The BRSR disclosures form a part of Escortsâ Integrated Annual Report 2021-22.
Application made or any proceeding pending under the Insolvency and Bankruptcy Code
As on the date of the Report no application is pending under the Insolvency and Bankruptcy Code, 2016 and the Company did not file any application under (IBC) during the Financial Year 2021-22. Further, the Company has not made any one-time settlement.
Your Company does not fall under the category of large corporate, as defined under SEBI vide its circular SEBI/HO/ DDHS/GR/P/2018/144 dated November 26, 2018, as such no disclosure is required in this regard.
Directorsâ Responsibility Statement
Pursuant to the requirement under Section 134(5) of the Act, with respect to Directorsâ Responsibility Statement, your Directors, to the best of their knowledge and ability, hereby confirm that:
(i) i n the preparation of the annual accounts for the year ended March 31, 2022, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed alongwith proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the profit of the Company for the year ended on that date;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) t he Directors have prepared the annual accounts for financial year ended March 31, 2022 on a âgoing concernâ basis;
(v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
(vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
General
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
1. i ssue of equity shares with differential rights as to dividend, voting or otherwise.
2. i ssue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.
3. Neither the Managing Director nor the Whole Time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companyâs operations in future. However, members attention is drawn to note 32 in the notes to accounts in the standalone financial statement and to note 33 in the notes to accounts in the consolidated financial statement which sets out information on Commitments and Contingencies.
5. Details of difference between amount of valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof.
Acknowledgement
Your Directors would like to express their sincere appreciation of the positive co-operation received from the Central Government, the Government of Haryana and Karnataka, Financial Institutions and the Companyâs Bankers, Customers, Dealers and all other business associates.
The Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers, workers, employee unions and staff of the Company resulting in the successful performance of the Company during the year.
The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.
For and on behalf of the Board of Directors
Sd/-
Place: Faridabad Nikhil Nanda
Date: May 13, 2022 Chairman and Managing Director
Mar 31, 2021
Your Directors have pleasure in presenting the Seventy Fifth Annual Report of the Company along with Companyâs audited financial statements (standalone and consolidated) for the financial year ended on March 31, 2021.
Financial Results
('' crores) |
||||
Particulars |
Stand |
alone |
Conso |
idated |
Year ended on March 31, 2021 |
Year ended on March 31, 2020 |
Year ended on March 31, 2021 |
Year ended on March 31, 2020 |
|
Revenue from operations |
6929.29 |
5760.95 |
7,014.42 |
5,810.09 |
Other income |
154.56 |
92.25 |
160.38 |
97.60 |
Total income |
7083.85 |
5853.20 |
7,174.80 |
5,907.69 |
Profit from operations before Interest, Depreciation, Exceptional Items & Tax |
1283.79 |
768.07 |
1,286.40 |
758.92 |
Finance Cost |
10.98 |
15.46 |
13.34 |
17.23 |
Profit from operations before Depreciation, Exceptional Items & Tax |
1272.81 |
752.61 |
1,273.06 |
741.69 |
Depreciation & Amortisation |
115.70 |
104.55 |
118.28 |
107.22 |
Profit from operations before Exceptional Items & Tax |
1157.11 |
648.06 |
1,154.78 |
634.47 |
Exceptional Item |
- |
(9.22) |
- |
(9.22) |
Profit from operations before Tax |
1157.11 |
638.84 |
1,154.78 |
625.25 |
Tax Expense |
283.05 |
153.30 |
283.15 |
153.53 |
Profit from operations after Tax |
874.06 |
485.54 |
871.63 |
471.72 |
Net profit for the period |
874.06 |
485.54 |
871.63 |
471.72 |
Your Company sold 106741 tractors during the year under ) review as against 86018 tractors sold during the last financial year. The directors are also pleased to inform that in fiscal 2020-21, for the first time ever in any financial year, your Company has crossed the 1,00,000 unit landmark in terms of tractor sales and tractor production in India.
The brief highlights of the Companyâs performance (Consolidated) for the financial year ended March 31, 2021 are:-
⢠Total income of the Company for FY 2021 stood at '' 7,174.80 crores ('' 5,907.69 crores in FY 2020)
⢠Profit from operations before Interest, Depreciation, Exceptional Items & Tax stood at '' 1,286.40 crores.
⢠Profit from operations before Tax (PBT) stood at '' 1,154.78 crores. Net profit for the period stood at '' 871.63 crores.
The details on the individual businesses of the Company are provided in the Management Discussion & Analysis section provided in this annual report. On our response to COVID-19 pandemic, please refer sustainability report at page 70.
Management Discussion & Analysis
In terms of the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as the "SEBI Listing Regulationsâ), the Management Discussion and Analysis is set out in this Annual Report and provides a detailed analysis on the performance of individual businesses and their outlook.
Based on the Companyâs performance, your Directors are pleased to recommend, for approval of the members, the following dividend for the financial year ended March 31, 2021:
a. Normal Final Dividend @ 50% per share of Face Value of '' 10/- each (i.e. '' 5.00 per share)
b. Additional Special one-time Platinum Jubilee (75th Year) Dividend @ 25% per share of Face Value of '' 10/- each (i.e. '' 2.50 per share)
c. Total Dividend @ 75% per share i.e. '' 7.50 per equity share payable on all outstanding shares except on the equity shares held by Escorts Benefit & Welfare Trust.
The dividend payout is subject to the approval of members at the ensuing Annual General Meeting (AGM).
The dividend payout for the period under review has been formulated in accordance with shareholdersâ aspirations and the Companyâs Dividend Distribution Policy to pay sustainable dividend linked to long-term growth objectives of the Company to be met by internal cash accruals.
The dividend distribution policy is available on our website at https://www.escortsaroup.com/investors/aovernance.html.
The Escorts Employees Stock Option Scheme ("Schemeâ) is in line with the SEBI (Share Based Employee Benefits) Regulations, 2014 ("SBEB Regulationsâ) and there were no material changes to the scheme during the financial year 202021. The Scheme is being implemented in accordance with the SBEB Regulations and the resolutions passed by the members. The auditors certificate would be available during the Annual General Meeting for inspection by members. The details as required to be disclosed under the SBEB Regulations would be available on the Companyâs website at www.escortsgroup.com.
The Board of Directors in its meeting held on May 14, 2021 on the recommendation of the Nomination, Remuneration and Compensation Committee meeting held on May 11, 2021, has approved the changes in Employee Stock Option Scheme (âSchemeâ) of the Company subject to the approval of shareholders of the Company.
Directors and Key Managerial Personnel
In accordance with the provisions of Companies Act, 2013 (hereinafter referred as "the Actâ) and Articles of Association of the Company, Mr. Shailendra Agrawal (DIN: 03108241) and Ms. Nitasha Nanda (DIN: 00032660), Directors retire by rotation at the ensuing AGM and being eligible, offer themselves for re-appointment.
The Board of Directors in its meeting held on July 16, 2020 co-opted Mr. Harish N. Salve (DIN: 01399172) as an Additional and Independent Director on the Board of the Company on the recommendations of Nomination and Remuneration Committee. The Board considered the domain knowledge and experience of Mr. Harish N. Salve in the areas of constitutional, commercial and taxation law while approving his appointment as an Independent Director on the Board of the Company. The Board is of the opinion that Mr. Harish N. Salve possesses requisite qualification, experience, expertise and holds high standard of integrity. Mr. Salve was regularised as Independent Director in the Annual General Meeting held on August 24, 2020.
The Board of Directors in its meeting held on July 16, 2020, appointed Mr. Dai Watanabe (DIN: 08736520) and Mr. Yuji Tomiyama (DIN: 08779472) as an additional directors on the Board of the Company based on the recommendations of the Nomination and Remuneration Committee of the Company and pursuant to the Share Subscription Agreement dated March 20, 2020 read with the amendment agreement dated July 15, 2020 ("SSAâ), with Kubota Corporation, Japan and certain Specified Promoters. The shareholders of the Company in the Annual General Meeting held on August 24, 2020 had approved the regularization of Mr. Watanabe and Mr. Tomiyama as the Non-Executive Directors of the Company.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet with criteria of independence as prescribed under subsection (6) of Section 149 of the Act and under Regulation 16(1)(b) & 25(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015 (hereinafter referred as "the Listing Regulationsâ). The policy on Appointment and Removal of Directorâs and Members of Senior Management is attached as Annexure - A and forms an integral part of this Report.
The Company has devised a Policy for performance evaluation of Independent Directors, Board, Board Committees and individual Directors, which includes criteria for performance evaluation of the Non-Executive and Executive Directors. In accordance with the Policy, a process was followed by the Board for evaluation of its own performance and that of its Committees and individual Directors. The remuneration policy for directors, key managerial personnel, senior management and other employees is annexed as Annexure - B and forms an integral part of this Report.
The due date of filing the Cost Audit Report for the year ended on March 31, 2020 was September 30, 2020 and the same had been filed on August 24, 2020.
Further, this is to confirm that the requirement of maintaining cost records as per Section 148(1) of the Act is applicable to the Company and accordingly, the Company has made and maintained cost records.
Secretarial Auditors
The Board of Directors of the Company had appointed M/s. Jayant Gupta and Associates, Practicing Company Secretaries to conduct secretarial audit of the Company for the financial year 2020-21.
The Secretarial Audit Report for the financial year ended March 31, 2021 is enclosed as Annexure - G and forms an integral part of this Report.
The observations and comments given by the Secretarial Auditors in their report are self-explanatory and hence, do not call for any further comments under Section 204(3) of the Act.
The Board has also re-appointed M/s. Jayant Gupta and Associates, Practicing Company Secretaries to conduct secretarial audit of the Company for the financial year 2021-22.
Risk Management
The Risk Management Committee of the Board has been entrusted with the responsibility to assist the Board in (a) Overseeing and approving the Companyâs enterprise wide risk management framework; and (b) Overseeing that all the risks that the organisation faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.
The Company has laid down a Risk Management Policy and the same is available on the website of the Company at https:// www.escortsaroup.com/investors/aovernance.html
The details of constitution of Risk Management Committee of the Company is provided in Report on Corporate Governance at Annexure - D of the Directorsâ Report.
Internal Financial Control and its Adequacy
The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, the prevention and detection of fraud, error reporting mechanisms, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.
The Company has in place adequate internal financial controls for ensuring the orderly and efficient conduct of its business.
The Company has devised a process whereby various presentations/ programs are being conducted to familiarise the Directors with various developments at Industry level, new business initiatives and organisation strategies etc.
The details of programme for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company - www.escortsgroup.com.
The Company recognises and embraces the importance of a diverse board in its success. Your Company believes 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 it retain its competitive advantage.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 are provided as Annexure - C and forms an integral part of this Report.
Corporate Governance is about maximising shareholders value, ethically and sustainably. At Escorts the goal of corporate governance is to ensure fairness for every stakeholder. Your Company believes that strong corporate governance is critical to enhancing and retaining investor trust. Your Company also endeavours to enhance long term shareholder value and respect minority rights in all its business decisions.
Your Company reaffirms its commitment to the good corporate governance practices and has adopted the Code of Business Conduct which has set out the systems, processes and policies conforming to international standards. Pursuant to Regulation 34(3) of the SEBI Listing Regulations, Corporate Governance Report and Auditorsâ Certificate regarding compliance of conditions of Corporate Governance are enclosed as Annexure - D and forms an integral part of this Report.
Corporate Social Responsibility (CSR)
The key philosophy of all CSR initiatives of the Company is to make CSR a key business process for sustainable development of the society. The initiatives aim at enhancing welfare measures of the society based on the immediate and long term social and environmental consequence of its activities.
The Company intends to undertake other need-based initiatives in compliance with Schedule VII of the Act.
The CSR Policy may be accessed on the Companyâs website www.escortsgroup.com under Investors Information Section. During the year, the Company has spent '' 11.82 crores. ^Including amount transferred to unspent CSR account (refer note 30 of the standalone financial statements)
The Annual Report on CSR activities is enclosed as Annexure - E and forms an integral part of this Report.
Consolidated Financial Statements
The Consolidated Financial Statements have been prepared in accordance with the Act and Indian Accounting Standard (IND AS) - 110 applicable to the Consolidated Financial Statements read with IND AS-28 on Accounting for Investments in Associates and IND AS-31 on Financial Reporting of Interests in Joint Ventures issued by The Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements along with the Auditorsâ Report thereon are annexed with this Report.
Subsidiaries, Joint Ventures and Associate Companies
The statement in Form AOC-1 containing salient features of financial statements of subsidiaries, associate and joint venture companies prepared in accordance with Section 129 of the Act read with Rule 5 of Companies (Accounts) Rules, 2014, forms an integral part of this Report. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiaries, associate and joint venture companies.
During the financial year ended on March 31, 2021, the Company has infused additional equity capital in the following Companies at different point of times:
1. Escorts Crop Solutions Limited, Subsidiary
2. Tadano Escorts India Private Limited, Joint Venture
3. Escorts Kubota India Private Limited, Joint Venture
The Company has also entered into another Joint Venture with Kubota Corporation, Japan during the year. The Company has made an investment of '' 90 crores being 40% stake in the Equity Capital of Kubota Agricultural Machinery India Private Limited being the Joint Venture of your Company with Kubota Corporation.
The Company will make available the Annual Accounts of its subsidiaries, associate and joint venture companies and related information to the members of the Company who may be interested in obtaining the same. The annual accounts of its subsidiaries, associate and joint venture companies will also be available for inspection.
Further, the Company along with other shareholders of Escorts Securities Limited (âESLâ), the subsidiary of Escorts Limited, have entered into a Share Purchase Agreement (âSPAâ) with M/s. Choice Equity Broking Private Limited (âthe Acquirerââ) a wholly owned Subsidiary of M/s. Choice International Limited, to sell and transfer their entire shareholding in ESL to the Acquirer, subject to obtaining all applicable regulatory approvals. Upon completion of the aforesaid transaction in terms of the SPA, Escorts Limited will sell and transfer its entire 40.444% shareholding in ESL to the Acquirer and ESL will cease to be subsidiary of the Company.
The details of the above investments/ disinvestment are provided in the note 7 & 16 of the Notes to Accounts of Standalone Financial Statements of the Company.
Contracts and Arrangements with Related Parties
All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on the materiality of related party transactions.
The particulars of contracts or arrangements with related parties referred to in Section 188(1) of the Act in the prescribed Form AOC-2 is appended as Annexure - F to this report.
The Policy on materiality of related party transactions and dealing with related party transactions may be accessed on the Companyâs website www.escortsgroup.com under Investors Information Section.
Your Directors draw attention of the members to note 47 in the notes to accounts in the standalone financial statement and to note 47 in the notes to accounts in the consolidated financial statement which sets out related party disclosures.
Auditors and Auditorsâ Report Statutory Auditors
Pursuant to the provisions of Section 139 of the Act read with Companies (Audit and Auditors) Rules, 2014, the shareholders of the Company in the 71st AGM held on September 21, 2017 had appointed M/s Walker Chandiok & Co LLP, Chartered Accountants, New Delhi (Firm Registration No. 001076N/ N500013) as Statutory Auditors of the Company for a period of 5 years i.e. upto the conclusion of AGM to be held in the year 2022.
In accordance with the Companies (Amendment) Act, 2017 enforced on May 7, 2018 by MCA, the appointment of Statutory Auditors is not required to be ratified by members at every AGM.
The observations and comments given by M/s. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors in their report read together with notes to Accounts for the year ended March 31, 2021 are self-explanatory and hence, do not call for any further comments under Section 134 of the Act.
The Statutory Auditors of the Company have not reported any fraud as specified in Section 143(12) of the Act.
The Board of Directors of the Company has re-appointed M/s. Ramanath Iyer and Co., Cost Accountants, New Delhi (Firm Registration No. 000019), Cost Auditors of the Company under Section 148 of the Act, for conducting the audit of cost records for the financial year 2021-22.
The reporting on the utilisation of funds raised through preferential allotment is as follows: |
|||||
Original Object |
Modified Object, if any |
Original Allocation |
Modified allocation, if any |
Funds Utilised |
Amount of Deviation/ Variation for the Remarks if quarter according to any applicable object |
For the Agri Machinery Business of the Company i.e. the business of manufacturing, assembly, sales, marketing, financing, servicing, research and development of: (a) tractors; (b) construction equipment (i.e., backhoe loaders and other items to be mutually agreed between Promoters and Kubota Corporation); (c) implements; (d) transmission for tractors, construction equipment (i.e., backhoe loaders and other items to be mutually agreed between the Promoters and Kubota Corporation) and implements; and (e) spare parts of the items referred in (a), (b), (c) and (d), and for the manufacture of engines by the Company |
Not Applicable |
'' 1041.90 crores |
NIL |
'' 142.30 crores |
NIL - |
Guarantee |
The Corporate Guarantee was |
Mizhuo Bank |
11.025 |
Given |
issued in favour of Mizhuo Bank Limited for an amount of '' 11.025 crores for its share of 49% in Tadano Escorts India Private Limited (TEI), a Joint Venture Company. The facility for an amount of '' 22.50 crores was availed by TEI for meeting their non-fund based requirements. |
Limited |
|
Guarantee |
The Corporate Guarantee was |
Tata Capital |
10.00 |
given |
issued in favour of Tata Capital |
Financial |
|
Financial Services Limited for |
Services |
||
credit facility of '' 7.50 crores availed by Escorts Securities Limited, a subsidiary of the Company for meeting their working capital requirements which was renewed and increased to '' 10.00 crores |
Limited |
Capital Reduction
During the year, the Audit Committee and Board of Directors in their meeting held on July 15, 2020 separately had approved the proposal of Capital Reduction of 1,22,57,688 Equity Shares of '' 10/- each of the Company held by Escorts Benefit and Welfare Trust without payment of any consideration.
