Directors Report of Hindustan Composites Ltd.

Mar 31, 2023

The Directors are pleased to present the Fifty Ninth Annual Report together with the Standalone and Consolidated Audited Financial Statements of the Company for the financial year ended 31⁸¹ March, 2023.

1. FINANCIAL HIGHLIGHTS

The Company''s financial performance forthe financial year ended 31^st March, 2023 is summarized below:

(Rs. in Lakhs)
PARTICULARS	STANDALONE		CONSOLIDATED
	2022-23	2021-22	2022-23	2021-22
Revenue from Operations	28,268.76	23,263.96	28,268.76	23,263.96
Other Income	84.62	37.79	84.62	37.79
Profit before Interest, Depreciation and Taxes	4,145.25	3,335.59	4,145.25	3,335.59
Less: Interest	12.67	7.80	12.67	7.80
Less: Depreciation (Net)	872.93	856.36	872.93	856.36
Profit Before Tax	3,259.65	2,471.43	3,259.65	2,471.43
Less: Provision for Tax	512.38	311.27	512.38	311.27
Profit After Tax	2,747.27	2,160.16	2,747.27	2,160.16
Other Comprehensive Income / (Loss) (Net of Tax)	(2,093.46)	8,161.68	(2,093.46)	8,161.68
Total Comprehensive Income	653.81	10,321.84	653.81	10,321.84

2. OPERATIONAL PERFORMANCE

On a standalone basis, the Company achieved total revenue of ? 28,268.76 Lakhs during the financial year under review compared to ? 23,263.96 Lakhs in the previous financial year. The net manufacturing revenue was higher by 26.79 % from ? 18,592.29 Lakhs to? 23,469.93 Lakhs.

Investment income during the financial year was also higher at ? 4,731.54 Lakhs compared to ? 4,671.67 Lakhs in the previous financial year. It was achieved with judicious deployment of funds in various asset classes, despite volatile market conditions and falling interest rates.

The gross profit of the Company was higher at ? 4,145.25 Lakhs as against ? 3,335.59 Lakhs in the previous financial year. After considering the interest of ? 12.67 Lakhs and depreciation of ? 872.93 Lakhs, Profit before tax was ? 3,259.65 Lakhs. With a tax provision of ? 512.38 Lakhs (previous year ? 311.27 Lakhs) profit after tax stood at ? 2,747.27 Lakhs as against ? 2,160.16 Lakhs in the previous financial year. Other comprehensive income, net of tax during the financial year was ? - 2,093.46 Lakhs (previous financial year ? 8,161.68 Lakhs) and the total comprehensive income was ? 653.81 Lakhs (previous financial year ? 10,321.84 Lakhs).

During the financial year, the Company continued its growth trajectory and posted excellent results with highest ever revenue and improved profitability. It aligned with the overall

success of the auto industry. Growth was led by strong traction in commercial vehicle / rail friction material business.

The financial year 2022-23 was marked by global events causing significant disruption to the world economy including the Russia-Ukraine conflict, China''s lockdowns and European market slowdown. These led to supply chain disruption and volatile input prices making cost planning challenging. India showcased resilience with a remarkable 6.8% growth rate, becoming fastest growing economy. The government policy aims to drive economic growth and infrastructure development. The Indian automotive industry emerged as a leading global player and performed very well.

Amid the dynamic landscape of the automotive sector, our Company has adeptly positioned itself for healthy growth. Our Company is deeply aware of customer expectations and has taken proactive measures to align itself towards the development of high performance products. The Company continues to emphasis on improvement in operational efficiencies, higher productivity, and prudent cost control measures.

The investment segment faced some challenges related to fluctuations in interest rates, volatile stock market, currency depreciation and global uncertainties. However, performance of investment operations remains stable with a conservative approach towards deployment of funds, keeping capital protection in focus.

The working of Company''s Joint venture viz. Compo Advics Private Limited, though improved, remained under pressure with high raw material cost escalation and low-price realization. Several measures have been taken towards change in product mix and cost reduction program.

The outlook for the financial year 2023-24 remain positive with continued growth prospectus of automotive industry in terms of underlying demand. With a clear focus on innovation and customer satisfaction, the Company is well positioned to achieve its plan and will remain a major player in its business segment. The Company also foresees a significant demand growth from its rail business.

There was no change in the nature of the business of the Company during the financial year under review.

3. MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION BETWEEN THE END OF THE FINANCIAL YEAR AND DATE OF THE REPORT

There were no material changes and commitments affecting the financial position of the Company between the end of the financial year to which the financial statements relate and the date of this annual report.

4. SHARE CAPITAL OF THE COMPANY

During the financial year under review, there was no change in the share capital of the Company. The paid-up equity share capital of your Company as on 31^st March, 2023 was ?.7,38,45,000/- (Rupees Seven Crore Thirty Eight Lakh Forty Five Thousand only) divided into 1,47,69,000 Equity Shares of ?5/- (Rupees Five only) each fully paid up.

During the financial year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity.

5. DIVIDEND & DIVIDEND POLICY

Your directors have recommended a dividend of ? 21- per share (previous financial year ? 21- per share) of ? 5/- each, being 40% (previous financial year 40%) on equity share capital for the financial year ended 31⁸¹ March, 2023. This will absorb a total cash outflow off 295.38 Lakhs. The dividend, if approved, will be paid to those members whose names shall appear in the Register of Members / List of Beneficiaries as on Friday, 22^nd September, 2023.

Pursuant to the provisions of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"), the Company has formulated the Dividend Distribution Policy. The policy can be accessed on the Company''s website at https://www.hindcompo.com/investor-relations/documents/ dividend-distribution-policy.pdf

6. RESERVES

During the financial year under review, a sum of f2,000 Lakhs (previous year f 2,000 Lakhs) were transferred to the General Reserve.

7. SUBIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES

Your Company has a Joint Venture Company namely “Compo Advics (India) Private Limited.” The Company had no subsidiary or associate company during the financial year under review.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 (''the Act''), a statement containing salient features of financial statements of the Joint Venture Company in Form AOC-1 is attached to the financial statements of the Company forming part of this Annual Report.

No subsidiary, joint venture or associate company were formed or ceased during the financial year under review.

8. CONSOLIDATED AUDITED FINANCIAL STATEMENTS

Pursuant to the provisions of Sections 129 and 133 of the Act read with the Companies (Accounts) Rules, 2014 and as required under Regulation 34 of the Listing Regulations, the Company has prepared Consolidated Audited Financial Statements consolidating financial statements of its Joint Venture Company namely “Compo Advics (India) Private Limited” with its financial statements in accordance with the applicable provisions of Indian Accounting Standards (“Ind-AS”).

The Consolidated Audited Financial Statements along with the Independent Auditors'' Report thereon are annexed and form part of this Annual Report.

The summarized consolidated financial position is provided in point no. 1 above.

9. RISK MANAGEMENT AND AREAS OF CONCERN

The Company has laid down a well-defined Risk Management Policy covering the risk mapping, trend analysis, risk exposure, potential impact, and risk mitigation process. Adetailed exercise is being carried out from time to time to identify, evaluate, manage and monitoring of both business and non-business risks. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework.

During the financial year 2022-23, the Risk Management Committee was reconstituted. Mr. Raghu Mody ceased to be member of the Risk Management Committee with effect from close of business hours of 11^th November, 2022 and Mr. P. K. Choudhary was designated as Chairman of the Risk Management Committee with effect from 12^lh November, 2022. Pursuant to the provisions of Regulation 21 of the Listing Regulations, as on 31^st March, 2023, Risk Management Committee comprised of Mr. Lalit Kumar Bararia and Mrs.Preeti Vimal Agrawal, Independent Directors as its members and Mr. P. K. Choudhry as Chairman of Committee. The Company Secretary and Compliance officer of the Company acts as the Secretary of the Committee.

The Committee assists the Board in fulfilling its oversight responsibilities with regard to enterprise risk management. The Committee reviews the risk management practices and

actions deployed by the Management with respect to identification, impact assessment, monitoring, mitigation and reporting of key risks while at the same time trying to achieve its business objectives.

This Committee''s responsibilities include achieving the objective of developing a risk mitigated culture that supports decision making and helps improving the Company''s performance as stated in the Risk Management Policy of the Company. The role and terms of reference of the Risk Management Committee are in conformity with the requirements of the Act and Regulation 21 of the Listing Regulations.

10. ANNUAL RETURN

Annual Return of the Company as on 31^st March, 2023 in accordance with the provision of Section 92(3) read with the Section 134(3)(a) of the Act will be placed on the website of the Company and can be accessed at the link https://www.hindcompo.com/investor-relations/annual-reports.htm.

11. DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)a) Composition

As on 31^st March, 2023, the Board comprised of seven directors including one independent women director. The Board has an appropriate mix of Executive Directors, Non-Executive Directors and Independent Directors, which is in compliance with the requirements of the Act and the Listing Regulations and is also aligned with the best practices of Corporate Governance.

b) Retirement by rotation

In accordance with the provisions of Section 152(6) of the Act read with the Companies (Management and Administration) Rules, 2014 and the Articles of Association of the Company, Mr. Raghu Mody (DIN: 00053329), Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment. The Board of Directors, on the recommendation of Nomination and Remuneration Committee, recommends his reappointment to the members of the Company.

c) Appointment and reappointment

Mr. P. K. Choudhary, who retried by rotation at previous 58^th Annual General Meeting held on 29^th September, 2022, was re-appointed as director of the company in terms of provisions of Section 152(6) of the Act.

Pursuant to the provisions of Section 203 of the Act read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 6 of the Listing Regulations, the Board of Directors of the Company appointed Mr. Pranabh Kapoor as the Company Secretary and Compliance Officer of the Company w.e.f. 11^,h November, 2022.

Further, upon resignation of Mr. Pranabh Kapoor from the services of the Company from close of business

hours of 13^lh April, 2023 , the Board of Directors of the Company appointed Mr. Ravi Vaishnav as the Company Secretary and Compliance Officer of the Company w.e.f. 30^,h June, 2023.

Mr. Raghu Mody, was re-appointed as the Executive Chairman & Whole Time Director of the Company for a period of 3 years w.e.f. 1^st October, 2020 till 30^th September, 2023 by passing a Special Resolution in the 56* Annual General Meeting of the Company held on 29* September, 2020. Mr. Raghu Mody stepped down from the executive position (Whole Time Director) of the Company due to his personal reasons w.e.f. close of business hours of 22^nd October, 2022; and his position was re-categorized as Chairman & Non-Executive Non-Independent Director of the Company w.e.f. 23^rd October, 2022. His tenure as Director of the Company would complete on 30^th September, 2023. The Board of Directors of the Company at its meeting held on 30* June, 2023, based on the recommendation of Nomination and Remuneration Committee, has reappointed Mr. Raghu Mody (DIN: 00053329) as a Chairman & Non-Executive Non-Independent Director of the Company, w.e.f. 1^5t October, 2023, subject to the approval of the Members of the Company. Mr. Raghu Mody has attained more than seventy five (75) years of age, and therefore his re-appointment requires approval of the Members of the Company by passing a Special Resolution in terms of the provisions of Regulation 17(1 A) of the Listing Regulations.

Upon the recommendations of Nomination and Remuneration Committee, the Board of Directors of the Company at its meeting held on 30^th June, 2023 appointed Mr. Vinay Sarin (DIN: 00090757) as Additional Non-Executive Non-Independent Director of the Company w.e.f. 1^st July, 2023, who shall hold office upto the date of ensuing Annual General Meeting of the Company.

The resolutions seeking approval of members for appointment of Mr. Vinay Sarin as Non - Executive Non-Independent Director and re-appointment of Mr. Raghu Mody as Non-Executive Non-Independent Director of the Company along with their brief resume as required under Regulation 36(3) of Listing Regulations and Secretarial Standard - 2 on General Meetings are given in the Notice convening the 59* Annual General Meeting of the Company. The Board recommends their appointment and reappointment respectively.

d) Cessation

There was no cessation from the Board of the Company during the financial year under review. Mr. Raghu Mody stepped down from the executive position (Whole Time Director) of the Company w.e.f. close of business hours of 22^nd October, 2022; however, he continues as Non-Executive Non-Independent Director of the Company.

Mr. Vikram Soni, Company Secretary and Compliance Officer of the Company resigned from the services of the Company w.e.f. the close of business hours of 8^th October, 2022.

Mr. Pranabh Kapoor, Company Secretary and Compliance Officer of the Company resigned from the

services of the Company w.e.f. the close of business hours of 13^,h April, 2023.

e) Declaration from Independent Directors

The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Act and Regulation 16(1 )(b) of the Listing Regulations and pursuant to the provisions of Regulation 25 of the said Regulations that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence. The Independent Directors have also confirmed that they have complied with Schedule IV of the Act and the Company''s Code of Conduct.

Further, the Independent Directors have also submitted their declarations in compliance with the provision of Rule 6(3) of the Companies (Appointment and Qualification of Directors) Rules, 2014, which mandates the inclusion of Independent Director''s name in the data bank of Indian Institute of Corporate Affairs (“MCA”) till they continue to hold the office of an independent director.

None of the directors of your Company are disqualified under the provisions of Section 164(2) of the Act. Your directors have made necessary disclosures, as required under various provisions of the Act and the Listing Regulations.

In the opinion of the Board, all the independent directors are person of integrity and possess relevant expertise and experience and are independent of the management.

f) Annual Performance and Board Evaluation

The Board has devised a policy pursuant to the provisions of the Act and the Listing Regulations for performance evaluation of the chairman, board, individual directors (including independent directors) and committees which includes criteria for performance evaluation of non-executive directors and executive directors.

The Nomination and Remuneration Committee of the Company has specified the manner of effective evaluation of the performance of Board, its committees and individual directors of the Company and has authorized the Board to carry out the evaluation. Based on the manner specified by the Committee, the Board has devised questionnaire to evaluate its performance and performance of its committees and individual directors and the chairperson. Such questions are prepared considering the business of the Company and the expectations that the Board has from each of the directors. The performance of each committee was evaluated by the Board, based on the report on evaluation received from respective Board committees. The reports on performance evaluation of the individual directors were reviewed by the Chairman of the Board.

The evaluation framework for assessing the performance of directors comprises of the following key areas:

i. Attendance at Board and Committee Meetings;

ii. Quality of contribution to Board deliberations;

iii. Strategic perspective or inputs regarding future growth of the Company and its performance; and

iv. Providing perspective and feedback going beyond information provided by the management.