The Shareholders of the Company approved by way of Postal Ballot on February 21, 2021 the scheme of Capital Reduction of 1,22,57,688 Equity Shares of '' 10.00 each of the Company held by Escorts Benefit and Welfare Trust subject to the confirmation by the Honâble National Company Law Tribunal, Chandigarh Bench (NCLT).
Post approval of the shareholders, the scheme of Capital Reduction was filed for approval of the NCLT.
Particulars of Loans given, Investments made, Guarantees given and Securities provided
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient has been given below. The details are also provided elsewhere in the Annual Report and forms an integral part of this Report.
Details of Investments made during the year:
Name of Party |
Amount ('' in crores) |
Tadano Escorts India Private Limited |
26.22 |
Escorts Crop Solutions Limited |
3.55 |
Kubota Agricultural Machinery India Private Limited |
90.00 |
Details of existing Guarantees and Loans given: |
|
Nature Purpose Party Name |
Amount ('' in crores) |
Nature |
Purpose |
Party Name |
Amount ('' in crores) |
Loan given |
An amount of '' 1 crores was given to Adico Escorts Agri Equipments Private Limited, a Joint Venture Company for meeting their business requirements at a rate of interest of 13% p.a. for a period of one year and the same was renewed for another year. |
Adico Escorts Agri Equipments Private Limited |
1.00 |
During the year, such controls were tested and no reportable material weakness in the design or operation was observed.
Disclosures Meetings of the Board
Eight meetings of the Board of Directors were held during the year. For further details, please refer Report on Corporate Governance annexed as Annexure - D to this Report.
For constitution and other details of the Audit Committee, please refer Report on Corporate Governance annexed as Annexure-D to this Report.
All the recommendations made by the Audit Committee were accepted by the Board.
The extracts of the Annual Return in Form MGT-9 is available on the Companyâs website at www.escortsgroup.com. The Annual Return for Financial Year 2019-20 is also available on the Companyâs website at www.escortsgroup.com.
The Company has adopted a Whistle Blower Policy establishing vigil mechanism for Directors and Employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Companyâs Code of Conduct. The mechanism provides for adequate safeguards against victimisation of effected Director(s) and Employee(s). In exceptional cases,
Directors and Employees have direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee.
The Whistle Blower Policy is available on Companyâs website at https://www.escortsgroup.com/investors/ governance.html
Registrar and Share Transfer Agent
The Share Transfer and related activities are being carried out by M/s KFin Technologies Private Limited (earlier Karvy Fintech Private Limited), Registrar and Share Transfer Agent from the following address:-
M/s KFin Technologies Private Limited Tower B, Plot No. 31-32, Selenium Building,
Gachibowli, Financial District, Nanakramguda, Hyderabad-500032, Telangana
An amount of '' 0.21 crores (previous year: 0.33 crores) transferred to general reserves on account of vested employees stock options lapsed during the year.
Change in Share Capital Preferential Issue
During the year, the Board of Directors of the Company had approved the allotment of 1,22,57,688 Equity Shares of '' 10/-each at a premium of '' 840/- each for a total consideration of '' 1041.90 crores to M/s Kubota Corporation, Japan.
Particulars of Employees and related disclosures
In terms of provisions of Section 197(12) of the Act, read with 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 prescribed limits are available with the Company Secretary. Having regard to the provisions of Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company and the same will be furnished on request.
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 annexed as Annexure - H and forms an integral part of this Report.
The Company has not accepted/ renewed any Fixed Deposit during the financial year and as such no amount of principal or interest was outstanding as of the Balance Sheet date.
Investor Education and Protection Fund (IEPF)
Pursuant to the applicable provisions of the Companies Act, 2013, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (âthe Rulesâ), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Central Government, after the completion of seven years.
Further, according to the rules, the shares in respect of which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account created by the IEPF Authority. Accordingly, the Company was required to transfer the unclaimed and unpaid dividends and shares from time to time as per the requirements of the IEPF rules, details of which are provided on our website.
As on March 31, 2021, no unclaimed deposits are pending for transfer to Investor Education and Protection Fund.
Credit Rating
During the year, the credit rating of the Company is as under:
ICRA Limited has upgraded the long-term rating from âICRA AA-â to âICRA âAAâ with change in status from âWatch with developing implicationâ to âStableâ and reaffirmed Short-term rating at âICRA A1 â.
CRISIL has upgraded the long term rating from âCRISIL AA-â to âCRISIL AAâ with Stable outlook and reaffirmed Short-term rating at âCRISIL A1 â.
Material Changes and Commitment affecting the financial position
There are no material changes affecting the financial position of the Company subsequent to the closure of the Fiscal 2021 till the date of this report except the impact of COVID-19, however, impact thereof is not expected to be significant.
Prevention of Sexual Harassment
The Company 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. The Company is committed to provide equal opportunities without regard to their race, caste, sex, religion, colour, nationality, disability, etc. All women associates (permanent, temporary, contractual and trainees) as well as any women visiting the Companyâs office premises or women service providers are covered under this Policy. All employees are treated with dignity with a view to maintain a work environment free of sexual harassment whether physical, verbal or psychological.
The Company has also complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Secretarial Standards
The Company is in compliance with all the applicable Secretarial Standards.
Business Responsibility Report (BRR)
The SEBI Listing Regulations mandate the inclusion of BRR as part of the Annual Report for top 1000 listed entities based on market capitalisation.
In compliance with the SEBI Listing Regulations, the BRR describing the initiatives taken by the Company from an environmental, social and governance perspective is enclosed as Annexure - I and forms an integral part of this Report.
Application made or any proceeding pending under the Insolvency and Bankruptcy Code
As on the date of the Report any application is not pending under the Insolvency and Bankruptcy Code, 2016 and the Company did not file any application under (IBC) during the Financial Year 2020-21.
Directorsâ Responsibility Statement
Pursuant to the requirement under Section 134(5) of the Act, with respect to Directorsâ Responsibility Statement, your Directors, to the best of their knowledge and ability, hereby confirm that:
(i) in the preparation of the annual accounts for the year ended March 31, 2021, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed alongwith proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2021 and of the profit and loss of the Company for the year ended on that date;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the annual accounts for financial year ended March 31, 2021 on a âgoing concernâ basis;
(v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
(vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
Your Directors state that no disclosure or reporting is required
in respect of the following items as there were no transactions
on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companyâs operations in future. However, members attention is drawn to note 34 in the notes to accounts in the standalone financial statement and to note 35 in the notes to accounts in the consolidated financial statement which sets out information on Commitments and Contingencies.
6. Details of difference between amount of valuation done at the time of one time settlement and the valuation done while taking loan from the Banks or Financial Institutions along with the reasons thereof: Not applicable.
Your Directors would like to express their sincere appreciation of the positive co-operation received from the Central Government, the Government of Haryana and Uttaranchal and Karnataka, Financial Institutions and the Companyâs Bankers, Customers, Dealers and all other business associates.
The Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers, workers, employee unions and staff of the Company resulting in the successful performance of the Company during the year.
The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.
For and on behalf of the Board of Directors
Place: New Delhi Nikhil Nanda
Date: May 14, 2021 Chairman & Managing Director
Mar 31, 2019
Dear Shareholders,
The Directors have pleasure in presenting the Seventy Third Annual Report of the Company along with Companyâs audited financial statements (standalone and consolidated) for the financial year ended on March 31, 2019.
Financial Results
(Rs. crores)
Particulars |
Year ended on March 31, 2019 |
Year ended on March 31, 2018 |
Gross Revenue |
6,277.21 |
5,075.38 |
Excise Duty |
- |
20.85 |
Net Revenue |
6,277.21 |
5,054.53 |
Profit from continuing operations before Interest, Depreciation, Exceptional Items & Tax |
814.14 |
616.63 |
Finance Cost |
18.48 |
28.57 |
Profit from continuing operations before Depreciation, Exceptional Items & Tax |
795.66 |
588.06 |
Depreciation & Amortisation |
85.37 |
72.48 |
Profit from continuing operations before Exceptional Items & Tax |
710.29 |
515.58 |
Exceptional Item |
10.91 |
(6.76) |
Profit from continuing operations before Tax |
721.20 |
508.82 |
Tax Expense |
237.52 |
164.10 |
Profit from continuing operations after Tax |
483.68 |
344.72 |
Profit / (Loss) from discontinued operations before Tax |
1.89 |
- |
Tax Expense of discontinued operations |
0.66 |
- |
Profit / (Loss) from discontinued operations after Tax |
1.23 |
- |
Net profit for the period |
484.91 |
344.72 |
Appropriations for the year: |
||
Dividends |
(23.90) |
(17.93) |
Tax on dividends |
(5.04) |
(3.74) |
Dividend received on share held by beneficiary trust1 |
6.73 |
5.59 |
* for more information please refer note 45 of the notes to accounts of standalone financial statement
Financial Performance
The brief highlights of the Companyâs performance (Standalone) for the financial year ended March 31, 2019 are:-
- Net Revenue of the Company for FY 2019 of Rs. 6,277.21 crores was higher by 24.19% over the last year (Rs. 5,054.53 crores in FY 2018)
- Profit from continuing operations before Interest, Depreciation, Exceptional Items & Tax stood at Rs. 814.14 crores
- Profit from continuing operations before Tax (PBT) stood at Rs. 721.20 crores and Profit from continuing operations After Tax (PAT) stood at Rs. 483.68 crores. Net profit for the period stood at Rs. 484.91 crores
- Your Company sold 96,412 tractors during the year under review as against 80,417 tractors sold during the last financial year
Management Discussion & Analysis
In terms of the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as the âSEBI Listing Regulationsâ), the Management Discussion and Analysis is set out in this Annual Report and provides a detailed analysis on the performance of individual businesses and their outlook.
Dividend
Based on the Companyâs performance, your Directors are pleased to recommend, for approval of the members, a Dividend of Rs. 2.50 per Equity Share (25%) on the face value of Rs. 10/- each, aggregating Rs. 22.22 crores (exclusive of tax on dividend) for the financial year ended March 31, 2019 except on the equity shares held by Escorts Benefit and Welfare Trust (EBWT). The dividend payout is subject to the approval of members at the ensuing Annual General Meeting (AGM).
The dividend payout for the period under review has been formulated in accordance with shareholdersâ aspirations and the Companyâs Dividend Distribution Policy to pay sustainable dividend linked to long-term growth objectives of the Company to be met by internal cash accruals.
During the year, the Dividend Distribution Policy was amended to specify the Dividend Range. The amended policy is available on our website at https://www.escortsgroup.com/templates/ escortsgroup_home/images/pdf/Dividend-Distribution-Policy.pdf
Employee Stock Option Scheme
The Scheme is in line with the SEBI (Share Based Employee Benefits) Regulations, 2014 (âSBEB Regulationsâ) and there have been no material changes to the schemes during the financial year 2018-19. The Scheme has been implemented in accordance with the SBEB Regulations and the resolutions passed by the members. The auditors certificate would be available at the Annual General Meeting for inspection by members. The details as required to be disclosed under the SBEB Regulations would be available on the Companyâs website at www.escortsgroup.com.
Directors
During the year ended March 31, 2019, Mr. Rajan Nanda, Chairman and Managing Director of the Company passed away on August 5, 2018. The Board of Directors in their meeting held on August 7, 2018 had appointed Mr. Nikhil Nanda, Managing Director as the Chairman of the Company w.e.f. August 7, 2018.
Further, Mr. Ravi Narain, Independent Director of the Company had resigned from the Board of Directors of the Company w.e.f. May 1, 2019 in view of the order passed by SEBI in the matter of National Stock Exchange of India Limited.
In accordance with the provisions of Companies Act, 2013 (hereinafter referred as âthe Actâ) and Articles of Association of the Company, Ms. Nitasha Nanda, Whole-time Director and Mr. G.B. Mathur, Director retire by rotation at the ensuing AGM and being eligible, offers themselves for re-appointment.
The Company has on the recommendation of Nomination and Remuneration Committee (NRC) and in accordance with the provisions of the Act and SEBI Listing Regulations co-opted Mr. Shailendra Agrawal as an Additional Director on the Board of the Company and designated as the Executive Director w.e.f. March 22, 2019, liable to retire by rotation, subject to approval of the members at the AGM. He shall hold office as Director of the Company upto the date of ensuing AGM and is eligible for appointment as a Director. His appointment is appropriate and in the best interest of the Company.
The Board of Directors on the recommendation of NRC, in their meeting held on May 7, 2019, co-opted Mr. Sunil Kant Munjal as an Additional and Independent Director on the Board of the Company. He shall hold office as Director of the Company upto the date of ensuing AGM.
The Board of Directors on the recommendation of NRC, in their meeting held on May 7, 2019, on the basis of the report of performance evaluation, had recommended the re-appointment of Ms. Nitasha Nanda as Whole-time Director for a period of 5 years w.e.f. January 16, 2020 and Mr. D.J. Kakalia as an Independent Director for a further period of 5 years for approval of members of the Company at the ensuing AGM.
Pursuant to the applicable provisions of the Act, your directors are seeking appointment of Mr. Shailendra Agrawal as an Executive Director w.e.f. March 22, 2019 for a period of 5 years and Mr. Sunil Kant Munjal as an Independent Director for a period 5 years and re-appointment of Ms. Nitasha Nanda as Whole-time Director w.e.f. January 16, 2020 for a period of 5 years and Mr. D.J. Kakalia as an Independent Director for a period of 5 years.
The brief resumes and other disclosures relating to the Directors who are proposed to be appointed/ re-appointed, as required to be disclosed pursuant to Regulation 36 of the SEBI Listing Regulations and Clause 1.2.5 of the Secretarial Standard 2 are given in the Annexure to the Notice of the 73rd AGM.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet with criteria of independence as prescribed under sub-section (6) of Section 149 of the Act and under Regulation 16(1)(b) of SEBI Listing Regulations. The policy for selection of directors and determining directors independence is attached as Annexure -A and forms an integral part of this Report.
The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the Non-Executive and Executive Directors. In accordance with the Policy, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors. The remuneration policy for directors, key managerial personnel and other employees is annexed as Annexure - B and forms an integral part of this Report.
Your Directors recommend the appointment/ re-appointment of the above said Directors at the ensuing AGM.
The Company has devised a process where various presentations/ programs are being conducted to make them familiarise with various developments at Industry level, new business initiatives and organisation strategies etc.
The details of programme for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company - www.escortsgroup.com.
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.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 are provided as Annexure - C and forms an integral part of this Report.
Corporate Governance
Corporate Governance is about maximising shareholders value, ethically and sustainable. At Escorts the goal of corporate governance is to ensure fairness for every stakeholder. We believe strong corporate governance is critical to enhancing and retaining investor trust. We also endeavor to enhance long term shareholder value and respect minority rights in all our business decisions.
Your Company reaffirms its commitment to the good corporate governance practices and has adopted the Code of Business Conduct which has set out the systems, processes and policy conforming to international standards. Pursuant to Regulation 34(3) of the SEBI Listing Regulations, Corporate Governance Report and Auditorsâ Certificate regarding compliance of conditions of Corporate Governance are enclosed as Annexure - D and forms an integral part of this Report.
Corporate Social Responsibility (CSR)
The key philosophy of all CSR initiatives of the Company is to make CSR a key business process for sustainable development of the society. The initiatives aim at enhancing welfare measures of the society based on the immediate and long term social and environmental consequence of its activities.
The Company intends to undertake other need-based initiatives in compliance with Schedule VII of the Act.
The CSR Policy may be accessed on the Companyâs website www.escortsgroup.com under Investors Information Section. During the year, the Company has spent Rs. 6.13 crores (2.07%) of the average net profits of last three financial years on CSR activities.
The Annual Report on CSR activities is enclosed as Annexure - E and forms an integral part of this Report.
Consolidated Financial Statements
The Consolidated Financial Statements have been prepared in accordance with the Act and Indian Accounting Standard (IND AS) - 110 applicable to the Consolidated Financial Statements read with IND AS-28 on Accounting for Investments in Associates and IND AS-31 on Financial Reporting of Interests in Joint Ventures issued by The Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements along with the Auditorsâ Report thereon are annexed with this Report.
Subsidiaries, Joint Ventures and Associate Companies
The statement in Form AOC-1 containing salient features of financial statements of subsidiaries, associate and joint venture companies prepared in accordance with Section 129 of the Act read with Rule 5 of Companies (Accounts) Rules, 2014, forms an integral part of this Report. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiaries, associate and joint venture companies.
During the financial year ended on March 31, 2019, the Company has infused additional equity capital in Escorts Crop Solutions Limited, subsidiary of the Company. The details of the said investment/ disinvestment is provided in the note 6(i) of the Notes to Accounts of the Standalone Financial Statements of the Company.
The Company has also entered into two Joint Ventures with Japanese companies during the year i.e. with Tadano Limited and Kubota Corporation. The Company has also made an investment of Rs. 29.40 crores being 49% stake in the Equity Capital of Tadano Escorts India Private Limited being the Joint Venture of your Company with Tadano Limited, Japan and Rs. 60 crores being 40% stake in the Equity Capital of Escorts Kubota India Private Limited being the Joint Venture of your Company with Kubota Corporation, Japan.
The Company will make available the Annual Accounts of its subsidiaries, associate and joint venture companies and related information to the members of the Company who may be interested in obtaining the same. The annual accounts of its subsidiaries, associate and joint venture companies will also be kept open for inspection at the Registered Office of the Company.
Contracts and Arrangements with Related Parties
All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on the materiality of related party transactions.
The particulars of contracts or arrangement with related parties referred to in Section 188(1) of the Act in the prescribed Form AOC-2 is appended as Annexure - F to this report.
The Policy on materiality of related party transactions and dealing with related party transactions may be accessed on the Companyâs website www.escortsgroup.com under Investors Information Section.
Your Directors draw attention of the members to Note 47 in the notes to accounts in the standalone financial statement and to Note 46 in the notes to accounts in the consolidated financial statement which sets out related party disclosures.