The details of the programmes for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at the link: https://www.hindcompo.com/investor-relations/documents/ familiarisation-programes-for-indepedent-directors.pdf.

g) Key managerial Person nel (KM P)

The Key Managerial Personnel of the Company are as follows:

Sr. No.	Name	Designation
1.	Mr. Raghu Mody1	Chairman, Non-Executive Director (Promoter)
2.	Mr. P. K. Choudhary	Managing Director
3.	Mr. Sunil Jindal	Chief Financial Officer
4.	Mr. Vikram Soni	Company Secretary and Compliance Officer (Upto 8lh October, 2022)
5.	Mr. Pranabh Kapoor	Company Secretary and Compliance Officer (During the period from 11th November, 2022 to 13th April, 2023)
6.	Mr. Ravi Vaishnav	Company Secretary and Compliance Officer (W.e.f. 30th June, 2023)

Note:

1. Stepped down from the executive position (Whole Time Director) of the Company with effect from close of business hours of 22^nd October, 2022 and continues as Chairman & Non-Executive Non-Independent Director of the Company.

12. MANAGERIAL REMUNERATION AND OTHER DETAILS

Disclosure pertaining to remuneration and other details as required under Section 197 of the Act read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in this Report as “Annexure -A” and forms part of this Annual Report.

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided in a separate annexure forming part of this Report. Further in terms of Section 136 of the Act, the report and accounts are being sent to the members excluding the aforesaid annexure. The said annexure is available for inspection at the registered office of the Company during the working hours and any member interested in obtaining copy of the same may write to the Company Secretary and Compliance Officer of the Company and the same will be furnished on request.

13. REMUNERATION POLICY

Pursuant to the provisions of Section 178 of the Act and Regulation 19 of the Listing Regulations and on the recommendation of the Nomination and Remuneration Committee, the Board of Directors of the Company has adopted a policy for selection and appointment of Directors, Key Managerial Personnel (KMP), Senior Management Personnel (SMP), other employees and their remuneration including criteria for determining qualifications, positive attributes, independence of a director and other related matters.

The Remuneration Policy is placed on the website of the Company viz. www.hindcompo.com.

14. MEETINGS OF THE BOARD

The Board met five times during the financial year under review, the details of which are given in the Corporate Governance Report, which forms part of this Annual Report. The intervening gap between the two consecutive meetings was within the period prescribed under the Act and the Listing Regulations.

15. COMMITTEES OF THE BOARD

Details of the Committees constituted by the Board under the Act and the Listing Regulations, along with their composition and changes, if any, and the number and dates of meetings held during the financial year under review are provided in the Corporate Governance Report, which forms part of this Report.

16. AUDIT COMMITTEE AND ITS COMPOSITION

The Audit Committee is duly constituted as per the provisions of Section 177 of the Act and Regulation 18ofthe Listing Regulations.

During the financial year under review, Mr. P. K. Choudhary, Managing Director, was appointed as Member of the Committee effective from 12*¹ November, 2022 in place of Mr. Raghu Mody, who ceased to be the member of the Audit Committee w.e.f. 11^th November, 2022.

As on 31^st March, 2023, the Audit Committee comprised of Mr. Lalit Kumar Bararia, Mr. A. B. Vaidya, Mr. Deepak Sethi, Lt. Gen. (Retd.) K. S. Brarand Mr. P. K. Choudhary.

Mr. Lalit Kumar Bararia is Chairman of the Audit Committee. The Company Secretary and Compliance officer of the Company acts as the Secretary of the Audit Committee. All the recommendations made by the Audit Committee were accepted by the Board of Directors of the Company. Other details with respect to Audit Committee are given in Corporate Governance Report, which forms part of this Annual Report.

The Audit Committee reviews the reports to be submitted to the Board of Directors with respect to auditing and accounting matters, etc. It also supervises the Company''s internal control, financial reporting process and vigil mechanism.

17. DIRECTORS'' RESPONSIBILITY STATEMENT

Your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them and as required under Section 134(3)(c) read with Section 134(5) of the Act state that:

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

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that 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;

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

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

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

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

18. PUBLIC DEPOSITS

During the financial year under review, the Company has not accepted or renewed any public deposit within the meaning of Sections 73 and 76 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014. As on 31^st March 2023, there were no deposits which were unclaimed / unpaid and due for repayment.

19. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1)OFTHE ACT

All contracts / arrangements / transactions entered by the Company during the financial year under review with related parties were in ordinary course of business and on arm''s length basis and are entered into based on considerations of various business exigencies, such as synergy in operations, their specializations etc. and to further the Company''s interests.

During the financial year under review, the Company had no material transactions with related parties falling under the scope of Section 188(1) of the Act. Hence, the Company is not required to furnish disclosure of material related party transactions as required under Section 134(3)(h) of the Act in Form AOC-2 for the financial year under review.

In accordance with the provisions of Regulation 23 of the Listing Regulations, the Company has adopted the policy on related party transactions and the same is available on the Company''s website viz. https://www.hindcompo.com/ investor-relations/documents/related-party-transaction-policy.pdf.

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

The details of loans, guarantee or investments made by the Company as required under Section 186 of the Act are given under notes to accounts on financial statements forming part ofthisAnnual Report.

21. CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

Pursuant to the provisions of Section 135 of the Act read with the Companies (Corporate Social Responsibility) Rules, 2014, the Company has formed Corporate Social Responsibility Committee and a Policy on Corporate Social Responsibility (''CSR''). As part of its initiatives under CSR in order to support and assist the Central Government to strengthen the country''s fight against the post -pandemic situation or any other kind of emergency or distressed situation, the Company contributed a sum off. 70.00 Lakhs to the PM CARES Fund towards its CSR obligations for the financial year under review. The policy on Corporate Social Responsibility has been placed on the website of the Companyviz. www.hindcompo.com.

As required under the provisions of Rule 8 of the Companies (Corporate Social Responsibility) Rules, 2014, a brief outline/salient features of the Company''s CSR Policy and the Annual Report on CSR activities undertaken by the Company during the financial year under review are given in “Annexure - B”, which forms part of this Report.

22. WHISTLE BLOWER/ VIGIL MECHANISM POLICY

The Company has a Vigil Mechanism / Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The mechanism also provides for adequate safeguards against victimization of directors and employees who avails of the mechanism and also provide for direct access to the Chairman of the Audit Committee in appropriate and exceptional cases.

The details of the Vigil Mechanism Policy are explained in the Corporate Governance Report and the policy has been placed on the website of the Company viz. www.hindcompo.com.

We affirm that during the financial year under review, no employee or director was denied access to the Chairman of the Audit Committee.

23. STATUTORY AUDITORS

As per provisions of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company in their 58^lh Annual General Meeting held on 29^lh September, 2022 appointed M/s. Lodha & Company, Chartered Accountants, Mumbai (Firm Registration No. 301051E), as the Statutory Auditors of the Company for a term of consecutive 5 years i.e. to hold office from the conclusion of 58^th Annual General Meeting till the conclusion of 63^rt Annual General Meeting of the Company to be held for the financial year ending 31^st March, 2027.

M/s. Lodha & Company has furnished written confirmation to the effect that they are not disqualified from acting as the Statutory Auditors of the Company in terms of the provisions of Sections 139 and 141 oftheActand the Companies (Audit and Auditors) Rules 2014.

24. SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204(1) of the Act read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. M Baldeva Associates, Company Secretaries, Thane to undertake Secretarial Audit of the Company for the financial year under review.

The Secretarial Audit Report is annexed to this report as “Annexure-C” and forms part of this Report.

25. INTERNALAUDITORS

Pursuant to the provisions of Section 138 of the Act read with the Companies (Accounts) Rules, 2014, the Board, on recommendation of the Audit Committee, re-appointed M/s. S M M P & Associates, Chartered Accountants, Mumbai, as Company''s I nternal Aud itors for the financial year 2023-24.

The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control system in the Company, its compliances with operating systems, accounting procedures and policies at all locations of the Company and reports are presented to the Audit Committee periodically.

26. COST RECORDS AND COST AUDITORS

As required under Section 148(1) of the Act, the Company has prepared and maintained cost accounts and cost records in the prescribed manner for its products viz. Railway Brake Block manufactured atAurangabad unit.

As per the provisions of Section 148(2) & (3) of the Act read with the Companies (Audit and Auditors) Rules, 2014, the Board of Directors of the Company has appointed M/s. M. R. Pandit & Co., Cost Accountants, Aurangabad (Firm Registration No: 00268) as Cost Auditors of the Company to conduct audit of cost records maintained by the Company of

its products viz. Railway Brake Block manufactured at Aurangabad unit for the financial year 2023-24. A resolution seeking ratification of the remuneration payable to the Cost Auditors by the members of the Company is proposed in the Notice of the ensuing 59Annual General Meeting of the Company.

27. COMMENTS ON QUALIFICATION BY STATUTORY AUDITORS AND SECRETARIAL AUDITORS

There is no qualification / observation / adverse remark in Statutory Auditors'' Report.

With respect to observations made by the Secretarial Auditors in their report, your directors would like to state that:

Delay in filing of one e-form with the Registrar of Companies was on account of technical glitches at newly launched version 3 of Ministry of Corporate Affairs website.

Further, none of the Auditors of the Company have reported any fraud as specified under the second proviso of Section 143(12)oftheAct.

28. MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE REPORT

Pursuant to the provisions of Regulations 34(2) & (3) and Schedule V of the Listing Regulations, the following have been made part of the Annual Report and are attached to this Annual Report:

• Management Discussion and Analysis Report,

• Corporate Governance Report,

• Declaration on compliance with Code of Conduct,

• Certificate from Practicing Company Secretary that none of the directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as director of companies, and

• Auditors''Certificate regarding compliance of conditions of Corporate Governance.

29. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

There was no significant or material order passed by any regulator or court or tribunal, which impacts the going concern status of the Company or will have a bearing on Company''s operations in future.

30. INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has in place proper and adequate internal control systems commensurate with the nature of its business, size and complexity of its business operations. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, compliance with policies, procedures, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and adequately protected.

31. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the provisions of Section 124(5) of the Act read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (''the Rules''), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF Authority established by the Government of India after the completion of seven years. Further, according to provisions of Section 124(6) of the Act read with the aforesaid said Rules, the shares on which dividend remains unpaid or unclaimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. Accordingly, during the financial year under review, the Company transferred 15,718 equity shares to the demat account of the IEPF Authority on which the dividend remained unclaimed / unpaid upto financial years 2014-15.

In terms of the provisions of Sections 124(5) and 125 of the Act and said Rules, during the financial year under review, an amount of ? 1,95,365/- being remained unpaid / unclaimed dividend for the financial year 2014-15 was transferred to the IEPF Authority.

Further, the unpaid and unclaimed dividend amount lying with the Company for financial year 2015 - 16 is due to transfer to the IEPF in the month of October, 2023. The details of the same are available on the Company''s website viz. www.hindcompo.com.

During the financial year under review, Mr. Pranabh Kapoor, Company Secretary and Compliance Officer of the Company was appointed as the Nodal Officer to ensure compliance with the IEPF Rules. Upon the resignation of Mr. Pranabh Kapoor, Company Secretary and Compliance Officer of the Company, Mr. P. K. Choudhary, Managing Director of the Company was appointed as the Nodal Officer to ensure compliance with the IEPF Rules. Upon appointment of Mr. Ravi Vaishnav as Company Secretary and Compliance Officer of the Company, Mr. Ravi is being appointed as Nodal Officer to ensure compliance with the IEPF Rules w.e.f. 30”''June, 2023.

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

Pursuant to the provisions of Section 134(3)(m) of the Act read with Rule 8 of the Companies (Accounts) Rules, 2014 details regarding Conservation of Energy, Technology Absorption, Foreign Exchange earnings and outgo are given in “Annexure - D”, which forms part of this Report.

33. CREDIT RATINGS:

Acuite Ratings & Research Limited has reaffirmed the following credit ratings for Company''s long term and short term instruments:

Scale	Amount (Â¥ in Crore)	Rating
Long Term Instruments (fund based facilities)	16.00	ACUITE A-/Stable
Short Term Instruments (nonfund based facilities)	9.00	ACUITE A2
Total	25.00

34. COMPLIANCE WITH SECRETARIAL STANDARDS

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and your directors confirm compliance of the same during the financial year under review.

35. INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has complied with the provisions relating to the constitution of the Internal Committee as required under Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the financial year under review, there was no complaint filed before the said Committee and there was no complaint pending at the beginning or end of the financial year under review.

36. DETAILS OF PROCEEDINGS UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016

During the financial year under review, no application was made or proceeding initiated against the Company under the Insolvency and Bankruptcy Code, 2016 nor any such proceeding was pending at the end of the financial year under review.

37. VALUATION OF ASSETS

During the financial year under review, there was no instance of one-time settlement of loans / financial assistance taken from Banks or Financial Institutions, hence, the Company was not required to carry out valuation of its assets for the said purpose.

38. TRANSFER OF UNCLAIMED SHARES TO UNCLAIMED SUSPENSE ACCOUNT OF THE COMPANY

During the financial year under review, the Company was not required to transfer any share to the unclaimed suspense account as specified in Schedule VI of the Listing Regulations. The details of the number of shares transferred from the Unclaimed suspense account to the respective shareholders are provided in the Corporate Governance report, which forms part of this Annual Report.

39. APPRECIATION

Your directors would like to place on record their sincere appreciation for the continued co-operation, guidance, support and assistance extended during the financial year under review by our bankers, customers, suppliers and Government agencies. The Board also wishes to express its appreciation for the valuable contribution made by the employees at all levels during the financial year under review.

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Mar 31, 2018

DIRECTORS’ REPORT

To the Members, Hindustan Composites Limited,

The Directors are pleased to present the Fifty Fourth Annual Report together with the Standalone and Consolidated Audited Financial Statements for the year ended 31^st March, 2018.

1. FINANCIAL RESULTS

The Company’s financial performance, for the year ended 31^st March, 2018 is summarized below:

(Rs, in Lakhs)

	Standalone		Consolidated
	2017-18	2016-17	2017-18	2016-17
Revenue from Operations	20,335.95	18,162.38	20,335.95	18,162.38
Other Income	44.77	110.54	44.77	110.54
Profit before Interest, Depreciation and Taxes	3,723.55	3,990.76	3,487.05	3,823.68
Less: Interest	30.82	19.75	30.82	19.75
Less: Depreciation (Net)	863.52	771.04	863.52	771.04
Profit Before Tax	2,829.21	3,199.97	2,592.71	3,032.89
Less: Provision for Tax	291.85	711.44	291.85	711.44
Profit After Tax	2,537.36	2,488.53	2,300.86	2,321.45
Other Comprehensive
Other Comprehensive Income/(Loss)/(Net of Tax)	2,241.76	3,396.15	2,241.76	3,396.14
Total Comprehensive Income/(Loss)	4,779.12	5,884.68	4,542.62	5,717.59

The Financial Statements have been prepared in accordance with the applicable Indian Accounting Standards (“IndAS”) as prescribed under section 133 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014.