Auditors and Auditorsâ Report
Statutory Auditors
Pursuant to the provisions of Section 139 of the Act read with Companies (Audit and Auditors) Rules, 2014, the shareholders of the Company in the 71st AGM held on September 21, 2017 had appointed M/s Walker Chandiok & Co LLP, Chartered Accountants, New Delhi (Firm Registration No. 001076N/ N500013) as Statutory Auditors of the Company for a period of 5 years i.e. upto the conclusion of AGM to be held in the year 2022.
In accordance with the Companies (Amendment) Act, 2017 enforced on May 7, 2018 by MCA, the appointment of Statutory Auditors is not required to be ratified by members at every AGM. The observations and comments given by M/s. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors in their report read together with notes to Accounts for the year ended March 31, 2019 are self-explanatory and hence, do not call for any further comments under Section 134 of the Act. The Statutory Auditors of the Company have not reported any fraud as specified in Section 143(12) of the Act.
Cost Auditors
The Board of Directors of the Company has re-appointed M/s. Ramanath Iyer and Co., Cost Accountants, New Delhi (Firm Registration No. 000019), Cost Auditors of the Company under Section 148 of the Act, for conducting the audit of cost records for the financial year 2019-20.
The due date of filing the Cost Audit Report for the year ended on March 31, 2018 was September 30, 2018 and the same had been filed on September 13, 2018.
Secretarial Auditors
The Board of Directors of the Company had appointed M/s. Jayant Gupta and Associates, Practicing Company Secretary to conduct secretarial audit of the Company for the financial year 2018-19.
The Secretarial Audit Report for the financial year ended March 31, 2019 is enclosed as Annexure - G and forms an integral part of this Report.
The observations and comments given by the Secretarial Auditors in their report are self-explanatory and hence, do not call for any further comments under Section 204(3) of the Act.
The Board has also re-appointed M/s. Jayant Gupta and Associates, Practicing Company Secretary to conduct secretarial audit of the Company for the financial year 2019-20.
Risk Management
The Risk Management Committee of the Board has been entrusted with the responsibility to assist the Board in (a) overseeing and approving the Companyâs enterprise wide risk management framework; and (b) Overseeing that all the risks that the organisation faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.
Internal Financial Control and its Adequacy
The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, the prevention and detection of fraud, error reporting mechanisms, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.
The Company has in place adequate internal financial controls for ensuring the orderly and efficient conduct of its business. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.
Disclosures
Meetings of the Board
Ten meetings of the Board of Directors were held during the year. For further details, please refer Report on Corporate Governance annexed as Annexure - D to this Report.
Audit Committee
For constitution and other details of the Audit Committee, please refer Report on Corporate Governance annexed as Annexure-D to this Report.
All the recommendations made by the Audit Committee were accepted by the Board.
Extracts of Annual Return
In terms of provisions of Section 92 of the Act read with the Companies (Management and Administration) Rules, 2014, the extracts of Annual Return in Form MGT-9 is enclosed as Annexure - H and forms an integral part of this Report. The Annual Return for Financial Year 2017-18 is also available on the Companyâs website at www.escortsgroup.com.
Vigil Mechanism
The Company has adopted a Whistle Blower Policy establishing vigil mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Companyâs Code of Conduct. The mechanism provides for adequate safeguards against victimisation of effected Director(s) and Employee(s). In exceptional cases, Directors and Employees have direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The Whistle Blower Policy is available on Companyâs website.
Registrar and Share Transfer Agent
The Share Transfer and related activities are being carried out by M/s Karvy Fintech Private Limited (earlier Karvy Computershare Private Limited), Registrar and Share Transfer Agents from the following address:-
M/s Karvy Fintech Private Limited
Karvy Selenium, Tower B, Plot No. 31-32,
Gachibowli, Financial District, Nanakramguda,
Hyderabad-500032, Telangana
All correspondence may kindly be sent to the above address only.
Particulars of Loans given, Investments made, Guarantees given and Securities provided
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient has been given elsewhere in the Annual Report and forms an integral part of this Report.
Particulars of Employees and related disclosures
In terms of provisions of Section 197(12) of the Act, read with 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 prescribed limits are available with the Company Secretary. Having regard to the provisions of Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company and the same will be furnished on request.
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 annexed as Annexure - I and forms an integral part of this Report.
Public Deposits
The Company has not accepted/ renewed any Fixed Deposit during the financial year and as such no amount of principal or interest was outstanding as of the Balance Sheet date.
Investor Education and Protection Fund (IEPF)
Pursuant to the applicable provisions of the Companies Act, 2013, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (âthe Rulesâ), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Central Government, after the completion of seven years.
Further, according to the rules, the shares in respect of which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account created by the IEPF Authority. Accordingly, the Company was required to transfer the unclaimed and unpaid dividends and shares as per the requirements of the IEPF rules, details of which are provided on our website.
As on March 31, 2019, no unclaimed deposits are pending for transfer to Investor Education and Protection Fund.
Credit Rating
During the year, the credit rating of the Company have been upgraded as under:
ICRA Limited has upgraded the long-term rating from âICRA A â/ Positive to âICRA AA-â/ Stable and short-term rating reaffirmed âICRA A1 â.
India Ratings has upgraded the long-term rating from âIND A / Positive to âIND AA-/ Positive and short-term rating reaffirmed âIND A1 â.
CRISIL has assigned long term rating âCRISIL AA-â/ Stable and short term rating âCRISIL A1 â.
Material Changes and Commitment affecting the financial position
There are no material changes affecting the financial position of the Company subsequent to the close of the Fiscal 2019 till the date of this report.
Prevention of Sexual Harassment
The Company 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. The Company is committed to providing equal opportunities without regard to their race, caste, sex, religion, colour, nationality, disability, etc. All women associates (permanent, temporary, contractual and trainees) as well as any women visiting the Companyâs office premises or women service providers are covered under this Policy. All employees are treated with dignity with a view to maintain a work environment free of sexual harassment whether physical, verbal or psychological.
The Company has also complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Secretarial Standards
The Company is in compliance with all the applicable Secretarial Standards.
Business Responsibility Report (BRR)
The SEBI Listing Regulations mandate the inclusion of BRR as part of the Annual Report for top 500 listed entities based on market capitalisation.
In compliance with the SEBI Listing Regulations, the BRR describing the initiatives taken by the Company from an environmental, social and governance perspective is enclosed as Annexure - J and forms an integral part of this Report.
Directorsâ Responsibility Statement
Pursuant to the requirement under Section 134(5) of the Act, with respect to Directorsâ Responsibility Statement, your Directors, to the best of their knowledge and ability, hereby confirm that:
(i) in the preparation of the annual accounts for the year ended March 31, 2019, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed alongwith proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019 and of the profit and loss of the Company for the year ended on that date;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the annual accounts for financial year ended March 31, 2019 on a âgoing concernâ basis;
(v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
(vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
General
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companyâs operations in future. However, members attention is drawn to note 34 on Commitments and Contingencies in the Notes forming part of the financial statement.
Acknowledgement
Your Directors would like to express their sincere appreciation of the positive co-operation received from the Central Government, the Government of Haryana and Uttaranchal and Karnataka, Financial Institutions and the Companyâs Bankers, Customers, Dealers and all other business associates.
The Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers, workers, employee unions and staff of the Company resulting in the successful performance of the Company during the year.
The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.
For and on behalf of the Board of Directors
Sd/-
Place: Faridabad Nikhil Nanda
Date: May 7, 2019 Chairman & Managing Director
Mar 31, 2018
Dear Shareholders,
The Directors have pleasure in presenting the Seventy Second Annual Report of the Company along with Companyâs audited financial statements (standalone and consolidated) for the financial year ended on March 31, 2018.
Financial Results
(Rs. crores)
Particulars |
Year ended on March 31, 2018 |
Year ended on March 31, 2017 |
Gross Revenue |
5,075.38 |
4,211.04 |
Excise Duty |
20.85 |
74.42 |
Net Revenue |
5,054.53 |
4,136.62 |
Profit fiom continuing operations befoie Interest, Depieciation. Exceptional Items & Tax Finance Cost Profit from continuing operations before Depreciation, Exceptional Items & Tax |
616.63 28.57 588.06 |
367.17 31.11 336.06 |
Depreciation & Amortisation |
72.48 |
63.07 |
Profit from continuing operations before Exceptional Items & Tax |
515.58 |
272.99 |
Exceptional Item |
6.76 |
(3.76) |
Profit from continuing operations before Tax |
508.82 |
276.75 |
Tax Expense |
164.10 |
75.60 |
Profit from continuing operations after Tax |
344.72 |
201.15 |
Profit / (Loss) from discontinued operations before Tax |
- |
(58.46) |
Tax Expense of discontinued operations |
- |
(17.75) |
Profit / (Loss) from discontinued operations after Tax |
- |
(40.71) |
Profit for the year |
344.72 |
160.44 |
Appropriations for the year: |
||
Dividend on Equity Shares (excluding Tax) Tax on dividends Dividend received on share held by beneficiary trust1 |
(17.93) (3.74) 5.59 |
(14.35) (2.99) 4.48 |
* for more information please refer note 45 of the notes to accounts of standalone financial statement
Financial Performance
The brief highlights of the Companyâs performance (Standalone) for the fi nancial year ended March 31, 2018* are:-
Net Revenue of the Company for FY 2018 of Rs.5054.53 crores was higher by 22.19% over the last year (Rs.4,136.62 crores in FY 2017)
- Profit from continuing operations Before Interest, Depreciation, Amortisation, Exceptional Items & Tax stood at Rs.616.63 crores
- Profit from continuing operations Before Tax (PBT) stood at Rs.508.82 crores and Profit from continuing operations After Tax (PAT) stood at Rs.344.72 crores Net profit for the period stood at Rs.344.72 crores.
- Your Company sold 80,417 tractors during the year under review.
Management Discussion & Analysis
In terms of the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred as the âSEBI Listing Regulationsâ ), the Management Discussion and Analysis is set out in this Annual Report and provides a detailed analysis on the performance of individual businesses and their outlook.
Dividend
Based on the Companyâs performance, your Directors are pleased to recommend, for approval of the members, a Dividend of Rs.2.00 per Equity Share (20%) on the face value of Rs.10/- each, aggregating Rs.24.52 crores (exclusive of tax on dividend) for the financial year ended March 31, 2018. The dividend payout is subject to the approval of members at the ensuing Annual General Meeting (AGM).
The dividend payout for the period under review has been formulated in accordance with shareholdersâ aspirations and the Companyâs Dividend Distribution Policy to pay sustainable dividend linked to long-term growth objectives of the Company to be met by internal cash accruals.
Employee Stock Option Scheme
The particulars with regard to the Employees Stock Options as on March 31, 2018 as required to be disclosed pursuant to the provisions of Clause 12 of SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, as amended, are enclosed at Annexure - A and forms an integral part of this Report.
Directors
In accordance with the provisions of Companies Act, 2013 (hereinafter referred as âthe Actâ) and Articles of Association of the Company, Mr. Hardeep Singh, Director and Mr. G.B. Mathur, Director retires by rotation at the ensuing AGM and being eligible, offers themselves for re-appointment.
The Company has on the recommendation of Nomination and Remuneration Committee and in accordance with the provisions of the Act and SEBI Listing Regulations co-opted Mr. Ravi Narain as an Additional and Independent Director on the Board of the Company with effect from September 21, 2017 subject to approval of the members at the AGM. He shall hold office as Director of the Company upto the date of ensuing AGM and is eligible for appointment as a Director.
The Board of Directors, in their meeting held on May 17, 2018, had recommended the re-appointment of Dr. Sutanu Behuria as an Independent Director for a further period of 5 years for approval of members of the Company at the ensuing AGM.
Pursuant to the provisions of Section1 49 and other applicable provisions of the Act, your directors are seeking appointment of Mr. Ravi Narain as an Independent Director for a period of 3 years and re-appointment of Dr. Sutanu Behuria as an Independent Director for a period of 5 years.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet with criteria of independence as prescribed under sub-section (6) of Section 149 of the Act and under Regulation 16(1)(b) of SEBI Listing Regulations. The policy for selection of directors and determining directors independence is attached as Annexure - B and forms an integral part of this Report.
The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the Non-Executive and Executive Directors. In accordance with the Policy, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors. The remuneration policy for directors, key managerial personnel and other employees is annexed as Annexure - C and forms an integral part of this Report.
The brief resumes and other disclosures relating to the Directors who are proposed to be appointed/ re-appointed, as required to be disclosed pursuant to Regulation 36 of the SEBI Listing Regulations and Clause 1.2.5 of the Secretarial Standard 2 are given in the Annexure to the Notice of the 72nd AGM.
Your Directors recommend the appointment/ re-appointment of the above said Directors at the ensuing AGM.
The Company has devised a process where various presentations/ programs are being conducted to make them familiarise with various developments at Industry level, new business initiatives and organisation strategies etc.
The details of programme for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company - www.escortsgroup.com.
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.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 are provided as Annexure - D and forms an integral part of this Report.
Corporate Governance
Corporate Governance is about maximising shareholders value, ethically and sustainable. At Escorts the goal of corporate governance is to ensure fairness for every stakeholder. We believe strong corporate governance is critical to enhancing and retaining investor trust. We also endeavor to enhance long term shareholder value and respect minority rights in all our business decisions.
Your Company reaffirms its commitment to the good corporate governance practices and has adopted the Code of Conduct which has set out the systems, processes and policy conforming to international standards. Pursuant to Regulation 34(3) of the SEBI Listing Regulations, Corporate Governance Report and Auditorsâ Certificate regarding compliance of conditions of Corporate Governance are enclosed as Annexure - E and forms an integral part of this Report.
Corporate Social Responsibility (CSR)
The key philosophy of all CSR initiatives of the Company is to make CSR a key business process for sustainable development of the society. The initiatives aim at enhancing welfare measures of the society based on the immediate and long term social and environmental consequence of its activities.
The Company intends to undertake other need based initiatives in compliance with Schedule VII of the Act.
The CSR Policy may be accessed on the Companyâs website www. escortsgroup.com under Investors Information Section. During the year, the Company has spent Rs.3.25 crores (2.11%) of the average net profits of last three financial years on CSR activities.
The Annual Report on CSR activities is enclosed as Annexure - F and forms an integral part of this Report.
Indian Accounting Standards
The Ministry of Corporate Affairs (MCA) on February 16, 2015, notified that Indian Accounting Standards (Ind AS) are applicable to certain classes of companies from April 1, 2016 with a transition date of April 1, 2015. Ind AS has replaced the previous Indian GAAP prescribed under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. Ind AS is applicable to the Company from April 1, 2016.
Consolidated Financial Statements
The Consolidated Financial Statements have been prepared in accordance with the Act and Indian Accounting Standard (IND AS) - 1 1 0 applicable to the Consolidated Financial Statements read with IND AS-28 on Accounting for Investments in Associates and IND AS-31 on Financial Reporting of Interests in Joint Ventures issued by The Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements along with the Auditorsâ Report thereon are annexed with this Report.
Subsidiaries, Joint Ventures and Associate Companies
The statement in Form AOC-1 containing salient features of financial statements of subsidiaries, associate and joint venture companies prepared in accordance with Section 129 of the Act read with Rule 5 of Companies (Accounts) Rules, 2014, forms an integral part of this Report. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiaries, associate and joint venture companies.
During the financial year ended on March 31, 2018, the Company has infused additional equity in Escorts Securities Limited and Escorts Crop Solutions Limited, subsidiaries of the Company. The Company has divested its investment in Escorts Asset Management Limited, the Board Controlled Subsidiary of the Company. The details of the said investment/ disinvestment is provided in the note 6(i) of the Notes to Accounts of the Standalone Financial Statements of the Company.
The Company will make available the Annual Accounts of its subsidiaries, associate and joint venture companies and related information to the members of the Company who may be interested in obtaining the same. The annual accounts of its subsidiaries, associate and joint venture companies will also be kept open for inspection at the Registered Office of the Company.
Contracts and Arrangements with Related Parties
All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on the materiality of related party transactions.
The particulars of contracts or arrangement with related parties referred to in Section 188(1) of the Act in the prescribed Form AOC-2 is appended as Annexure - G to this report.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companyâs website www.escortsgroup.com under Investors Information Section.
Your Directors draw attention of the members to Note 47 in the notes to accounts in the standalone financial statement and to Note 46 in the notes to accounts in the consolidated financial statement which sets out related party disclosures.
Auditors and Auditorsâ Report Statutory Auditors
Pursuant to the provisions of Section 1 39 of the Act read with Companies (Audit and Auditors) Rules, 2014, the shareholders of the Company in the 71st AGM held on September 21, 2017 had appointed M/s Walker Chandiok & Co LLP, Chartered Accountants, New Delhi (Firm Registration No. 001076N/ N500013) as Statutory Auditors of the Company for a period of 5 years i.e. upto the conclusion of AGM to be held in the year 2022. The first year of audit was of the fi nancial statements for the year ending March 31, 2018, which included the audit of the quarterly financial statements for the year.
In accordance with the Companies (Amendment) Act, 2017 enforced on May 7, 2018 by MCA, the appointment of Statutory Auditors is not required to be ratified by members at every AGM.
The observations and comments given by M/s. Walker Chandiok & Co LLP, Chartered Accountants, Statutory Auditors in their report read together with notes to Accounts for the year ended March 31, 2018 are self-explanatory and hence, do not call for any further comments under Section 134 of the Act.
Cost Auditors
The Board of Directors of the Company has re-appointed M/s. Ramanath Iyer and Co., Cost Accountants, New Delhi (Firm Registration No. 000019), Cost Auditors of the Company under Section 148 of the Act, for conducting the audit of cost records for the fi nancial year 2018-19.
The due date of filing the Cost Audit Report for the year ended on March 31, 2017 was September 30, 2017 and the same has been filed on September 29, 2017.