2. OPERATIONAL PERFORMANCE

The Company achieved a total revenue of Rs, 20,335.95 Lakhs, representing a growth of 12% over the previous year. The manufacturing revenue increased by 14% from Rs, 14,043.45 Lakhs to Rs, 16,013.58 Lakhs. This was achieved despite challenging market condition in the first half of the year, with implementation of GST from 1^st July, 2017. However the situation improved in the second half of the year.

Investment income during the year was also higher at Rs, 4,322.38 Lakhs, as against Rs, 4,118.92 Lakhs in the previous year. This was achieved with judicious deployment of funds in various asset classes, despite volatile interest rate conditions.

The gross profit of the Company was slightly lower at Rs, 3,723.55 Lakhs, as against Rs, 3,990.76 Lakhs. After considering interest of Rs, 30.82 Lakhs and depreciation of Rs, 863.52 Lakhs, Profit Before Tax was Rs, 2,829.21 Lakhs and net Profit After Tax was Rs, 2,537.36 Lakhs. Other Comprehensive Income (OCI) net of Tax was Rs, 2,241.76 Lakhs, as against Rs, 3,396.15 Lakhs. The total comprehensive income after tax during the year was Rs, 4,779.12 Lakhs, as against Rs, 5,884.68 Lakhs in the previous year.

The profitability was impacted mainly due to continuous cost pressures with commodity prices going-up. This impact could not be fully passed on to the customers because of competitive market conditions and fixed rate contracts with the Railway and other customers.

The Indian Automotive Industry posted a healthy growth with most segments reporting double digit increase in sales. While Passenger Vehicles grew at 7.89%, other segments including Commercial Vehicles, 2/3 Wheelers, Tractors have grown in double digits and their sales hit a new record during the year. Ban on over-loading, market shift to higher tonnage vehicles and a positive effect of GST also boosted the commercial vehicle sales.

The forecast from Industry body SIAM expects Passenger Vehicle Sales to grow at a high single digit rate in 2018-19, while Commercial Vehicle are likely to grow at low double digits.

Although, economic scenario appears positive, there are concerns relating to increase in international prices of Crude and other commodity prices, resulting inflationary pressure in the Company’s raw material cost. Challenging and competitive market conditions may prevent the Company from passing on the entire burden of cost increase to its customers. However, company will continue to emphasis on improvement in operational efficiencies, higher productivity with prudent cost control measures.

The Company’s Railway business has shown slight increase in Sales, but price realization remain low due to highly competitive conditions on account of many approved manufacturers with surplus capacity. With continuous pressure on price realization, coupled with increase in manufacturing costs, the Company expects this segment to remain under stress.

In the Investment segment, the situation is likely to remain challenging with fluctuation in Interest rates, volatile stock market and fear of Bank NPA’s. The Company will continue to maintain its conservative approach towards deployment of its funds, keeping capital protection in focus.

The Company participated in Aftermarket Auto-Expo 2018 at Guwahati in December, 2017, the Auto-Expo show at Pragati Maidan, New Delhi in February, 2018 and 10th Indonesia International Auto Parts, Accessories and Equipment Exhibition 2018 at Jakarta in March 2018. The response from Domestic and International customers was encouraging. The Company continues to carry-out several sales promotion initiatives, including Retailer Meet, Garage Campaigning and Road Shows, both in India and Overseas to improve its market position.

The Company entered into a long-term settlement with workmen at its Bhandara Plant for a period of 3 years, effective from August, 2017.

During the year the Company entered into a long-term Technical Assistance Agreement with TBK Co. Ltd., headquartered in Tokyo, Japan and having a largest shareholding of ISUZU Motors Ltd., to obtain Technical Assistance for manufacture of Commercial Vehicle Brake Friction Materials in India.

This association with TBK Co. Ltd., will help us to bring innovative technology for Brake Lining and Disc Brake Pad for Commercial Vehicles in India.

The working of Company’s Joint Venture viz. Compo-Advics (India) Pvt. Ltd. was lower than the plan, mainly due to highly competitive market condition.

Based on the above positive scenario, the Company remains optimistic for the increase in demand of its products. Accordingly, the Company has geared to meet the demand through continuous investment in capacity expansion, introduction of new products and improvement in quality.

There was no change in the nature of business of the Company during the year under review. Similarly, there have been no material changes and commitments affecting the financial position of the Company between the end of the Company’s financial year to which the financial statements relate and upto the date of this report.

3. SHARE CAPITAL OF THE COMPANY

During the year under review, the Company has obtained the shareholders’ approval for the following matters through postal ballot process, the results of which were declared on 13^th May, 2017:

1) Sub-division of existing 1 equity share having face value of Rs, 10 each fully paid-up into 2 equity shares having face value of Rs, 5 each;

2) Increase in Authorized Share Capital of the Company from Rs, 6 crore to Rs, 8 crore divided into 1.6 crore equity shares of Rs, 5 each and subsequent alteration of Capital Clause of Memorandum of Association to give effect to the sub-division of shares and increase in the authorized share capital; and

3) Issue of 49,23,000 bonus equity shares in proportion of 1:2 (i.e. 1 new bonus equity share of Rs, 5 each for every 2 equity shares of Rs, 5 each held) (Post split face value per equity share).

After giving effect to the above, the issued, subscribed and paid up share capital of your Company as on 31^stMarch, 2018 was Rs, 7,38,45,000 (Rupees Seven Crore Thirty Eight Lakhs Forty Five Thousand only) divided into 1,47,69,000 equity shares of the face value of Rs, 5 (Rupees Five) each fully paid up.

4. DIVIDEND

Your Directors have recommended a dividend of Rs, 0.50 per share, being 10% of equity share capital for the year ended 31^st March, 2018. The Corporate Dividend Tax of Rs, 15.03 Lakhs (previous year 15.03 Lakhs) will be payable on the total dividend amount of Rs, 73.85 Lakhs (previous year 73.85 Lakhs).

5. RESERVES

During the year under review 1,500.00 Lakhs (previous year

1,500.00 Lakhs) was transferred to the General Reserve.

6. SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES

Your Company has a Joint Venture Company namely “Compo Advics (India) Private Limited”. The Company had no subsidiary or associate company during the year under review.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the Joint Venture Company in Form AOC 1 is attached to the financial statements of the Company forming part of this Annual Report.

7. CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to the provisions of Sections 129 and 133 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 and as required under Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has prepared Consolidated Financial Statements consolidating financial statements of its Joint venture Company namely “Compo Advics (India) Private Limited” in its financial statements in accordance with the applicable provisions of Indian Accounting Standards (“IndAS”).

The Consolidated Financial Statements along with the Independent Auditors’ Report thereon are annexed and form part of this Report.

The summarized consolidated Financial position is provided above in point no. 1 of this Report.

8. RISKS AND AREAS OF CONCERN

The Company has laid down a well-defined Risk Management Policy covering the risk mapping, trend analysis, risk exposure, potential impact and risk mitigation process. A detailed exercise is being carried out from time to time to identify, evaluate, manage and monitoring of both business and non-business risk. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework.

9. EXTRACT OF ANNUAL RETURN

An extract of Annual Return in Form MGT 9 is annexed to this Report as "Annexure - A” and forms a part of this report.

10. DIRECTORS AND KMP

a) Retirement by rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014 and Articles of Association of the Company, Mrs. Sakshi Mody (DIN: 06518139), Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, has offered herself for re-appointment and your Board recommends her re-appointment.

b) Appointment

The Members, in its 53^rd Annual General Meeting held on 12^th September, 2017, approved the re-appointment of Mr. Raghu Mody (DIN: 00053329) as Executive Chairman and Whole time Director of the Company for a period of three years commencing from 1^st October, 2017 to 30^th September, 2020 and appointment of Mr. Chakrapani B. Misra (DIN: 07184034) as (NonExecutive) Independent Director of the Company to hold office for a term up to 22^nd May, 2022.

Pursuant to the provisions of Section 149 of the Companies Act, 2013, Mr. A. B. Vaidya (DIN 00246208) and Lt. Gen. (Retd.) K. S. Brar (DIN: 01146720) were appointed as (Non- Executive) Independent Directors for five consecutive years by the members of the Company in its 50^th Annual General Meeting held on 1^st September, 2014 and holds office up to 31^st March, 2019.

Mr. A. B. Vaidya and Lt. Gen. (Retd.) K. S. Brar are eligible for re-appointment as (Non-Executive) Independent Directors for another term of 5 consecutive years. Pursuant to the provisions of Section 149(10) of the Companies Act, 2013 and based on the recommendations of Nomination and Remuneration Committee of the Company, the Board recommends for approval of members through Special Resolutions in 54^th Annual General Meeting for their re-appointment as (Non - Executive) Independent Directors for another five consecutive years from 1^st April, 2019 to 31^st March, 2024.

Brief resume of the Directors proposed to be appointed/re-appointed as stipulated under Regulation 26(4) and 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and SS-2 is given in the Notice convening the 54^th Annual General Meeting of the Company.

Mr. Vikram Soni has been appointed as the Company Secretary and Compliance Officer of the Company w.e.f. 8^thMay, 2018. The appointment of Mr. Vikram Soni as Company Secretary and Compliance Officer of the Company is pursuant to the provisions of Section 203 of the Companies Act, 2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 and Regulation 6 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

c) Cessation

Mr. Amit Goenka has resigned as Company Secretary and Compliance Officer of the Company w.e.f. the close of business hours of 7^th May, 2018, however he continues to remain in the services of the Company.

Mr. K M Robinson, (DIN: 02353919) (Non -Executive) Independent Director of the Company expired on 11^thJanuary, 2018, accordingly he ceased to be director of the Company from that date. The Board places on record its sincere appreciation for the valuable contribution made by him during his tenure as director of the Company.

d) Declaration from Independent Directors

The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

e) Annual Performance and Board Evaluation

The Board has devised a policy pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, for performance evaluation of the Chairman, Board and individual Directors (including Independent Directors) and Committees which includes criteria for performance evaluation of Non-executive Directors and Executive Directors.

The Board has devised questionnaire to evaluate the performances of Board, Board Committees and individual Directors and Chairperson. The Chairman of respective Board Committees shared the report on evaluation with the respective Committee members. The performance of each Committee was evaluated by the Board, based on report on evaluation received from respective Board Committees. The reports on

11. MANAGERIAL REMMUNERATION AND OTHER DETAILS

Disclosure pertaining to remuneration and other details as required under Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are provided in this Report as “Annexure -B” and forms a part of this report.

The statement containing particulars of employees as required under Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rule, 2014 is provided in a separate annexure forming part of this report. performance evaluation of the individual Directors were reviewed by the Chairman of the Board.

The evaluation framework for assessing the performance of Directors comprises of the following key areas:

i. Attendance at Board Meetings and Committee Meetings;

ii. Quality of contribution to Board deliberations;

iii. Strategic perspectives or inputs regarding future growth of Company and its performance;

iv. Providing perspectives and feedback going beyond information provided by the management.

The details of the programmes for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at the link: http://www.hindcompo.com/investorrelations/ documents/familiarisation-programes-forindependent directors.pdf

Sr. No.	Name of the Director	Designation
1.	Mr. Raghu Mody	Executive Chairman
2.	Mr. P. K. Choudhary	Managing director
3.	Mr. Sunil Jindal	Chief Financial Officer
4.	Mr. Amit Goenka	V.P. Finance & Company Secretary (Resigned w.e.f. 7th May, 2018)
5	Mr. Vikram Soni	Company Secretary and Compliance Officer (Appointed w.e.f. 8th May, 2018)

f) Key managerial Personnels (KMP)

The Key Managerial Personnel of the Company are as follows:

Further in terms of Section 136 of the Act, the report and accounts are being sent to the members excluding the aforesaid annexure. The said annexure is available for inspection at the registered office of the Company during the working hours and any member interested in obtaining a copy of the same may write to the Company Secretary and the same will be furnished on request.

12. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy has been placed on the website of the company viz. www.hindcompo.com.

13. AUDIT COMMITTEE AND ITS COMPOSITION

As on 31^st March, 2018, the Audit Committee comprised of Mr. A. B. Vaidya, Mr. Chakrapani B. Misra, Mr. Deepak Sethi, Lt. Gen. (Retd.) K. S. Brar and Mr. Raghu Mody.

Mr. Chakrapani B. Misra is Chairman of Audit Committee of the Company. Company Secretary of the Company acts as the Secretary of the Audit Committee. All the recommendations made by the Audit Committee were accepted by the Board of Directors of the Company.

The Audit Committee of the Company reviews the reports to be submitted to the Board of Directors with respect to auditing and accounting matters. It also supervises the Company’s internal control, financial reporting process and vigil mechanism.

14. MEETINGS OF THE BOARD

The Board met six times during the year, the details of which are given in the Corporate Governance Report. The intervening gap between the two consecutive meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

15. DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them and as required under Section 134(5) of the Companies Act, 2013 state that:

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

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that 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;

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

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

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

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

16. DEPOSITS

During the year under review, the Company has not accepted any deposits within the meaning of Section 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

17. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT 2013

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 basis and are entered into based on considerations of various business exigencies, such as synergy in operations, their specializations etc. and to further the Company’s interests.

During the Financial Year 2017-18, the Company had entered into contracts / arrangements / transactions with related party, the details of which as referred to in Section 188(1) of the Companies Act, 2013 in the prescribed Form AOC-2 under Companies (Accounts) Rules, 2014 is annexed to this report as ”Annexure - C” and forms a part of this report.

The policy on Related Party Transactions as approved by the Board of Directors is available on the Company’s website at http://www.hindcompo.com/investor-relations/ documents/ related-party-transaction-policy.pdf

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

The details of loans, guarantees or investments made under Section 186 of the Companies Act, 2013 are given under Notes to Accounts on financial statements forming part of this Annual Report.

19. CORPORATE SOCIAL RESPONSIBILITY INITIATIVE

Pursuant to the provisions of Section 135 read with Companies (Corporate Social Responsibility) Rules, 2014, the Company has formed Corporate Social Responsibility Committee and a Policy on Corporate Social Responsibility (CSR). As part of its initiatives under CSR, the Company has undertaken project for promoting education in accordance with Schedule VII of the Companies Act, 2013.

The details as per the provisions of Rule 8 of Companies (Corporate Social Responsibility) Rules, 2014 is annexed to this report as “Annexure - D” and forms a part of this report.