Secretarial Auditors
The Board of Directors of the Company had appointed M/s. Jayant Gupta and Associates, Practicing Company Secretary to conduct secretarial audit of the Company for the financial year 2017-18.
The Secretarial Audit Report for the financial year ended March 31, 2018 is enclosed as Annexure - H and forms an integral part of this Report.
The observations and comments given by the Secretarial Auditors in their report are self-explanatory and hence, do not call for any further comments under Section 204(3) of the Act.
The Board has also re-appointed M/s. Jayant Gupta and Associates, Practicing Company Secretary to conduct secretarial audit of the Company for the financial year 2018-19.
Risk Management
The Risk Management Committee of the Board has been entrusted with the responsibility to assist the Board in (a) overseeing and approving the Companyâs enterprise wide risk management framework; and (b) Overseeing that all the risks that the organisation faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks.
Internal Financial Control and its Adequacy
The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Companyâs policies, the safeguarding of its assets, the prevention and detection of fraud, error reporting mechanisms, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.
The Company has in place adequate internal financial controls for ensuring the orderly and efficient conduct of its business. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.
Disclosures Meetings of the Board
Seven meetings of the Board of Directors were held during the year. For further details, please refer Report on Corporate Governance annexed as Annexure - E to this Report.
Audit Committee
For constitution and other details of the Audit Committee, please refer Report on Corporate Governance annexed as Annexure-E to this Report.
All the recommendations made by the Audit Committee were accepted by the Board.
Extracts of Annual Return
In terms of provisions of Section 92 of the Act read with the Companies (Management and Administration) Rules, 2014, the extracts of Annual Return in Form MGT-9 is enclosed as Annexure - I and forms an integral part of this Report.
Vigil Mechanism
The Company has adopted a Whistle Blower Policy establishing vigil mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Companyâs Code of Conduct. The mechanism provides for adequate safeguards against victimization of effected Director(s| and Employee(s). In exceptional cases, Directors and Employees have direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company has been denied access to the Audit Committee. The Whistle Blower Policy is available on Companyâs website.
Registrar and Share Transfer Agent
The Share Transfer and related activities are being carried out by M/s Karvy Computershare Private Limited, Registrar and Share Transfer Agents from the following address:-
M/s Karvy Computershare Private Limited Karvy Selenium, Tower B, Plot No. 31-32,
Gachibowli, Financial District, Nanakramguda, Hyderabad-500032, Telangana
All correspondence may kindly be sent to the above address only.
General Reserve
Rs.217.09 crores have been credited/ appropriated in General Reserves for the amount received by the Company as Beneficiary of Escorts Benefit and Welfare Trust on account of sale of treasury stock.
Particulars of Loans given, Investments made, Guarantees given and Securities provided
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient has been given elsewhere in the Annual Report and forms an integral part of this Report.
Particulars of Employees and related disclosures
In terms of provisions of Section 197(12) of the Act, read with 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 prescribed limits are available with the Company Secretary. Having regard to the provisions of Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company and the same will be furnished on request.
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 annexed as Annexure - J and forms an integral part of this Report.
Public Deposits
The Company has not accepted/ renewed any Fixed Deposit during the financial year and as such no amount of principal or interest was outstanding as of the Balance Sheet date.
Investor Education and Protection Fund (IEPF)
Pursuant to the applicable provisions of the Companies Act, 2013, read with IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (âthe Rulesâ), all unpaid or unclaimed dividends are required to be transferred by the company to the IEPF established by the Central Government, after the completion of seven years. Further, according to the rules, the shares in respect of which dividend has not been paid or claimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account created by the IEPF Authority. Accordingly, the Company has transferred the unclaimed and unpaid dividends and shares as per the requirements of the IEPF rules, details of which are provided on our website.
As on March 31, 2018, no unclaimed deposits are pending for transfer to Investor Education and Protection Fund.
Credit Rating
During the year, the credit rating of the Company have been upgraded as under:
ICRA Limited has upgraded the long-term rating from âAâ to âA â and short-term rating from âA1â to âA1 â with Positive outlook.
India Ratings has upgraded the long-term rating from âIND Aâ to âIND A â and short-term rating from âA1â to âA1 â with upward change in outlook from âSTABLEâ to âPOSITIVEâ
Material Changes and Commitment affecting the financial position
There are no material changes affecting the financial position of the Company subsequent to the close of the Fiscal 2018 till the date of this report.
Prevention of Sexual Harassment
The Company 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. The Company is committed to providing equal opportunities without regard to their race, caste, sex, religion, colour, nationality, disability, etc. All women associates (permanent, temporary, contractual and trainees) as well as any women visiting the Companyâs office premises or women service providers are covered under this Policy. All employees are treated with dignity with a view to maintain a work environment free of sexual harassment whether physical, verbal or psychological.
Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Secretarial Standards
The Company is in compliance with all the applicable Secretarial Standards.
Business Responsibility Report (BRR)
The SEBI Listing Regulations mandate the inclusion of BRR as part of the Annual Report for top 500 listed entities based on market capitalization.
In compliance with the SEBI Listing Regulations, the BRR describing the initiatives taken by the Company from an environmental, social and governance perspective is enclosed as Annexure - K and forms an integral part of this Report.
Directorsâ Responsibility Statement
Pursuant to the requirement under Section 134(5) of the Act, with respect to Directorsâ Responsibility Statement, your Directors, to the best of their knowledge and ability, hereby confirm that:
(i) in the preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed alongwith proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit and loss of the Company for the year ended on that date;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the annual accounts for financial year ended March 31, 2018 on a âgoing concernâ basis;
(v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
(vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
General
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
1 . Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-ti me Directors of the Company receive any remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companyâs operations in future. However, members attention is drawn to note 34 on Commitments and Contingencies in the Notes forming part of the financial statement.
Acknowledgement
Your Directors would like to express their sincere appreciation of the positive co-operation received from the Central Government, the Government of Haryana and Uttaranchal and Karnataka, Financial Institutions and the Companyâs Bankers, Customers, Dealers and all other business associates.
The Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers, workers, employee unions and staff of the Company resulting in the successful performance of the Company during the year.
The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.
For and on behalf of the Board of Directors
Sd/-
Place: Faridabad RAJAN NANDA
Date: May 17, 2018 Chairman & Managing Director
Mar 31, 2017
The Directors have pleasure in presenting the Seventy First Annual Report and the Companyâs audited financial statements (standalone and consolidated) for the financial year ended on March 31, 2017.
Financial Results
Particulars |
Year ended on March 31, 2017 |
Year ended on March 31, 2016 |
Gross Revenue |
4,211.04 |
3,494.49 |
Excise Duty |
74.42 |
71.91 |
Net Revenue |
4,136.62 |
3,422.58 |
Profit from continuing operations before Interest, Depreciation, Exceptional terns & Tax |
367.17 |
232.55 |
Finance Cost |
31.11 |
49.54 |
Profit from continuing operations before Depreciation, Exceptional Items & Tax. |
336.06 |
183.01 |
Depreciation & Amortisation |
63.07 |
57.50 |
Profit from continuing operations before Exceptional Items b Tax |
272.99 |
125.51 |
Exceptional Item |
(3.76) |
12.29 |
Profit from continuing operations before Tax |
276.75 |
113.22 |
Tax. Expense |
75.60 |
12.50 |
Profit from continuing operations after Tax. |
201.15 |
100.72 |
Profit/(Loss) from discontinued operations before tax |
(58.46) |
(25.96) |
Tax. expense of discontinued operations |
(17.75) |
(8.99) |
Net profit/(loss) from discontinued operations after tax |
(40.71) |
(16.97) |
Net profit for the period |
160.44 |
83.75 |
Appropriations for the year:- |
||
Di vi cl ends |
(14.35) |
(14.30) |
Tax. on Dividends |
(2.99) |
(2.99) |
Dividend received on shares held by beneficiary trust* |
4.48 |
4.48 |
* for more information please refer note 45 of the notes to accounts of standalone financial statement
Financial Performance
The brief highlights of the Companyâs performance (standalone) for the financial year ended March 31, 2017 are:-
- Net Revenue of the Company for FY 2017 of Rs.4,136.62 cr. was higher by 20.86% over the last year (Rs.3,422.58 cr. in FY 2016).
- Profit from continuing operations Before Interest, Depreciation, Amortisation, Exceptional Items & Tax stood at Rs.367.17 Cr.
- Profit from continuing operations Before Tax (PBT) stood at Rs.276.75 Cr and Profit from continuing operations After Tax (PAT) stood at Rs.201.15 Cr. Net profit for the period stood at Rs.160.44 Cr.
- Earnings per share is of Rs.13.43 for the year under review.
- Your Company sold 63,786 tractors during the year under review.
Management Discussion & Analysis
Management Discussion & Analysis which forms an integral part of this Annual Report provides a detailed analysis on the performance of individual businesses and their outlook.
Dividend
Your Directors are pleased to recommend a Dividend of Rs.1.50 per Equity Share (15%) on the face value of Rs.10/- each, aggregating Rs.18.39 Cr. (exclusive of tax on dividend) for the financial year ended March 31, 2017. The dividend payout is subject to the approval of members at the ensuing Annual General Meeting (AGM).
The dividend, if approved at the ensuing AGM, will be paid to members whose names appear in the Register of Members as on September 8, 2017, in respect of shares held in dematerialized form and members whose names are furnished by National Securities Depository Limited and Central Depository Services (India) Limited, as beneficial owners as at that date.
The dividend payout for the period under review has been formulated in accordance with shareholdersâ aspirations and the Companyâs Dividend Distribution Policy to pay sustainable dividend linked to long-term growth objectives of the Company to be met by internal cash accruals.
Employee Stock Option Scheme
The particulars with regard to the Employees Stock Options as on March 31, 2017 as required to be disclosed pursuant to the provisions of Clause 12 of SEBI (Employees Stock Option Scheme and Employees Stock Purchase Scheme) Guidelines, 1999, as amended, are enclosed at Annexure -A and forms an integral part of this Report.
Directors
In accordance with the provisions of Companies Act, 2013 (hereinafter referred as âthe Actâ) and Articles of Association of the Company, Ms. Nitasha Nanda, Whole-time Director and Mr. G.B. Mathur, Director retires by rotation at the ensuing AGM and being eligible, offers themselves for reappointment.
The Board of Directors, in their meeting held on May 29, 2017, had recommended the re-appointment and remuneration of Mr. Nikhil Nanda as Managing Director for a further period of 5 years w.e.f September 19, 2017, subject to the approval of the shareholders in the ensuing Annual General Meeting. His appointment is appropriate and in the best interest of the Company.
Dr. S.A. Dave had resigned as Director of the Company w.e.f. September 20, 2016. The Board places on record its warm appreciation for the valuable guidance and services rendered by Dr. Dave during his tenure with the Company.
The Board of Directors, in their meeting held on May 29, 2017, had recommended the re-appointment of Mr. PH. Ravikumar and Mrs. Vibha Paul Rishi as Independent Directors for a further period of 5 years for approval of members of the Company at the ensuing AGM.
Pursuant to the provisions of Section 149 and other applicable provisions of the Act, your directors are seeking re-appointment of Mr. PH. Ravikumar and Mrs. Vibha Paul Rishi as Independent Directors for a period of 5 years.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet with criteria of independence as prescribed under sub-section (6) of Section 149 of the Act and under Regulation 16(l)(b) of SEBI (Listing Obligations and Disclosures Requirements) Regulation, 2015 (hereinafter referred as âthe Listing Regulationsâ). The policy for selection of directors and determining directors independence is attached as Annexure - B and forms an integral part of this Report.
The Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which includes criteria for performance evaluation of the Non-Executive and Executive Directors. In accordance with the Policy, a process of evaluation was followed by the Board for its own performance and that of its Committees and individual Directors. The remuneration policy for directors, key managerial personnel and other employees is annexed as Annexure - C and forms an integral part of this Report.
The brief resumes and other details relating to the Directors who are proposed to be appointed/ re-appointed, as required to be disclosed under the Listing Regulations is given in the Annexure to the Notice of the 71st AGM.
Your Directors recommend the appointment/ reappointment of the above said Directors at the ensuing AGM.
The Company has devised a process where various presentations/ programs are being conducted to make them familiarise with various developments at Industry level, new business initiatives and organisation strategies etc.
The details of programme for familiarisation of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company - www. escortsg rou p. com.
Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Act read with Companies (Accounts) Rules, 2014 are provided as Annexure - D and forms an integral part of this Report.
Corporate Governance
Your Company reaffirms its commitment to the good corporate governance practices and has adopted the Code of Conduct which has set out the systems, processes and policy conforming to international standards. Pursuant to Regulation 34(3) of the Listing Regulations 2015, Corporate Governance Report and Auditorsâ Certificate regarding compliance of conditions of Corporate Governance are enclosed as Annexure - E and forms an integral part of this Report.
Corporate Social Responsibility (CSR)
The key philosophy of all CSR initiatives of the Company is to make CSR a key business process for sustainable development of the society. The initiatives aim at enhancing welfare measures of the society based on the immediate and long term social and environmental consequence of its activities.
The Company intends to undertake other need based initiatives in compliance with Schedule VII of the Act.
The CSR Policy may be accessed on the Companyâs website www.escortsgroup.com under Investors Information Section. During the year, the Company has spent Rs.3.30 Cr. (1.93% of the average net profits of last three financial years) on CSR activities.
The Annual Report on CSR activities is enclosed as Annexure - F and forms an integral part of this Report.
Indian Accounting Standards
The Ministry of Corporate Affairs (MCA) on February 16, 2015, notified that Indian Accounting Standards (Ind AS) are applicable to certain classes of companies from April 1, 2016 with a transition date of April 1, 2015. Ind AS has replaced the previous Indian GAAP prescribed under Section 133 of the Companies Act, 2013 (âthe Actâ) read with Rule 7 of the Companies (Accounts) Rules, 2014. Ind AS is applicable to the Company from April 1, 2016.
The reconciliations and descriptions of the effect of the transition from previous GAAP to Ind AS have been set out in Note 49 in the notes to accounts in the standalone financial statement and in Note 49 in the notes to accounts in the consolidated financial statement.
Consolidated Financial Statements
The Consolidated Financial Statements have been prepared in accordance with the Act and Indian Accounting Standard (IND AS) - 110 applicable to the Consolidated Financial Statements read with IND AS-28 on Accounting for Investments in Associates and IND AS-31 on Financial Reporting of Interests in Joint Ventures issued by The Institute of Chartered Accountants of India. The Audited Consolidated Financial Statements along with the Auditorsâ Report thereon are annexed with this Report.
Subsidiaries, Joint Ventures and Associate Companies
The statement containing salient features of financial statements of subsidiaries, associate and joint venture companies prepared in accordance with Section 129 of the Act read with Rule 5 of Companies (Accounts) Rules, 2014, forms an integral part of this Report. The Consolidated Financial Statements presented by the Company include the financial results of its subsidiaries, associate and joint venture companies.
The Company will make available the Annual Accounts of its subsidiaries, associate and joint venture companies and related information to the members of the Company who may be interested in obtaining the same. The annual accounts of its subsidiaries, associate and joint venture companies will also be kept open for inspection at the Registered Office of the Company.
Contracts and Arrangements with Related Parties
All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an armâs length basis. During the year, the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on the materiality of related party transactions.
The particulars of contracts and arrangement with related parties under Section 188(1) of the Act in Form AOC-2 is enclosed as Annexure - G.
The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board may be accessed on the Companyâs website www. escortsgroup.com under Investors Information Section.
Your Directors draw attention of the members to Note 48 in the notes to accounts in the standalone financial statement and to note 47 in the notes to accounts in the consolidated financial statement which sets out related party disclosures.
Auditors and Auditorsâ Report Statutory Auditors
Pursuant to the provisions of Section 139 of the Act read with Companies (Audit and Auditors) Rules, 2014, M/s. S.N. Dhawan & Co. LLP, Chartered Accountants, Delhi (Firm Registration No. 000050N/N50004) Statutory Auditors of the Company, hold office till the conclusion of the ensuing AGM and are not eligible for re-appointment.
M/s. Walker Chandiok & Co LLP, Chartered Accountants, New Delhi (Firm Registration No. 001076N/ N500013) have shown their interest to act as Statutory Auditors of the Company for a period of 5 years subject to the ratification of their appointment at every AGM.
The Company has received letter of confirmation from M/s. Walker Chandiok & Co LLP, Chartered Accountants to the effect that their appointment, if made, would be within the prescribed limits under Section 139 of the Act and that they are not disqualified for such appointment within the meaning of Section 141 of the Act, read with Companies (Audit and Auditors) Rules, 2014.
The observations and comments given by M/s. S.N. Dhawan & Co. LLP, Chartered Accountants, Statutory Auditors in their report read together with notes to Accounts for the year ended March 31, 2017 are self-explanatory and hence, do not call for any further comments under Section 134 of the Act.
Cost Auditors
The Board of Directors of the Company has re-appointed M/s. Ramanath Iyer and Co., Cost Accountants, New Delhi (Firm Registration No. 000019), Cost Auditors of the Company under Section 148 of the Act, for conducting the audit of cost records for the financial year 2017-18.
The due date of filing the Cost Audit Report for the year ended on March 31, 2016 was September 30, 2016 and the same has been filed on September 28, 2016.
Secretarial Auditors
The Board of Directors of the Company had appointed M/s. Jayant Gupta and Associates, Practicing Company Secretary to conduct secretarial audit of the Company for the financial year 2016-17. The Secretarial Audit Report for the financial year ended March 31, 2017 is enclosed as Annexure - H and forms an integral part of this Report.
The observations and comments given by the Secretarial Auditors in their report are self-explanatory and hence, do not call for any further comments under Section 204(3) of the Act.
The Board has also re-appointed M/s. Jayant Gupta and Associates, Practicing Company Secretary to conduct secretarial audit of the Company for the financial year 2017-18.