20. WHISTLE BLOWER/ VIGIL MECHANISM POLICY

The Company has a Vigil Mechanism / Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The mechanism also provides for adequate safeguards against victimization of directors and employees who avails the same in the exceptional cases. The details of the Vigil Mechanism Policy is explained in the Corporate Governance Report and also posted on the website of the Company at www.hindcompo.com. We affirm that during the financial year 2017-18, no employees or directors were denied access to the Audit Committee.

21. STATUTORY AUDITORS

As per provisions of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company in their 53^rd Annual General Meeting held on 12^th September, 2017 appointed M/s. Bagaria & Co. LLP, Chartered Accountants, Mumbai, (Firm Registration No. 113447W), as the Statutory Auditors of the Company for a term of consecutive 5 years i.e. to hold office from the conclusion of 53^rd Annual General Meeting till the conclusion of 58^th Annual General Meeting of the Company to be held for the financial year ending 31^st March, 2022, subject to the ratification by members of the Company every year.

However, the aforesaid Section 139 is amended by the

However, the aforesaid Section 139 is amended by the Companies (Amendment) Act, 2017 w.e.f. 7^th May, 2018 and as per amended section, the appointment of auditors is no more required to be ratified every year in Annual General Meeting. Accordingly, the ratification of appointment of M/s. Bagaria & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company is no more required and they will hold office upto the conclusion of 58^thAnnual General Meeting of the Company to be held for the financial year ending on 31^st March, 2022.

M/s. Bagaria & Co. LLP, has furnished written confirmation to the effect that they are not disqualified from acting as the Statutory Auditors of the Company in terms of the provisions of Section 139 and 141 of the Companies Act, 2013 and Rules framed there under.

22. SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. M Baldeva Associates, Company Secretaries, Thane to undertake Secretarial Audit of the Company for the year 2017-18. The Secretarial Audit Report is annexed to this report as “Annexure - E” and forms a part of this report.

23. INTERNAL AUDITORS

The Company has appointed M/s. S M M P & Associates, Chartered Accountants, Mumbai, as its Internal Auditors. The Internal Auditors monitor and evaluate the efficacy and adequacy of internal control system in the Company, its compliances with operating systems, accounting procedures and policies at all locations of the Company and report the same to the Audit Committee on quarterly basis.

24. REMARKS ON QUALIFICATION BY STATUTORY AUDITORS AND SECRETARIAL AUDITORS

There is no qualification / observation / adverse remark in Statutory Auditor’s Report.

With respect to observation made by the Secretarial Auditors in their report regarding delay in filing of certain e-forms, we would like to state that the delay in filling of e-forms was due to oversight.

25. MANAGEMENT DISCUSSION AND ANALYSIS AND CORPORATE GOVERNANCE REPORT

Pursuant to Regulation 34(3) and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the following have been made a part of the Annual Report and are attached to this report:

- Management Discussion and Analysis Report

- Corporate Governance Report

- Auditors’ Certificate regarding compliance of conditions of Corporate Governance

26. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

There was no significant or material order passed by any regulator or court or tribunal, which impacts the going concern status of the Company or will have bearing on company''s operations in future.

27. INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has in place proper and adequate internal control systems commensurate with the nature of its business, size and complexity of its business operations. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, compliance with policies, procedures, applicable laws and regulations and that all assets and resources are acquired economically used efficiently and adequately protected.

28. INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the provisions of Section 125 of the Companies Act, 2013, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (‘the rules’), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Government of India after the completion of seven years. Further, according to the said Rules, the shares on which dividend remained unpaid or unclaimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. Accordingly, the Company has transferred corresponding shares to the demat account of the IEPF Authority as per the requirements of the IEPF rules for the dividend remained unclaimed /unpaid up to the financial year 2009-10.

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

Details regarding Conservation of energy, Technology Absorption, Foreign exchange earnings and outgo is annexed to this report as "Annexure - F” and forms a part of this report. z

30. COMPLIANCE WITH SECRETARIAL STANDARDS:

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and your directors confirm compliance of the same during the year under review.

31. INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has constituted an internal complaint committee under Section 4 of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year there was no complaint filed before the said Committee.

32. DISCLOSURES PURSUANT TO REGULATION 14 OF SEBI (SHARE BASED EMPLOYEE BENEFITS) REGULATIONS, 2014

A. Details related to GEBS

a) Date of Shareholders’ approval: Approved by the shareholders of the Company in the 51^st Annual General Meeting held on 18^th September 2015.

b) Kind of benefits to be granted under the Scheme:

Providing assistance to meet medical expenses, providing assistance/reimbursement to meet cost of tuition and other fees and expenses in connection with providing higher education/and professional courses, providing assistance to meet marriage expenses, to sponsor holidays trips and get-togethers and such other benefits as more particularly described in object clause of the Trust Deed.

c) Beneficiaries of the Scheme:

Such persons who are in permanent employment of the company for at least 5 years and are designated as Officers and Managers and their spouse, parents and children, who for the time being is nominated to be a beneficiary, as may be determined by the Nomination and Remuneration Committee from time to time, but shall not include directors or promoters of the company.

d) Total assets of the Scheme:

'' 8,79,32,856 as per the audited balance sheet of the Trust as on 31^st March, 2018.

e) Quantum of holding in own shares / listed holding company shares (both absolute and in percentage):

5,26,434 (3.56%) Equity Shares of '' 5 each of the Company.

f) Whether scheme is in compliance of regulation 26(2)/27(3) of the regulations, as applicable: No.

g) Variation in terms of Scheme: Not Applicable B. Details related to Trust

i. General information on all schemes

Sr. No.	Particulars	Details
A	Number of shares held at the beginning of the year (2,23,963 equity shares having face value of ''10 each were sub-divided into 2 equity shares having face value of '' 5 each)	4,47,926 (of '' 5 each)
B	Number of shares acquired during the year through (i) primary issuance (ii) secondary acquisition, also as a percentage of paid up equity capital as at the end of the previous financial year, along with information on weighted average cost of acquisition per share;	2,23,963 (of '' 5 each) (Bonus shares allotted)
C	Number of shares transferred to the employees / sold along with the purpose thereof;	1,45,455 (of '' 5 each)
D	Number of shares held at the end of the year	5,26,434 (of '' 5 each)

Number of shares	As a percentage of paid-up equity capital as at the end of the year immediately preceding the year in which shareholders’ approval was obtained
Held at the beginning of the year (2,23,963 equity shares having face value of '' 10 each were sub-divided into 2 equity shares having face value of '' 5 each)	4,47,926 (of '' 5 each) (4.55%)
Acquired during the year - Bonus shares allotted in ratio of 1:2	2,23,963 (of '' 5 each)
Sold during the year	1,45,455 (0.99%) (of '' 5 each)
Transferred to the employees during the year	Nil
Held at the end of the year	5,26,434 (3.56%) (of '' 5 each)