Risk Management
A Risk Management Committee which has been entrusted with the responsibility to assist the Board in (a) overseeing and approving the Companyâs enterprise wide risk management framework; and (b) Overseeing that all the risks that the organisation faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The Risk Management Policy was reviewed and approved by the Committee.
Internal Financial Controls
The Company has in place adequate internal financial controls for ensuring the orderly and efficient conduct of its business. During the year, such controls were tested and no reportable material weakness in the design or operation was observed.
Disclosures Meetings of the Board
Five meetings of the Board of Directors were held during the year. For further details, please refer Report on Corporate Governance annexed as Annexure - E to this Report.
Audit Committee
For constitution and other details of the Audit Committee, please refer Report on Corporate Governance annexed as Annexure-E to this Report.
All the recommendations made by the Audit Committee were accepted by the Board.
Extracts of Annual Return
in terms of provisions of Section 92 of the Act read with the Companies (Management and Administration) Rules, 2014, the extracts of Annual Return in Form MGT-9 is enclosed as Annexure - I and forms an integral part of this Report.
Vigil Mechanism
The Company has a vigil mechanism for Directors and Employees to report their concerns about unethical behavior, actual or suspected fraud or violation of the Companyâs Code of Conduct. The mechanism provides for adequate safeguards against victimization of effected Director(s) and Employee(s). In exceptional cases, Directors and Employees have direct access to the Chairman of the Audit Committee. The Whistle Blower Policy is available on Companyâs website.
Registrar and Share Transfer Agent
The Share Transfer and related activities are being carried out by M/s Karvy Computershare Private Limited, Registrar and Share Transfer Agents (Karvy RTA), from the following address: -
M/s Karvy Computershare Private Limited Karvy Selenium, Tower B, Plot No. 31-32, Gachibowli, Financial District, Nanakramguda, Hyderabad-500032, Telengana
All correspondence may kindly be sent to the above address only.
Particulars of Loans given. Investments made. Guarantees given and Securities provided
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient has been given elsewhere in the Annual Report and forms an integral part of this Report.
Particulars of Employees and related disclosures
In terms of provisions of Section 197(12) of the Act, read with 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 prescribed limits are available with the Company Secretary. Having regard to the provisions of Section 136(1) of the Act, the Annual Report excluding the aforesaid information is being sent to the members of the Company. Any member interested in obtaining such particulars may write to the Company Secretary of the Company and the same will be furnished on request.
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 annexed as Annexure - J and forms an integral part of this Report.
Public Deposits
The Company has not accepted/ renewed any Fixed Deposit during the financial year.
Transfer to Investor Education and Protection Fund
Pursuant to the provisions of Section 205A(5) of the Act, the dividend which remained unclaimed or unpaid for a period of seven years has been transferred by the Company, from time to time on due dates to the Investor Education and Protection Fund.
As on March 31, 2017, no unclaimed deposits are pending for transfer to Investor Education and Protection Fund.
Divestment of Auto Products Business
During the year, the Company has divested its OEM & Export Business of Auto Product Division as a part of the planned strategic reorientation of the business to focus on core verticals in the Agri-Machinery, Construction Equipment and Railway Equipment segments.
Credit Rating
During the year, the credit rating of the Company have been upgraded as under:
India Ratings has upgraded the long-term rating from 1ND A- toâIN DAâ.
ICRA Limited has upgraded the long-term rating from âA-â to âAâ with upward change in outlook from âSTABLEâ to âPOSITIVEâ.
Business Responsibility Report
As stipulated under the Listing Regulations, the Business Responsibility Report describing the initiatives taken by the Company from an environmental, social and governance perspective can be accessed at the website of the Company www.escortsgroup.com under Investor Information Section.
Directorsâ Responsibility Statement
Pursuant to the requirement under Section 134(5) of the Act, with respect to Directorsâ Responsibility Statement, your Directors hereby state that:
(i) in the preparation of the annual accounts for the year ended March 31, 2017, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed alongwith proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017 and of the profit and loss of the Company for the year ended on that date;
(iii) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the annual accounts for financialyear ended March 31, 2017 on a âgoing concernâ basis;
(v) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and
(vi) the Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
General
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-time Directors of the Company receive any remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companyâs operations in future.
Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Acknowledgement
Your Directors would like to express their sincere appreciation of the positive co-operation received from the Central Government, the Government of Haryana and Uttaranchal, Financial Institutions and the Companyâs Bankers, Customers and Dealers.
The Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers, workers and staff of the Company resulting in the successful performance of the Company during the year.
The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.
For and on behalf of the Board of Directors
Sd/-
Place: Faridabad RAJAN NANDA
Date: May 29, 2017 Chairman & Managing Director
Mar 31, 2016
Dear Shareholder''s
The Directors have pleasure in presenting the Seventieth Annual Report
for the year ended on March 31, 2016.
Financial Results
(Rs. Cr)
Particulars For the
year ended on For the
year ended on
March 31,2016 March 31,2015
Gross Revenue 3610.70 4122.29
Excise Duty 80.70 75.81
Net Revenue 3530.00 4046.48
Profit Before Interest,
Depreciation, Amortisation,
Exceptional Items & Tax 217.78 222.05
Finance Cost 51.29 57.11
Profit Before Depreciation,
Amortisation, Exceptional Items & Tax 166.49 164.94
Depreciation and Amortisation 60.11 66.06
Profit Before Exceptional Items & Tax 106.38 98.88
Exceptional Income 14.51 30.63
Profit Before Tax 91.87 68.25
Tax 2.49 (6.46)
Profit After Tax 89.38 74.71
Financial Performance
The brief highlights of the Company''s performance for the financial
year ended March 31, 2016 are:-
- Net Revenue of the Company for the Financial Year 2015-16 was Rs.3530
Cr.
- Profit Before Interest, Depreciation, Amortisation, Exceptional Items
& Tax stood at Rs.217.78 Cr.
- Profit Before Tax (PBT) stood at Rs.91.87 Cr and Profit After Tax
(PAT) stood at Rs.89.38 Cr. Earnings per share is of Rs.7.49 for the
year under review.
- Your Company sold 51455 tractors during the year under review.
Management Discussion & Analysis
Management Discussion & Analysis which forms an integral part of this
Annual Report provides a detailed analysis on the performance of
individual businesses and their outlook.
Dividend
Your Directors are pleased to recommend a Dividend of Rs.1.20 per
Equity Share (12%) on the face value of Rs.10 each, aggregating
Rs.14.71 Cr. (exclusive of tax on dividend) for the financial year
ended March 31, 2016. The dividend payout is subject to the approval of
members at the ensuing Annual General Meeting (AGM).
The dividend, if approved at the ensuing AGM, will be paid to members
whose names appear in the Register of Members as on September 9, 2016;
in respect of shares held in dematerialised form, it will be paid to
members whose names are furnished by National Securities Depository
Limited and Central Depository Services (India) Limited, as beneficial
owners as on that date.
The dividend payout for the period under review has been formulated in
accordance with shareholders'' aspirations and the Company''s policy to
pay sustainable dividend linked to long-term growth objectives of the
Company to be met by internal cash accruals.
Employee Stock Option Scheme
The particulars with regard to the Employees Stock Options as on March
31, 2016 as required to be disclosed pursuant to the provisions of
Clause 12 of SEBI (Employees Stock Option Scheme and Employees Stock
Purchase Scheme) Guidelines, 1999, as amended, are enclosed at Annexure
- A and forms an integral part of this Report.
Directors
In accordance with the provisions of Companies Act, 2013 (hereinafter
referred as "the Act") and Articles of Association of the Company, Mr.
Hardeep Singh and Mr. G.B. Mathur, Directors retires by rotation at the
ensuing AGM and being eligible, offers themselves for re-appointment.
The Board of Directors, in their meeting held on May 25, 2016, co-opted
Mr. D J Kakalia as Additional Director on the Board of the Company. He
shall hold office as Director of the Company upto the date of ensuing
AGM.
Mr. S.C. Bhargava had resigned as Director of the Company w.e.f. March
29, 2016. The Board places on record its appreciation for the valuable
guidance and services rendered by him during his tenure with the
Company.
Pursuant to the provisions of Section 149 and other applicable
provisions of the Act, your directors are seeking appointment of Mr. D
J Kakalia as Independent Director for a period of 3 years. The Company
has received requisite notice in writing from members proposing the
appointment of Mr. D J Kakalia as Director of the Company
The Company has received declarations from all the Independent
Directors of the Company confirming that they meet with criteria of
independence as prescribed under sub-section (6) of Section 1 49 of the
Act and SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (hereinafter referred as "the Listing Regulations").
The policy for selection of directors and determining directors
independence is attached as Annexure - B and forms an integral part of
this Report.
The Company has devised a Policy for performance evaluation of
Independent Directors, Board, Committees and other individual Directors
which includes criteria for performance evaluation of the Non-Executive
and Executive Directors. In accordance with the Policy, a process of
evaluation was followed by the Board for its own performance and that
of its Committees and individual Directors. The remuneration policy for
directors, key managerial personnel and other employees is annexed as
Annexure - C and forms an integral part of this Report.
The brief resumes and other details relating to the Directors who are
proposed to be appointed/ re-appointed, as required to be disclosed
under the Listing Regulations is given in the Annexure to the Notice of
the 70th AGM.
Your Directors recommend the appointment/ re-appointment of the above
said Directors at the ensuing AGM.
The details of programme for familiarisation of Independent Directors
with the Company, their roles, rights, responsibilities in the Company,
nature of industry in which the Company operates, business model of the
Company and related matters are put up on the website of the Company -
www. escortsgroup.com.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
The particulars relating to conservation of energy, technology
absorption, foreign exchange earnings and outgo, as required to be
disclosed under Section 134(3)(m) of the Act read with Companies
(Accounts) Rules, 2014 are provided as Annexure - D and forms an
integral part of this Report.
Corporate Governance
Your Company reaffirms its commitment to the good corporate governance
practices and has adopted the Code of Conduct which has set out the
systems, processes and policy conforming to international standards.
Pursuant to the Listing Regulations, Corporate Governance Report and
Auditors'' Certificate regarding compliance of conditions of Corporate
Governance are enclosed as Annexure - E and forms an integral part of
this Report.
Corporate Social Responsibility
The key philosophy of all CSR initiatives of the Company is to make CSR
a key business process for sustainable development of the society. The
initiatives aim at enhancing welfare measures of the society based on
the immediate and long term social and environmental consequence of its
activities.
The Company intends to undertake other need based initiatives in
compliance with Schedule VII of the Act.
The CSR Policy may be accessed on the Company''s website
www.escortsgroup.com under Investors Information Section. During the
year, the Company has spent Rs.1.16 Cr. (0.71% of the average net
profits of last three financial years) on CSR activities.
The Annual Report on CSR activities is enclosed as Annexure
- F and forms an integral part of this Report.
Consolidated Financial Statements
The Consolidated Financial Statements have been prepared in accordance
with the Act and Accounting Standard (AS) - 21 applicable to the
Consolidated Financial Statements read with AS-23 on Accounting for
Investments in Associates and AS-27 on Financial Reporting of Interests
in Joint Ventures issued by The Institute of Chartered Accountants of
India. The Audited Consolidated Financial Statements along with the
Auditors'' Report thereon are annexed with this Report.
Subsidiaries, Joint Ventures and Associate Companies
The statement containing salient features of financial statements of
subsidiaries, associate and joint venture companies prepared in
accordance with Section 129 of the Act read with Rule 5 of Companies
(Accounts) Rules, 2014, forms an integral part of this Report. The
Consolidated Financial Statements presented by the Company include the
financial results of its subsidiaries, associate and joint venture
companies.
The Company will make available the Annual Accounts of its
subsidiaries, associate and joint venture companies and related
information to the members of the Company who may be interested in
obtaining the same. The annual accounts of its subsidiaries, associate
and joint venture companies will also be kept open for inspection at
the Registered Office of the Company
Contracts and Arrangements with Related Parties
All contracts/ arrangements/ transaction entered by the Company during
the financial year with related parties were in the ordinary course of
business and on an arm''s length basis. During the year, the Company had
not entered into any contract/ arrangement/ transaction with related
parties which could be considered material in accordance with the
policy of the Company on the materiality of related party transactions.
The particulars of contracts and arrangement with related parties under
Section 188(1) of the Act in Form AOC-2 is enclosed as Annexure - G.
The Policy on materiality of related party transactions and dealing
with related party transactions as approved by the Board may be
accessed on the Company''s website www. escortsgroup.com under
Investors Information Section.
Your Directors draw attention of the members to Note 45 to the
financial statement which sets out related party disclosures.
Auditors and Auditors'' Report Statutory Auditors
M/s. S.N. Dhawan & Co., Chartered Accountants, Delhi (Firm Registration
No. 000050N) Statutory Auditors of the Company, hold office till the
conclusion of the ensuing AGM and are eligible for re-appointment.
The Company has received letter of confirmation from M/s. S. N. Dhawan
& Co., Chartered Accountants to the effect that their appointment, if
made, would be within the prescribed limits under Section 139 of the
Act and that they are not disqualified for such appointment within the
meaning of Section 141 of the Act read with Companies (Audit and
Auditors) Rules, 2014.
The observations and comments given by the Statutory Auditors in their
report read together with notes to Accounts are self-explanatory and
hence, do not call for any further comments under Section 134 of the
Act.
Cost Auditors
The Board of Directors of the Company has re-appointed M/s. Ramanath
Iyer and Co., Cost Accountants, New Delhi (Firm Registration No.
000019), Cost Auditors of the Company under Section 148 of the Act for
conducting the audit of cost records for the financial year 2016-17.
The due date of filing the Cost Audit Report for the year ended on
March 31, 2015 was September 30, 2015 and the same has been filed on
September 28, 2015.
Secretarial Auditors
The Board of Directors of the Company had appointed M/s. Jayant Gupta
and Associates, Practicing Company Secretary to conduct secretarial
audit of the Company for the financial year 2015-16. The Secretarial
Audit Report for the financial year ended March 31, 2016 is enclosed as
Annexure - H and forms an integral part of this Report.
The observations and comments given by the Secretarial Auditors in
their report are self-explanatory and hence, do not call for any
further comments under Section 204(3) of the Act.
The Board has also re-appointed M/s Jayant Gupta and Associates,
Practicing Company Secretary to conduct secretarial audit of the
Company for the financial year 2016-17.
Risk Management
A Risk Management Committee which has been entrusted with the
responsibility to assist the Board in (a) overseeing and approving the
Company''s enterprise wide risk management framework; and (b) overseeing
that all the risks that the organisation faces such as strategic,
financial, credit, market, liquidity, security, property, IT, legal,
regulatory, reputational and other risks have been identified and
assessed and there is an adequate risk management infrastructure in
place capable of addressing those risks. The Risk Management Policy was
reviewed and approved by the Committee.
Internal Financial Controls
The Company has in place adequate internal financial controls for
ensuring the orderly and efficient conduct of its business. During the
year, such controls were tested and no reportable material weakness in
the design or operation was observed.
Disclosures Meetings of the Board
Six meetings of the Board of Directors were held during the year. For
further details, please refer Report on Corporate Governance annexed as
Annexure - E to this Report.
Audit Committee
All the recommendations made by the Audit Committee were accepted by
the Board.
For constitution and other details of the Audit Committee, please refer
Report on Corporate Governance annexed as Annexure - E to this Report.
Extracts of Annual Return
In terms of provisions of Section 92 of the Act read with the Companies
(Management and Administration) Rules, 2014, the extracts of Annual
Return in Form MGT-9 is enclosed as Annexure - I and forms an integral
part of this Report.
Vigil Mechanism
The Company has a vigil mechanism for Directors and Employees to report
their concerns about unethical behavior, actual or suspected fraud or
violation of the Company''s Code of Conduct. The mechanism provides for
adequate safeguards against victimization of effected Director(s) and
Employee(s). In exceptional cases, Directors and Employees have direct
access to the Chairman of the Audit Committee. The Whistle Blower
Policy is available on Company''s website.
Shifting of Registered Office
The Company has shifted its registered office within the State of
Haryana from "SCO-232, First Floor, Sector - 20, Panchkula - 134 109"
to "15/5, Mathura Road, Faridabad - 121 003" w.e.f. January 30, 2016.
Registrar and Share Transfer Agent
The Company has appointed M/s Karvy Computershare Private Limited,
Karvy Selenium, Tower B, Plot No. 31-32, Gachibowli, Financial
District, Nanakramguda, Hyderabad - 500 032, Andhra Pradesh w.e.f
February 19, 2016 as Registrar and Share Transfer Agent.
Particulars of Loans given, Investments made, Guarantees given and
Securities provided
Particulars of loans given, investments made, guarantees given and
securities provided along with the purpose for which the loan or
guarantee or security is proposed to be utilised by the recipient has
been given elsewhere in the Annual Report and forms an integral part of
this Report.
Particulars of Employees and related disclosures
In terms of provisions of Section 197(12) of the Act read with 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 prescribed limits is
available with the Company Secretary. Having regard to the provisions
of Section 136(1) of the Act, the Annual Report excluding the aforesaid
information is being sent to the members of the Company. Any member
interested in obtaining such particulars may write to the Company
Secretary of the Company and the same will be furnished on request.
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
annexed as Annexure - J and forms an integral part of this Report.
Public Deposits
The Company has not accepted/ renewed any Fixed Deposit during the
financial year.
Transfer to Investor Education and Protection Fund
Pursuant to the provisions of Section 205A(5) of the Companies Act,
1956, the dividend which remained unclaimed or unpaid for a period of
seven years has been transferred by the Company, from time to time on
due dates to the Investor Education and Protection Fund.
As on March 31, 2016, no unclaimed deposits are pending for transfer to
Investor Education and Protection Fund.
Directors'' Responsibility Statement
Pursuant to the requirement under Section 1 34(5) of the Act with
respect to Directors'' Responsibility Statement, your Directors hereby
state that:
(i) in the preparation of the annual accounts for the year ended March
31, 2016, the applicable accounting standards read with requirements
set out under Schedule III to the Act, have been followed alongwith
proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at March 31, 2016 and of the profit and loss of the
Company for the year ended on that date;
(iii) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the annual accounts for financial year
ended March 31, 2016 on a ''going concern'' basis;
(v) the Directors have laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and are operating effectively; and
(vi) the Directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems are
adequate and operating effectively.
General
Your Directors state that no disclosure or reporting is required in
respect of the following items as there were no transactions on these
items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend,
voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the
Company under any scheme save and except ESOS referred to in this
Report.
4. Neither the Managing Director nor the Whole-time Directors of the
Company receive any remuneration or commission from any of its
subsidiaries.
5. No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern status and Company''s
operations in future.
Your Directors further state that during the year under review, there
were no cases filed pursuant to the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Acknowledgement
Your Directors would like to express their sincere appreciation of the
positive co-operation received from the Central Government, the
Government of Haryana, Karnataka and Uttaranchal, Financial
Institutions and the Company''s Bankers, Customers and Dealers.
The Directors also wish to place on record their deep sense of
appreciation for the commitment displayed by all executives, officers,
workers and staff of the Company resulting in the successful
performance of the Company during the year
The Board also takes this opportunity to express its deep gratitude for
the continued co-operation and support received from its valued
shareholders.
For and on behalf of the Board of Directors
Sd/-
Place: Faridabad RAJAN NANDA
Date: May 25, 2016 Chairman & Managing Director
Mar 31, 2015
Dear Members,
The Directors have pleasure in presenting the Sixty Ninth Annual
Report for the year ended on March 31, 2015.
Financial Results
Particulars For the period of For the period of
12 months ended 18 months ended
on March 31, 2015 on March 31, 2014
(Rs. Cr)
Gross Revenue 4122.29 6505.79
Excise Duty 75.81 132.87
Net Revenue 4046.48 6372.92
Profit Before Interest, 222.05 462.65
Depreciation,Amortisation,
Exceptional Items & Tax
Finance Cost 57.11 110.67
Profit Before Depreciation, 164.94 351.98
Amortisation,
Exceptional Items & Tax
Depreciation and Amortisation 66.06 83.22
Profit Before Exceptional 98.88 268.76
Items & Tax
Exceptional Income 30.63 (3.64)
Profit Before Tax 68.25 272.40
Tax (6.46) 27.51
Profit After Tax 74.71 244.89
Financial Performance
* The brief highlights of the Company''s performance for the financial
year ended March 31, 2015 are:-
*Net Revenue of the Company for the Financial Year 2014-15 was Rs.
4046.48 Cr.
*Profit Before Interest, Depreciation, Amortisation, Exceptional
Items & Tax stood at Rs. 222.05 Cr.
* Profit Before Tax (PBT) stood at Rs. 68.25 Cr and Profit After Tax
(PAT) stood at Rs. 74.71 Cr. Earnings per share is of Rs. 6.26 for the
year under review.
* Your Company sold 59779 tractors during the year under review.
Management Discussion & Analysis
Management Discussion & Analysis which forms an integral part of this
Annual Report provides a detailed analysis on the performance of
individual businesses and their outlook.
Dividend
Your Directors are pleased to recommend a Dividend of Rs. 1.20 per
Equity Share (12%) on the face value of Rs. 10 each, aggregating Rs.
14.71 Cr (exclusive of tax on dividend) for the financial year ended
March 31, 2015. The dividend payout is subject to the approval of
members at the ensuing Annual General Meeting (AGM).
The dividend, if approved at the ensuing AGM, will be paid to members
whose names appear in the Register of Members as on Friday, September
4, 2015; in respect of shares held in dematerialised form, it will be
paid to members whose names are furnished by National Securities
Depository Limited and Central Depository Services (India) Limited, as
beneficial owners as at that date.
The dividend payout for the period under review has been formulated in
accordance with shareholders'' aspirations and the Company''s policy to
pay sustainable dividend linked to long-term growth objectives of the
Company to be met by internal cash accruals.
Employee Stock Option Scheme
The particulars with regard to the Employees Stock Options as on March
31, 2015 as required to be disclosed pursuant to the provisions of
Clause 12 of SEBI (Employees Stock Option Scheme and Employees Stock
Purchase Scheme) Guidelines, 1999, as amended, are enclosed at Annexure
- A and forms an integral part of this Report.
Directors
In accordance with the provisions of Companies Act, 2013 and Articles
of Association of the Company, Mr. Hardeep Singh, Director retires by
rotation at the ensuing AGM and being eligible, offers himself for
re-appointment.
The Board of Directors, in their meeting held on January 16, 2015,
co-opted Dr. Sutanu Behuria, Ms. Nitasha Nanda and Mr. G.B. Mathur as
Additional Directors on the Board of the Company. They shall hold
office of Director(s) upto date of ensuing AGM.
Further, Ms. Nitasha Nanda, has been appointed as Whole-time Director
for a period of 5 years w.e.f. January 16, 2015, liable to retire by
rotation, subject to the approval of the shareholders in the ensuing
AGM. Her appointment is appropriate and in the best interest of the
Company.
Pursuant to the provisions of Section 149 and other applicable
provisions of the Companies Act, 2013, your Directors are seeking
appointment of Dr. Sutanu Behuria as Independent Director for a period
of 3 years. The Company has received requisite notices in writing from
members proposing Dr. Sutanu Behuria, Ms. Nitasha Nanda and Mr. G.B.
Mathur for appointment as Directors of the Company.
The Company has received declarations from all the Independent
Directors of the Company confirming that they meet with criteria of
independence as prescribed under sub-section (6) of Section 149 of the
Companies Act, 2013 and under Clause 49 of the Listing Agreement with
the Stock Exchanges. The policy for selection of directors and
determining directors independence is attached as Annexure - B and
forms an integral part of this Report.
The Company has devised a Policy for performance evaluation of
Independent Directors, Board, Committees and other individual Directors
which includes criteria for performance evaluation of the Non-Executive
and Executive Directors. In accordance with the Policy, a process of
evaluation was followed by the Board for its own performance and that
of its Committees and individual Directors. The remuneration policy for
directors, key managerial personnel and other employees is annexed as
Annexure - C and forms an integral part of this Report.
The brief resumes and other details relating to the Directors who are
proposed to be appointed/ re-appointed, as required to be disclosed
under Clause 49 of the Listing Agreement is given in the Annexure to
the Notice of the 69th AGM.
Your Directors recommend the appointment/ re-appointment of the above
said Directors at the ensuing AGM.
The details of programme for familarisation of Independent Directors
with the Company, their roles, rights, responsibilities in the Company,
nature of industry in which the Company operates, business model of the
Company and related matters are put up on the website of the Company -
www.escortsgroup.com.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
The particulars relating to conservation of energy, technology
absorption, foreign exchange earnings and outgo, as required to be
disclosed under Section 134(3)(m) of the Companies Act, 2013 read with
Companies (Accounts) Rules, 2014 are provided as Annexure - D and forms
an integral part of this Report.
Corporate Governance
Your Company reaffirms its commitment to the good corporate governance
practices and has adopted the Code of Conduct which has set out the
systems, processes and policy conforming to international standards.
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Corporate Governance Report and Auditors'' Certificate
regarding compliance of conditions of Corporate Governance are enclosed
as Annexure - E and forms an integral part of this Report.
Corporate Social Responsibility
During the financial year ended March 31,2015, the Corporate Social
Responsibility (CSR) Committee had been reconstituted by inducting Mr.
G.B. Mathur and Mrs. Vibha Paul Rishi as members of the Committee
w.e.f. January 16, 2015.
The CSR Committee comprises of following Directors:
1. Mr. Rajan Nanda (Chairman)
2. Mr. Nikhil Nanda
3. Mr. Hardeep Singh
4. Mr. S.C. Bhargava
5. Mrs. Vibha Paul Rishi
6. Mr. G.B. Mathur
The said committee has been entrusted with the responsibility of
formulating and recommending to the Board, a Corporate Social
Responsibility Policy (CSR Policy) indicating the activities to be
undertaken by the Company, monitoring the implementation of the
framework of CSR Policy and recommending the amount to be spent on CSR
activities.
The key philosophy of all CSR initiatives of the Company is to make CSR
a key business process for sustainable development of the society. The
initiatives aim at enhancing welfare measures of the society based on
the immediate and long term social and environmental consequence of its
activities.
The Company intends to undertake other need based initiatives in
compliance with Schedule VII of the Act.
The CSR Policy may be accessed on the Company''s website
www.escortsgroup.com under Investors Information Section.
During the year, the Company has spent Rs. 0.78 Cr. (0.48% of the
average net profits of last three financial years) on CSR activities.
Since being the first year of the CSR Committee, the Company under the
guidance and directions of the Committee is formulating its initiatives
for undertaking activities as identified in the CSR Policy. The full
impact of the CSR spend shall be felt in the financial year 2015-16.
The Annual Report on CSR activities is enclosed as Annexure - F and
forms an integral part of this Report.
Consolidated Financial Statements
The Consolidated Financial Statements in accordance with the Companies
Act, 2013 and Accounting Standard (AS) - 21 applicable to the
Consolidated Financial Statements read with AS-23 on Accounting for
Investments in Associates and AS- 27 on Financial Reporting of
Interests in Joint Ventures issued by The Institute of Chartered
Accountants of India have been prepared. The Audited Consolidated
Financial Statements along with the Auditors'' Report thereon are
annexed with this Report.
Subsidiaries, Joint Ventures and Associate Companies
The statement containing salient features of financial statements of
subsidiaries, associate and joint venture companies prepared in
accordance with Section 129 of the Companies Act, 2013 read with Rule 5
of Companies (Accounts) Rules, 2014, forms an integral part of this
Report. The Consolidated Financial Statements presented by the Company
include the financial results of its subsidiaries, associate and joint
venture companies.
The Company will make available the Annual Accounts of its
subsidiaries, associate and joint venture companies and related
information to the members of the Company who may be interested in
obtaining the same. The annual accounts of its subsidiaries, associate
and joint venture companies will also be kept open for inspection at
the Registered Office of the Company.
Contracts and Arrangements with Related Parties
All contract/ arrangements/ transactions entered by the Company during
the financial year with related parties were in the ordinary course of
business and on an arm''s length basis. During the year, the Company had
not entered into any contract/ arrangement/ transaction with related
parties which could be considered material in accordance with the policy
of the Company on the materiality of related party transactions. The
particulars of contracts and arrangement with related parties under
Section 188(1) of the Act in Form AOC-2 is enclosed as Annexure - G.
The Policy on materiality of related party transactions and dealing
with related party transactions as approved by the Board may be
accessed on the Company''s website www.escortsgroup.com under Investors
Information Section. Your Directors draw attention of the members to
Note 46 to the financial statement which sets out related party
disclosures.
Auditors and Auditors'' Report
Statutory Auditors
M/s. S.N. Dhawan & Co., Chartered Accountants, Delhi (Firm Registration
No. 000050N) Statutory Auditors of the Company, hold office till the
conclusion of the ensuing AGM and are eligible for re-appointment.
The Company has received letter of confirmation from M/s. S.N. Dhawan
& Co., Chartered Accountants to the effect that their appointment, if
made, would be within the prescribed limits under Section 139 of the
Companies Act, 2013 and that they are not disqualified for such
appointment within the meaning of Section 141 of the Companies Act,
2013 read with Companies (Audit and Auditors) Rules, 2014.
The observations and comments given by the Statutory Auditors in their
report read together with notes to Accounts are self- explanatory and
hence, do not call for any further comments under Section 134 of the
Companies Act, 2013.
Cost Auditors
The Board of Directors of the Company has re-appointed M/s. Ramanath
Iyer and Co., Cost Accountants, New Delhi (Firm Registration No.
000019), Cost Auditors of the Company under Section 148 of the
Companies Act, 2013 for conducting the audit of cost records for the
financial year 2015-16.
The due date of filing the Cost Audit Report for the eighteen months
period ended on March 31, 2014 was September 30, 2014 and the same has
been filed on September 22, 2014.
Secretarial Auditors
The Board of Directors of the Company has appointed M/s. Jayant Gupta
and Associates, Practicing Company Secretary to conduct secretarial
audit of the Company for the financial year 2014-15. The Secretarial
Audit Report for the financial year ended March 31, 2015 is enclosed as
Annexure - H and forms an integral part of this Report.
The observations and comments given by the Secretarial Auditors in
their report are self-explanatory and hence, do not call for any
further comments under Section 204(3) of the Companies Act, 2013.
Risk Management
During the year, your directors have constituted a Risk Management
Committee which has been entrusted with the responsibility to assist
the Board in (a) overseeing and approving the Company''s enterprise wide
risk management framework; and (b) Overseeing that all the risks that
the organisation faces such as strategic, financial, credit, market,
liquidity, security, property, IT, legal, regulatory, reputational and
other risks have been identified and assessed and there is an adequate
risk management infrastructure in place capable of addressing those
risks. The Risk Management Policy was reviewed and approved by the
Committee.
Internal Financial Controls
The Company has in place adequate internal financial controls with
reference to financial statements. During the year, such controls were
tested and no reportable material weakness in the design or operation
was observed.
Disclosures
Meetings of the Board
Five meetings of the Board of Directors were held during the year. For
further details, please refer Report on Corporate Governance annexed as
Annexure - E to this Report.
Audit Committee
The Audit Committee comprises of the following Non-Executive Directors:
1. Dr. S.A. Dave - Independent Director (Chairman)
2. Mr. S.C. Bhargava - Independent Director
3. Mr. Hardeep Singh - Non-Independent Director
All the recommendations made by the Audit Committee were accepted by
the Board.
Extracts of Annual Return
In terms of provisions of Section 92 of the Companies Act, 2013 read
with the Companies (Management and Administration) Rules, 2014, the
extracts of Annual Return in Form MGT-9 is enclosed as Annexure - I and
forms an integral part of this Report.
Vigil Mechanism
The Company has a vigil mechanism for Directors and Employees to report
their concerns about unethical behaviour, actual or suspected fraud or
violation of the Company''s Code of Conduct. The mechanism provides for
adequate safeguards against victimisation of Director(s) and
Employee(s) who avail of the mechanism. In exceptional cases, Directors
and Employees have direct access to the Chairman of the Audit
Committee. The Whistle Blower Policy is available on Company''s
website.
Particulars of Loans given, Investments made, Guarantees given and
Securities provided
Particulars of loans given, investments made, guarantees given and
securities provided along with the purpose for which the loan or
guarantee or security is proposed to be utilised by the recipient has
been given elsewhere in the Annual Report and forms an integral part of
this Report.
Particulars of Employees and related disclosures
In terms of provisions of Section 197(12) of the Companies Act, 2013
read with 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
prescribed limits are available with the Company Secretary. Having
regard to the provisions of Section 136(1) of the said Act, the Annual
Report excluding the aforesaid information is being sent to the members
of the Company. Any member interested in obtaining such particulars may
write to the Company Secretary of the Company and the same will be
furnished on request.
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
annexed as Annexure - J and forms an integral part of this Report.
Public Deposits
The Company has not accepted/ renewed any Fixed Deposit during the
financial year. All Fixed Deposits which were due and claimed by the
deposit holders have been paid on time.
Transfer to Investor Education and Protection Fund
Pursuant to the provisions of Section 205A(5) of the Companies Act,
1956, the dividend which remained unclaimed or unpaid for a period of
seven years has been transferred by the Company, from time to time on
due dates to the Investor Education and Protection Fund.
As on March 31, 2015, 136 unclaimed deposits for the period of seven
years aggregating to Rs. 26.45 lacs were transferred to Investor
Education and Protection Fund.
Directors'' Responsibility Statement
Pursuant to the requirement under Section 134(5) of the Companies Act,
2013 with respect to Directors'' Responsibility Statement, your
Directors hereby state that:
(i) in the preparation of the annual accounts for the year ended March
31, 2015, the applicable accounting standards read with requirements
set out under Schedule III to the Act, have been followed alongwith
proper explanation relating to material departures;
(ii) the Directors have selected such accounting policies and applied
them consistently and made judgements and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at March 31, 2015 and of the profit and loss of the
Company for the year ended on that date;
(iii) the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(iv) the Directors have prepared the annual accounts for financial year
ended March 31, 2015 on a ''going concern'' basis;
(v) the Directors have laid down internal financial controls to be
followed by the Company and that such internal financial controls are
adequate and are operating effectively; and
(vi) the Directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems are
adequate and operating effectively.
General
Your Directors state that no disclosure or reporting is required in
respect of the following items as there were no transactions on these
items during the year under review:
1. Details relating to deposits covered under Chapter V of the Act.
2. Issue of equity shares with differential rights as to dividend,
voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of the
Company under any scheme save and except ESOS referred to in this
Report.
4. Neither the Managing Director nor the Whole-time Directors of the
Company receive any remuneration or commission from any of its
subsidiaries.
5. No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern status and Company''s
operations in future.
Your Directors further state that during the year under review, there
were no cases filed pursuant to the Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Acknowledgement
Your Directors would like to express their sincere appreciation of the
positive co-operation received from the Central Government, the
Government of Haryana and Uttaranchal, Financial Institutions and the
Company''s Bankers, Customers and Dealers.
The Directors also wish to place on record their deep sense of
appreciation for the commitment displayed by all executives, officers,
workers and staff of the Company resulting in the successful
performance of the Company during the year.
The Board also takes this opportunity to express its deep gratitude for
the continued co-operation and support received from its valued
shareholders.
For and on behalf of the Board of Directors
Sd/-
Place: Faridabad RAJAN NANDA
Date: July 10, 2015 Chairman & Managing Director
Mar 31, 2014
Dear Members,
The Directors have pleasure in presenting the Sixty Eighth Annual
Report for the 18 months period ended on March 31, 2014.
Financial Results (RS Cr)
Particulars For the period of 18 For the period of 12
months ended months on September 30,2012
ended on March 31,2014
Gross Revenue 6505.79 4046.10
Excise Duty 132.87 103.32
Net Revenue 6372.92 3942.78
Profit Before Interest,
Depreciation, Amortisation,
Exceptional Items & Tax 462.65 231.14
Finance Cost 110.67 96.44
Profit Before Depreciation,
Amortisation, Exceptional Items
& Tax 351.98 134.70
Depreciation and Amortisation 83.22 48.43
Profit Before Exceptional Items
& Tax 268.76 86.27
Exceptional Income 3.64 1.68
Profit Before Tax 272.40 87.95
Tax 27.51 18.35
Profit After Tax 244.89 69.60
Financial Performance
For the financial period of 18 months ended on March 31, 2014 your
Company has recorded improved revenue and margin performance. The brief
highlights of the Company''s performance are:-
- Net Revenue of the Company for the 18 months period was Rs.6,372.92 Cr.
- Profit Before Interest, Depreciation, Amortisation, Exceptional Items
& Tax stood at Rs.462.65 Cr.
- Profit Before Tax (PBT) stood at Rs.272.40 Cr and Profit After Tax
(PAT) stood at Rs.244.89 Cr. Earnings per share is of Rs.20.53 for the
period under review.
- Your Company sold 1,00,833 tractors during the period under review.
Management Discussion & Analysis
Management Discussion & Analysis which forms an integral part of this
Annual Report provides a detailed analysis on the performance of
individual businesses and their outlook.
Dividend
Your Company paid an Interim Dividend of Rs.1.20/- per Equity Share (12%)
on the face value of Rs.10 each, aggregating Rs.14.71 Cr (exclusive of tax
on dividend) during the financial
period ended on March 31, 2014.
Your Directors are pleased to recommend a Final Dividend of 60 paisa
per Equity Share (6%) on the face value of H10 each, aggregating H7.35
Cr (exclusive of tax on dividend) for the 18 months period ended on
March 31, 2014. The dividend payout is subject to approval of members
at the ensuing Annual General Meeting.
The dividend, if approved at the ensuing Annual General Meeting, will
be paid to members whose names appear in the Register of Members as on
Friday, September 5, 2014; in respect of shares held in dematerialised
form, it will be paid to members whose names are furnished by National
Securities Depository Limited and Central Depository Services (India)
Limited, as beneficial owners as at that date.
The dividend payout for the period under review has been formulated in
accordance with shareholders'' aspirations and the Company''s policy to
pay sustainable dividend linked to long term growth objectives of the
Company to be met by internal cash accruals.
Employee Stock Option Scheme
The particulars with regard to the Employees Stock Options as on March
31, 2014 as required to be disclosed pursuant to
the provisions of Clause 12 of SEBI (Employees Stock Option Scheme and
Employees Stock Purchase Scheme) Guidelines, 1999, as amended, are
enclosed at Annexure - A and forms an integral part of this Report.
Extension of Financial Year
The Board of Directors of your Company had extended the financial year
from the current period of 12 months ending September 30, 2013 to 18
months ended on March 31, 2014 for the purpose of aligning with the
Companies Act, 2013 requirement with the permission of Registrar of
Companies, NCT of Delhi & Haryana (ROC). The ROC has also granted
extension of time for holding the Annual General Meeting of the Company
upto September 21, 2014.
Directors
In accordance with the provisions of Companies Act, 2013 and Articles
of Association of the Company, Mr. Hardeep Singh, Director retires by
rotation at the ensuing Annual General Meeting and being eligible,
offers himself for re-appointment.
Mr. Rajan Nanda, has been re-appointment as Managing Director for a
further period of 5 years w.e.f April 1, 2015, subject to the approval
of the shareholders in the ensuing Annual General Meeting. His
appointment is appropriate and in the best interest of the Company.
The Board of Directors, in their meeting held on July 29, 2014,
co-opted Mr. P.H. Ravikumar and Mrs. Vibha Paul Rishi as Additional
Directors designated as Independent Directors on the Board of the
Company. They shall hold office of Director upto the date of ensuing
Annual General meeting.
Pursuant to the provisions of Section 149 and other applicable
provisions of the Companies Act, 2013, your Directors are seeking
appointment of Dr. S. A. Dave and Mr. S. C. Bhargava as Independent
Directors for a period of 3 years. The Company has received requisite
notices in writing from members proposing Mr. P.H. Ravikumar, Mrs.
Vibha Paul Rishi, Dr. S.A. Dave and Mr. S.C. Bhargava for appointment
as Independent Directors.
Dr. M.G.K. Menon and Dr. P.S. Pritam have resigned as Directors of the
Company w.e.f. July 4, 2013 and June 4, 2014 respectively. The Board
places on record their appreciation for the valuable guidance and
services rendered by these Directors during their tenure with the
Company.
The Company has received declarations from all the Independent
Directors of the Company confirming that they meet with criteria of
independence as prescribed both under sub-section (6) of Section 149 of
the Companies Act, 2013 and under Clause 49 of the Listing Agreement
with the Stock Exchanges.
The brief resumes and other details relating to the Directors who are
proposed to be appointed/ re-appointed, as required to be disclosed
under Clause 49 of the Listing Agreement, given in the Annexure to the
Notice of 68th Annual General Meeting.
Your Directors recommend the appointment/ re-appointment of the above
said Directors at the ensuing Annual General Meeting.
Conservation of Energy, Technology Absorption, Foreign Exchange
Earnings and Outgo
The particulars relating to conservation of energy, technology
absorption, foreign exchange earnings and outgo, as required to be
disclosed under Section 217(1)(e) of the Companies Act, 1956 read with
Companies (Disclosure of Particulars in the Report of Board of
Directors) Rules, 1988 are provided in Annexure - B and forms an
integral part of this Report.
Corporate Governance
Your Company reaffirms its commitment to the good corporate governance
practices and has adopted the Code of Conduct which has set out the
systems, processes and policy conforming to international standards.
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Corporate Governance Report and Auditors'' Certificate
regarding compliance of conditions of Corporate Governance are enclosed
as Annexure - C and forms an integral part of this Report.
Corporate Social Responsibility
Your Directors have constituted the Corporate Social Responsibility
Committee comprising of Mr. Rajan Nanda as Chairman, Mr. Nikhil Nanda,
Mr. Hardeep Singh and Mr. S. C. Bhargava as other members.
The said Committee has been entrusted with the responsibility of
formulating and recommending to the Board, a Corporate Social
Responsibility Policy (CSR Policy) indicating the activities to be
undertaken by the Company, monitoring the implementation of the
framework of the CSR Policy and recommending the amount to be spent on
CSR activities.
Consolidated Financial Statements
Your Company has prepared Consolidated Financial Statements in
accordance with the Accounting Standard - 21 applicable to the
Consolidated Financial Statements issued by The Institute of Chartered
Accountants of India. Audited Consolidated Financial Statements along
with the Auditors'' Report thereon are annexed with this Report.
Subsidiary Companies
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Statement of
Profit and Loss and other documents of the subsidiary companies are not
being attached to the Balance Sheet of the Company. The Company will
make available the Annual Accounts of its subsidiary companies and
related information to the members of the Company who may be interested
in obtaining the same. The annual accounts of its
subsidiary companies will also be kept open for inspection at the
Registered Office of the Company and that of the respective subsidiary
companies. The Consolidated Financial Statements presented by the
Company include the financial results of its subsidiary companies.
Auditors
M/s. S.N. Dhawan & Co., Chartered Accountants, Delhi (Firm Registration
No. 000050N) Statutory Auditors of the Company, hold office until the
conclusion of the ensuing Annual General Meeting and are eligible for
re-appointment.
The Company has received letter from M/s. S.N. Dhawan & Co., Chartered
Accountants to the effect that their appointment, if made, would be
within the prescribed limits under Section 139 of the Companies Act,
2013 and that they are not disqualified for such appointment within the
meaning of Section 141 of the Companies Act, 2013 read with Companies
(Audit and Auditors) Rules, 2014.
The observations and comments given by the Statutory Auditors in their
report read together with notes to Accounts are self- explanatory and
hence, do not call for any further comments under Section 217 of the
Companies Act, 1956.
Cost Auditors
M/s. Ramanath Iyer and Co., Cost Accountants, New Delhi (Firm
Registration No. 000019), Cost Auditors of the Company under Section
233 of the Companies Act, 1956 have been re- appointed as the Company''s
Cost Auditors for the financial year 2014-15.
Particulars of Employees
In terms of provisions of Section 217(2A) of the Companies Act, 1956
read with the Companies (Particulars of Employees) Rules, 1975, as
amended, the names and other particulars of the employees are set out
in the annexure to the Directors'' Report. Having regard to the
provisions of Section 219(1)(b) (iv) of the said Act, the Annual Report
excluding the aforesaid information is being sent to the members of the
Company. Any member interested in obtaining such particulars may write
to the Company Secretary of the Company.
Directors'' Responsibility Statement
Pursuant to the requirement under Section 217(2AA) of the Companies
Act, 1956 with respect to Directors'' Responsibility Statement, it is
hereby confirmed that:
(i) in the preparation of the Annual Accounts for the financial period
ended on March 31, 2014, the applicable Accounting Standards have been
followed alongwith proper explanation relating to material departures;
(ii) the Directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a
true and fair view of the state of affairs of the Company as at March
31, 2014 and of the profit of the Company for the financial period
under review;
(iii) the Directors had taken proper and sufficient care for the
maintenance of adequate accounting 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; and
(iv) the Directors had prepared the annual accounts for financial
period ended on March 31, 2014 on a ''going concern'' basis.
Public Deposits
The Company has not accepted/ renewed any Fixed Deposit during the
financial period. All Fixed Deposits which were due and claimed by the
deposit holders have been paid on time. As on March 31, 2014, 53
deposits aggregating to H0.11 Cr have matured but have not been
claimed. Subsequently, out of the above, 11 deposits aggregating to H3
lacs have been repaid till the date of this report.
Transfer to Investor Education and Protection Fund
Pursuant to the provisions of Section 205A(5) of the Companies Act,
1956, the dividend which remained unclaimed or unpaid for a period of
seven years has been transferred by the Company, from time to time on
due dates, to the Investor Education and Protection Fund.
As on March 31, 2014, 123 unclaimed deposits for the period of seven
years aggregating to H25.50 lacs were transferred to Investor Education
and Protection Fund.
Acknowledgement
Your Directors would like to express their sincere appreciation for the
positive co-operation received from the Central Government, the
Government of Haryana and Uttaranchal, Financial Institutions and the
Company''s Bankers, Customers and Dealers.
The Directors also wish to place on record their deep sense of
appreciation for the commitment displayed by all executives, officers,
workers and staff of the Company resulting in the successful
performance of the Company during the period.
The Board also takes this opportunity to express its deep gratitude for
the continued co-operation and support received from its valued
shareholders.
For and on behalf of the Board of Directors
Sd/-
Place: Faridabad AJAN NANDA
Date: July 29, 2014 Chairman &Managing Director
Sep 30, 2012
Dear Shareholders,
The Directors have pleasure in presenting the Sixty Seventh Annual
Report for the financial year ended 30th September, 2012.
FINANCIAL RESULTS (Rs. Crores)
Particulars 30.09.12 30.09.11
Gross Revenue 4046.10 3305.78
Excise Duty 103.32 25.96
Net Revenue 3942.78 3279.82
Profit Before Interest, Depreciation,
Amortisation, Exceptional Items & Tax 231.14 189.71
Finance Cost 96.44 55.77
Profit Before Depreciation, Amortisation,
Exceptional Items & Tax 134.70 133.94
Depreciation and Amortisation 48.43 37.97
Profit/(loss) Before Tax, Exceptional Items
& Tax 86.27 95.97
Exceptional Income 1.68 4.65
Profit Before Tax 87.95 100.62
Tax 18.35 (19.47)
Profit After Tax 69.60 120.09
FINANCIAL PERFORMANCE
The Net Revenue of the Company for the year was Rs. 3942.78 Crores as
against Rs. 3279.82 Crores in the previous year showing a growth of
20.21%. Sale of Tractors during the year was 60673 as against 63420 in
the previous year.
Profit before Interest, Depreciation, Amortisation, Exceptional Items &
Tax stood at Rs. 231.14 Crores against Rs. 189.71 Crores in the
previous year.
Profit Before Tax (PBT) stood at Rs. 87.95 Crores against Rs. 100.62
Crores in the previous year and Profit After Tax (PAT) stood at Rs.
69.60 Crores against Rs. 120.09 Crores in the previous year. Earnings
per share stands at Rs. 5.84 for the current year vis a vis Rs. 11.74
last year. MANAGEMENT DISCuSSIoN AND ANALYSIS Management Discussion
and Analysis (refer page 10 to 18), which forms an integral part of
this Annual Report; provides a more detailed analysis on the
performance of individual businesses and their outlook.
DIVIDEND
Your Directors are pleased to recommend a dividend @ 12% i.e. Rs. 1.20
per Equity Share of Rs. 10 each for the year ended 30th September,
2012, payable to those Shareholders whose names appear in the Register
of Members as on the Book Closure Date, subject to the approval of
shareholders at the ensuing Annual General Meeting.
SCHEME OF ARRANGEMENT AND COMPROMISE
A Scheme of Arrangement and Amalgamation under Section 391 to 394 of
the Companies Act, 1956 for the amalgamation of Escorts Construction
Equipment Limited (''ECEL''), Escotrac Finance and Investments Private
Limited (''Escotrac'') and Escorts Finance Investments and Leasing
Private Limited (''EFILL'') (together ''Transferor Companies'') with the
Company (hereinafter referred to as ''the Scheme''), has been sanctioned
by the Hon''ble High Court of Punjab and Haryana at Chandigarh vide its
order dated 9th August, 2012 and upon necessary filings with the
Registrar of Companies, NCT of Delhi and Haryana by the Transferor
Companies and Transferee Company, the Scheme has become effective on
12th October, 2012 and the effect thereof has been given in the
financial statements from 1st October, 2011 being the appointed date
under the Scheme.
Pursuant to the Scheme, the issued and paid up share capital of the
Company has increased from Rs. 105.62 crores to Rs. 122.58 crores as
1,69,58,842 equity shares were allotted to the shareholders of the
transferor companies. The Authorized Share Capital of the Company
stands enhanced to Rs. 1289 crores.
The investments held by the Company in the merging entities have been
cancelled and wherever required the investment held by the later were
transferred to the Escorts Benefit and Welfare Trust in accordance with
the Scheme. Furthermore, pursuant to the scheme, Rs. 97.40 crores,
being the difference between the net assets of the transferor companies
and the purchase consideration issued by the Company is adjusted in
Reserves of the Company.
EMPLOYEE STOCK OPTION SCHEME
Disclosure pursuant to the SEBI (Employees Stock Option Scheme and
Employees Stock Purchase Scheme) Guidelines, 1999 is enclosed at
Annexure - A and forms part of this Directors'' Report for the year
ended 30th September, 2012.
DIRECTORS
In accordance with the provisions of Companies Act, 1956 and Articles
of Association of Company, Dr. S.A. Dave and Mr. S.C. Bhargava,
Directors retire by rotation at the ensuing Annual General Meeting of
your Company, and being eligible, offer themselves for re-appointment.
The brief resumes and other details relating to the Directors who are
proposed to be appointed/re-appointed, as required to be disclosed
under Clause 49 of the Listing Agreement, forms part of the Report on
Corporate Governance.
Your Directors recommend the appointment/re- appointment of the above
said Directors at the ensuing Annual General Meeting.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information required under Section 217(1)(e) of the Companies Act, 1956
read with Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 is given in Annexure - B and forms an
integral part of this Report.
CORPORATE GOVERNANCE
Your Company reaffirms its commitment to the good corporate governance
practices. Pursuant to Clause 49 of the Listing Agreement with the
Stock Exchanges, Corporate Governance Report and Auditors'' Certificate
regarding compliance of conditions of Corporate Governance are enclosed
at Annexure - C and forms an integral part of this report.
CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to Clause 32 and 50 of the Listing Agreement with Stock
Exchanges, your Company has prepared Consolidated Financial Statements
as per the Accounting Standards applicable to the Consolidated
Financial Statements issued by The Institute of Chartered Accountants
of India. Audited Consolidated Financial Statements along with the
Auditors'' Report are annexed with this Report. subsidiary COMPANIES
The Ministry of Corporate Affairs (MCA), Government of India vide
General Circular No. 2/2011 dated 8th February, 2011 has issued
directions under Section 212(8) of the Companies Act, 1956 granting
general exemption from the applicability of the provisions of Section
212 of the Companies Act, 1956, in relation to the Subsidiary
Companies, subject to the consent of the Board of Directors and
fulfillment of the other conditions specified in the said Circular.
The Board of Directors, in their meeting held on 27th November, 2012
has given its consent for not attaching the Balance Sheet of the
subsidiary companies in terms of the said circular and accordingly, the
documents mentioned in Section 212 of the Companies Act, 1956 relating
to the Company''s Subsidiaries are not attached to the Accounts of the
Company. In terms of the said Circular, your Company has fulfilled the
prescribed conditions and has also made the necessary disclosures in
the consolidated Balance Sheet and further undertakes that the Annual
Accounts of the Subsidiary Companies and the related detailed
information shall be made available to Shareholders of the Company and
its Subsidiary Companies seeking such information. These documents will
also be available for inspection during business hours at the
Head/Corporate office of the Company and of the respective Subsidiary
Companies.
AUDITORS
M/s. S.N. Dhawan & Co., Chartered Accountants, Auditors of the Company,
retire at the ensuing Annual General Meeting and are eligible for
re-appointment. The observations of the Auditors in their Report on
Accounts read with the relevant notes to accounts are self-explanatory.
PARTICuLARS OF EMPLOYEES Information in accordance with provisions of
Section 217(2A) of the Companies Act, 1956 read with the Companies
(Particulars of Employees) Rules, 1975 as amended regarding employees
is annexed to this Report as Annexure - D.
DIRECTORS'' RESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, (the
Act) your Directors state that:
i. In the preparation of Annual Accounts for the year ended 30th
September, 2012, the applicable accounting standards have been followed
along with proper explanation relating to material departures;
ii. Accounting policies selected and applied are consistent and
judgement and estimates made are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of
the financial year and of the profit of the Company for that period;
iii. Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities; and
iv. The Annual Accounts have been prepared on a going concern basis.
PUBLIC DEPOSITS
The Company has not accepted/renewed any Fixed Deposit during the year.
All Fixed Deposits which were due and claimed by the deposit holders
have been paid on time. As on 30th September, 2012, 375 deposits
aggregating to Rs. 0.75 crores matured but were not claimed.
Subsequently, out of the above, 31 deposits of Rs. 0.07 crores have
been repaid till the date of this report.
ACKNOWLEDGEMENT
Your Directors wish to thank the Customers, Dealers, Lenders,
Financiers, Vendors, the Central and State Governments and employees
for their continued support and commitment to the Company.
On behalf of the Board
RAJAN NANDA
Place: Faridabad Chairman &
Date: 27th November, 2012 Managing Director
Sep 30, 2011
Dear Shareholders,
The Directors have pleasure in presenting the Sixty Sixth Annual
Report for the financial year ended 30th September, 2011.
financial results
(Rs. Crores)
INCOME & PROFIT /(LOSS) year Ended year Ended
30.09.2011 30.09.2010
1. net Sales & Business Incomes 3,251.49 2,764.77
2. Total Expenses 3,076.96 2,533.47
3. Profit before Interest, Depreciation, 174.53 231.30
Amortisation & Exceptional Items (1-2)
4. Interest & Finance Charges 25.51 11.74
5. Cash Profit before Tax (3-4) 149.02 219.56
6. Depreciation & Amortisation 38.91 43.47
7. Profit/(Loss) before Tax & Exceptional 110.11 176.09
Items (5-6)
8. Exceptional Income/(Expense) 9.49 (11.93)
9. Tax & Deferred Tax (19.47) 50.47
10. Profit after Tax 120.09 137.55
Financial Performance
The net Revenue of the Company for the year was Rs. 3,251.49 crores as
againstRs. 2,764.77 crores in the previous year showing a growth of
17.60 per cent. Sale of Tractors increased by 5.50 per cent to 63,420
from 60,086 in the previous year.
Earnings before Interest, Depreciation, Amortisation (EBITDA) stood at
RS. 174.53 crores against Rs. 231.30 crores in the previous year.
Profit Before Tax (PBT) stood at Rs. 100.62 crores against Rs. 188.02
crores in the previous year and Profit After Tax (PAT) stood at Rs.
120.09 crores against Rs. 137.55 crores in the previous year. Earnings
per share stands at Rs. 11.74 for the current year vis a vis Rs. 14.67
last year.
management discussion & Analysis
Management Discussion & Analysis (refer page 14 to 33) , which forms an
integral part of this Annual Report; provides a more detailed analysis
on the performance of individual businesses and their outlook.
dividend
your Directors are pleased to recommend a dividend @ 15 per cent i.e.
Rs. 1.50 per Equity Share of Rs. 10 each for the year ended 30th
September, 2011, payable to those Shareholders whose names appear in
the Register of Members as on the Book Closure Date, subject to the
approval of shareholders at the ensuing Annual General Meeting.
scheme of Arrangement & compromise
The Scheme of compromise and arrangement pending before the Hon'ble
Delhi High Court (High Court) to bail out the Fixed Deposit Holders of
Escorts Finance Limited stand disposed off vide order dated 4th March,
2011. On the interim direction of the High Court, fixed deposit
liability of Rs. 130.32 crores has already been discharged by the
Hardship Committee constituted under the direction of the High Court.
For discharging the liability of unclaimed deposit holders, balance
2,401,050 Equity Shares of Escorts Limited, have been transferred to
Escorts Benefit Trust (Trust) and the Hardship Committee has been
dissolved. The Trust in due course and in terms of the direction of the
High Court is discharging the unclaimed deposit holders as and when
claimed by the deposit holders.
employee stock option scheme
Disclosure pursuant to the SEBI (Employees Stock Option Scheme and
Employees Stock Purchase Scheme) Guidelines, 1999 is enclosed at
Annexure-A and forms part of this Directors' Report for the year ended
30th September 2011.
directors
In accordance with the provisions of Companies Act, 1956 and Articles
of Association of Company, Dr. M.G.K.Menon, Director retires by
rotation at the ensuing Annual General Meeting of your Company, and
being eligible, offers himself for re-appointment.
The Board of Directors, in their meeting held on 28th November, 2011,
co-opted Mr. Hardeep Singh as an Additional Director on the Board of
the Company. He shall hold office of Director up to date of ensuing
Annual General Meeting. A notice under Section 257 of the Companies
Act, 1956, proposing his candidature as Director at the ensuing Annual
General Meeting of the Company, have been received.
Mr. nikhil nanda, has been re-appointed as Joint Managing Director for
a further period of 5 years with effect from 19th September, 2012,
subject to the approval of the shareholders in the ensuing Annual
General Meeting.
The brief resumes and other details relating to the Directors who are
proposed to be appointed/re-appointed, as required to be disclosed
under Clause 49 of the Listing Agreement, forms part of the Report on
Corporate Governance.
your Directors recommend the appointment/re-appointment of the above
said Directors at the ensuing Annual General Meeting.
conservation of energy, technology Absorption, foreign exchange
earnings And outgo
Information required under Section 217(1)(e) of the Companies Act, 1956
read with Companies (Disclosure of Particulars in the Report of the
Board of Directors) Rules, 1988 is given in Annexure - B and forms an
integral part of this Report.
corporate Governance
your Company reaffirms its commitment to the good corporate governance
practices. Pursuant to Clause 49 of the Listing Agreement with the
Stock Exchanges, Corporate Governance Report and Auditors' Certificate
regarding compliance of conditions of Corporate Governance are enclosed
at Annexure - C and forms an integral part of this report.
consolidated financial statements
Pursuant to Clause 32 and 50 of the Listing Agreement with Stock
Exchanges, your Company has prepared Consolidated Financial Statements
as per the Accounting Standards applicable to the Consolidated
Financial Statements issued by The Institute of Chartered Accountants
of India. Audited Consolidated Financial Statements along with the
Auditors' Report are annexed with this Report.
subsidiary companies
The Ministry of Corporate Affairs (MCA), Government of India vide
General Circular no. 2/2011 dated 8th February, 2011 has issued
directions under Section 212(8) of the Companies Act, 1956 granting
general exemption from the applicability of the provisions of Section
212 of the Companies Act,1956, in relation to the Subsidiary Companies,
subject to the consent of the Board of Directors and fulfillment of the
other conditions specified in the said Circular.
The Board of Directors, in their meeting held on 28th November, 2011
has given its consent for not attaching the Balance Sheet of the
Subsidiary Companies in terms of the said circular and accordingly, the
documents mentioned in Section 212 of the Companies Act, 1956 relating
to the Company's Subsidiaries are not attached to the Accounts of the
Company. In terms of the said Circular, your Company has fulfilled the
prescribed conditions and has also made the necessary disclosures in
the Consolidated Balance Sheet and further undertakes that the Annual
Accounts of the Subsidiary Companies and the related detailed
information shall be made available to Shareholders of the Company and
its Subsidiary Companies seeking such information. These documents will
also be available for inspection during business hours at the
Head/Corporate office of the Company and of the respective Subsidiary
Companies.
Auditors
M/s. S.n. Dhawan & Co., Chartered Accountants, Auditors of the Company,
retire at the ensuing Annual General Meeting and are eligible for
reappointment. The observations of the Auditors in their Report on
Accounts read with the relevant notes to accounts are self-explanatory.
Particulars of employees
Information in accordance with provisions of Section 217(2A) of the
Companies Act, 1956 read with the Companies (Particulars of Employees)
Rules, 1975 as amended regarding employees is annexed to this Report as
Annexure - D.
directors' responsibility statement
As required under Section 217 (2AA) of the Companies Act, 1956, (Act)
your Directors state that:
i. In the preparation of Annual Accounts for the year ended 30th
September, 2011, the applicable accounting standards have been followed
along with proper explanation relating to material departures;
ii. Accounting policies selected and applied are consistent and
judgment and estimates made are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of
the financial year and of the profit of the Company for that period;
iii. Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities; and
iv. The Annual Accounts have been prepared on a going concern basis.
Public deposits
The Company has not accepted/renewed any Fixed Deposit during the year.
All Fixed Deposits which were due and claimed by the deposit holders
have been paid on time. As on 30th September, 2011, 869 deposits
aggregating to RS. 1.58 crores matured but were not claimed.
Subsequently, out of the above, deposits of Rs. 0.08 crores have been
repaid till the date of this report.
Acknowledgement
your Directors wish to thank the Customers, Dealers, Lenders,
Financiers, vendors, the Central and State Governments and employees
for their continued support and commitment to the Company.
On behalf of the Board
Sd/-
Place : Faridabad RAJAN NANDA
Date : 28th November, 2011 Chairman & Managing Director
Sep 30, 2009
The Directors have pleasure in presenting the Sixty Fourth Annual
Report for the Financial year ended 30,th September, 2009.
FINANCIAL RESULTS
INCOME & PROFIT/(LOSS)
1. Net Sales & Business Incomes 2189.59 2051.55
2. Total Expenses 1982.15 1899.07
3. Profit before Interest,
Depreciation,
Amortisation & Exceptional
Items (1 -2) 207.44 152.48
4. Interest & Finance Charges 51.54 55.93
5. Cash Profit before Tax (3-4) 155.90 96.55
6. Depreciation & Amortisation 49.15 51.01
7. Profit/(Loss) before Tax &
Exceptional Items (5-6) 106.75 45.54
8. Exceptional lncome/(Expense) 4.31 (19.40)
9. Tax & Deferred Tax 21.33 14.97
10. Profit after Tax 89.73 11.87
The Company marginally improved its income by 6.7% during the year but
a series of cost reduction initiatives led by over 6% reduction in
material cost resulted in improved profitability with EBIDTA excluding
other income up at 9.4% against 7.4% last year. Improved working
capital management and overall debt reduction also resulted in reduced
financial costs by 7.8%. Cash profit for the year improved
significantly by over 61 % to Rs. 155.90 crores and Profit before Tax
improved from Rs. 26.14 crores to Rs. 1 11.06 crores. Net Profit after
Tax went up almost 8 times from Rs. 1 1.87 crores to Rs. 89.73 crores.
MANAGEMENT DISCUSSION & ANALYSIS
Management Discussion & Analysis (refer page 10 to 19) which forms an
integral part of this Annual Report provides a more detailed analysis
on the performance of individual businesses and their outlook.
DIVIDEND
Your Directors are pleased to recommend a dividend @10% i.e. Re. 1 per
Equity Share of Rs. 10 each for the year ended 30 September, 2009,
payable to those Shareholders whose names appear in the Register of
Members as on the Book Closure Date, subject to the approval of
shareholders at the ensuing Annual General Meeting.
BUSINESS RECONSTRUCTION RESERVE
In terms of the Scheme of Arrangement approved by the Honble High
Court of Punjab & Haryana on 1 7 September, 2009 the Board of
Directors of the Company have created a Business Reconstruction Reserve
(BRR) by transferring amounts lying to the credit of Amalgamation
Reserve, Capital Redemption Reserve, Revaluation Reserve and Share
Forfeiture Reserve as on 1 "April, 2009. The Company has also revalued
some fixed assets and the resultant difference in the value has also
been transferred to the BRR. The Board has also approved the
diminution/impairment/provisioning/write-offs of certain investments,
fixed assets, doubtful debts & loans and advances, inventories, carry
forward losses and other miscellaneous items from the BRR. The
aggregate of the diminution/impairment/provisioning/write-offs etc.
approved underthese heads is to the tune of Rs. 642.02 crores, for
which BRR has been utilised as per the said Scheme.
SHARE CAPITAL
The Company has issued 3,611,612 Equity Shares of Rs. 10 each fully
paid up at a price of Rs. 84.50 per share (including premium of Rs.
74.50 per share) in favour of the trustees of Escorts Employees Benefit
& Welfare Trust under Employee Stock Option Scheme, 2006 on 9
November, 2009. Accordingly, the share capital of the Company has been
increased to Rs. 94,32,11,080.
SCHEME OF COMPROMISE & ARRANGEMENT
Your Company had filed Scheme of Compromise & Arrangement ("Scheme") in
the Honble High Court of Delhi to bail out fixed deposit holders of
Escorts Finance Limited. The Scheme was approved by the Shareholders,
Secured and Unsecured Creditors of your Company and the Fixed Deposit
holders and Secured Creditors of Escorts Finance Limited on 1 0* May,
2006 and 5 May, 2006 respectively in the court convened meetings. The
approval of the scheme by the court is still awaited. In compliance of
the order of the High Court, Delhi, the Company has placed 34,04,256
shares of Rs. 32 crores at the disposal of Hardship Committee.
EMPLOYEE STOCK OPTION SCHEME
Disclosure pursuant to the SEBI (Employees Stock Option Scheme and
Employees Stock Purchase Scheme) Guidelines, 1999 is enclosed at
Annexure-A and forms part of the Directors Report for the year ended
30* September, 2009.
DIRECTORS
Mr. S.C. Bhargava, Director, retires by rotation at the ensuing Annual
General Meeting of your Company, and being eligible, offers himself for
reappointment.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information required under Section 21 7(1) (e) of the Companies Act, 1
956 read with Companies (Disclosure of particulars in the Report of the
Board of Directors) Rules, 1988 is given in Annexure- Band forms an
integral part of this Report.
CORPORATE GOVERNANCE
Your Company reaffirms its commitment to good corporate governance
practices. Pursuance to Clause 49 of the Listing Agreement with the
Stock Exchanges, Corporate Governance Report and Auditors Certificate
regarding compliance of conditions of Corporate Governance are enclosed
at Annexure - C and forms an integral part of this report.
CONSOLIDATED FINANCIAL STATEMENTS
Pursuant to Clause 32 and 50 of the Listing Agreement with Stock
Exchanges, your Company has prepared Consolidated Financial Statements
as per the Accounting Standards applicable to the Consolidated
Financial Statements issued by The Institute of Chartered Accountants
of India. Audited Consolidated Financial Statements along with the
Auditors Report are annexed with this Report.
SUBSIDIARY COMPANIES
During the year under report, the Company has disinvested its entire
equity and preference shareholdings in Cellnext Solutions Ltd.
Accordingly, Cellnext Solutions Ltd. is no longer a subsidiary of the
Company.
The Honble High Court of Punjab & Haryana has approved the Scheme of
Arrangement between Escorts Agri Machinery Inc. (EAMI), a wholly owned
Subsidiary of the Company in USA and the Company vide its Order dated
17 September, 2009. The necessary formalities for the merger with
Secretary of State of Delaware, USA have also been completed.
Accordingly, EAMI has merged into the Company.
The Company has filed an application with the Central Government for
exemption from attaching Annual Accounts and other documents in respect
of its subsidiaries to the Annual Report of the Company for the year
ended 30* September, 2009 and the approval of the Central Government on
the same is being obtained.
Accordingly, statement in respect of each of the subsidiary, giving the
details of capital, reserves, total assets and liabilities, details of
investments, turnover, profit before taxation and proposed dividend is
attached to the consolidated balance sheet.
The Annual Accounts of the subsidiary companies and the related
detailed information will be made available to the holding and
subsidiary company investors, seeking such information and will also be
available for inspection at the Corporate Office of the Company.
AUDITORS
M/s. S.N. Dhawan & Co., Chartered Accountants, Auditors of the Company,
retire at the ensuing Annual General Meeting and are eligible for
reappointment. The observations of the Auditors in their Report on
Accounts read with the relevant notes to accounts are self-explanatory.
PARTICULARS OF EMPLOYEES
Information in accordance with provisions of Section 21 7(2A) of the
Companies Act, 1 956 read with the Companies (Particulars of Employees)
Rules, 1 975 as amended regarding employees is annexed to this Report
as Annexure- D.
DIRECTORSRESPONSIBILITY STATEMENT
As required under Section 217 (2AA) of the Companies Act, 1956, (Act)
your Directors state that:
i. In the preparation of Annual Accounts for the year ended 30lh
September, 2009, the applicable accounting standards have been followed
along with proper explanation relating to material departures;
ii. Accounting policies selected and applied are consistent and
judgement and estimates made are reasonable and prudent so as to give a
true and fair view of the state of affairs of the Company at the end of
the financial year and of the profit of the Company for that period;
iii. Proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Act for safeguarding the assets of the Company and for preventing and
detecting fraud and other irregularities; and
iv. The Annual Accounts have been prepared on a going concern basis.
PUBLIC DEPOSITS
The Company has not accepted/renewed any Fixed Deposit during the year.
All Fixed Deposits which were due and claimed by the deposit holder
have been paid on time. 1453 Fixed Deposits aggregating to Rs. 2.63
crores were unclaimed as on 30* September, 2009. Subsequently, out of
the above, 8 deposits of Rs. 0.01 crores have been repaid till date.
ACKNOWLEDGEMENT
Your Directors wish to thank the Customers, Dealers, Lenders,
Financiers, Vendors, the Central and State Governments and employees
for their continued support and commitment to the Company.
On behalf of the Board
Sd/-
Place : New Delhi RAJAN NANDA
Date : 27th December, 2009 Chairman & Managing Director