Sr. No.	Particulars	Details
1	Name of the Trust	Carnation Welfare Trust
2	Details of the Trustee(s)	Mr. Snehal N. Muzoomdar Practicing Chartered Accountant Address: 52, Walchand Terraces, Tardeo Air Conditioned Market, Mumbai - 400034 Mr. Nilanjan Ghose Practicing Advocate Address: Khaitan & Co., One Indiabulls Centre, 13th Floor, Tower 1, Elphinstone Road,Mumbai 400013 IDBI Trusteeship Services Limited Private Trust Address: Asian Building, 17, R. Kamani Marg, Ballard Estate, Mumbai - 400001
3	Amount of loan disbursed by the Company/ any company in the group, during the year	Nil
4	Amount of loan outstanding (repayable to the company/ any company in the group) as at the end of the year	Nil
5	Amount of loan, if any, taken from any other source for which company / any company in the group has provided any security or guarantee	Nil
6	Any other contribution made to the Trust during the year	Nil

33. DISCLOSURE PURSUANT TO SECTION 67 OF THE COMPANIES ACT, 2013 READ WITH RULE 16(4) of THE COMPANIES (SHARE CAPITAL AND DEBENTURES) RULES, 2014

Your Company has created a ‘General Employee Benefits Scheme (GEBS)’ under an irrevocable Trust named as

i-

ii. Brief details of transaction in shares by the Trust

“Carnation Welfare Trust” on 20^th June, 2011 for the benefit of its existing and future permanent employees, except directors and promoters. The Scheme is established for the general welfare of the beneficiaries i.e. permanent employees of the Company. Under the Scheme, the Trust has purchased 2,34,899 Equity Shares of '' 10 each of the Company from Secondary Market for a total consideration of '' 11,29,56,669. As no shares are allotted or transferred to any employee or option to purchase of these shares is given to any employee under this Scheme, no voting rights are directly exercised by employees of the Company on these shares. The trustees of the Trust are entitled to exercise vote on these shares, however as provided under Regulation 3(5) of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, they have not exercised any voting right on these shares on resolutions transacted at the Annual General Meetings / Postal ballot process conducted by the Company.

34. APPRECIATIONS

The Directors would also like to place on record their sincere appreciation for the continued co-operation, guidance, support and assistance extended during the year under report by our bankers, customers, suppliers and Government agencies. The Board of Directors wishes to express its appreciation for the valuable contribution made by the employees at all levels during the year under report.

For and on bahalf of the Board of Directors

Raghu Mody

Chairman

^{Place: Mumbai} DIN: 00053329

Date: 8^th May, 2018

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Mar 31, 2017

To the Members, Hindustan Composites Limited,

The Directors are pleased to present the Fifty Third Annual Report together with the Standalone and Consolidated Audited Financial Statements for the year ended 31^st March, 2017.

1. FINANCIAL RESULTS

The Company’s financial performance, for the year ended 31^st March, 2017 is summarized below:

(Rs. in Crores)

	Standalone		Consolidated
	2016-17	2015-16	2016-17	2015-16
Revenue from Operations	181.62	168.20	181.62	168.20
Other Income	1.11	0.49	1.11	0.49
Profit before Interest, Depreciation and Taxes	39.91	30.69	38.24	28.64
Interest	0.20	0.22	0.20	0.22
Depreciation (Net)	7.71	6.53	7.71	6.53
Profit Before Tax	32.00	23.94	30.33	21.89
Provision for Tax	7.11	3.22	7.11	3.22
Profit After Tax	24.89	20.72	23.22	18.67
Other Comprehensive Income / Loss (Net of Tax)	33.96	10.73	33.96	10.73
Total Comprehensive Income	58.85	31.45	57.18	29.40

2. ADOPTION OF IND AS

The Company has adopted the Indian Accounting Standard (“Ind AS”) w.e.f. 1^st April 2016 with a transition date of 1^st April, 2015. The above Financial Statements have been prepared in accordance with the recognition and measurement principles stated therein and as prescribed under Section 133 of the Companies Act, 2013 read with the relevant rules issued there under and the other accounting principles generally accepted in India.

3. SHARE CAPITAL OF THE COMPANY

As at 31^st March, 2017, the paid up equity share capital of your Company stood Rs. 4,92,30,000 (Rupees Four Crore Ninety Two Lakhs Thirty Thousand only) divided into 49,23,000 Equity shares of the face value of Rs. 10 (Rupee Ten) each.

The Company has obtained its shareholders’ approval for the following matters through postal ballot process, the results of which were declared on the 13^th May, 2017:

1) Sub-division of existing 1 equity share having face value of Rs. 10 each fully paid-up into 2 equity shares having face value of Rs. 5 each;

2) Increase in Authorized Share Capital of the Company from Rs. 6 crore to Rs. 8 crore divided into 1.6 crore equity shares of Rs. 5 each and subsequent alteration of Capital Clause of Memorandum of Association to give effect to the sub-division of shares and increase in the authorized share capital;

3) Issue of 49,23,000 bonus equity shares in proportion of 1:2 (i.e. 1 new bonus equity share of Rs. 5 each for every 2 equity shares of Rs. 5 each held) (Post split face value per equity share);

After giving effect to the above, the issued, subscribed and paid up share capital of the company would be at Rs. 7,38,45,000 divide into 1,47,69,000 equity share of Rs. 5 each.

4. DIVIDEND

Your Directors have recommended a dividend of Rs. 0.50 per share, being 10% on the Company’s enhanced equity share capital after considering bonus issue, i.e. on 1,47,69,000 Equity Shares of Rs. 5 each fully paid up of the Company for the year ended 31^st March, 2017. The Corporate Dividend Tax of Rs. 0.15 crore will be payable on the total dividend amount of Rs. 0.74 crore. The Dividend, if approved, will be paid to those members whose names appear on the Register of Members / List of Beneficiaries as on 12^th September, 2017.

5. RESERVES

During the year under review Rs. 15 Crores were transferred to the General Reserve.

6. OVERVIEW OF ECONOMY AND PERFORMANCE OPERATIONS

The Company reported total revenue of Rs. 181.62 Crores, representing a growth of 8% over the previous year. The manufacturing turnover increased by 11% from Rs. 124.81 Crores to Rs. 139.38 Crores. This was achieved despite challenging market conditions both in the domestic and export segments.

Investment Income during the year was marginally lower at Rs. 41.19 Crores, as against Rs. 42.23 Crores in the previous year. This was mainly due to lower dividend income during the year.

The gross profit of the Company was substantially higher at Rs. 39.91 Crores from Rs. 30.69 Crores. After considering interest of Rs. 0.20 Crores and depreciation of Rs. 7.71 Crores, Profit Before Tax was Rs. 32 Crores and net profit after provision for tax of Rs. 7.11 Crores, was Rs. 24.89 Crores.

Other Comprehensive Income (OCI) (net of Tax) was Rs. 33.96 Crores, as against Rs. 10.73 Crores in the previous year. The total Comprehensive Income after tax during the year was Rs. 58.85 Crores, as against Rs. 31.45 Crores in the previous year.

The Indian economy performed well during 2016-17 with a GDP growth of about 6.8%, despite a temporary slow-down due to the demonetization of high value currency notes by the Indian Government in November 2016.

The Indian Automobile Industry produced a total of 25,316,044 vehicles including passenger vehicles, commercial vehicles, three wheelers, two wheelers and quadricycle in FY 2016-17, as against 24,016,599 in the previous year, registering a growth of 5.41% over the last year. The sale of Passenger vehicles grew by 9.23%, while the growth of Commercial vehicle was 4.16%.

With the Government’s decisive policy towards economic reforms and a thrust on infrastructure development, the Indian economy is poised for a decent growth in the coming years.

Based on the above positive scenario, the Company remains optimistic for a good demand outlook for its products even though there may be some immediate slowdown in the truck segment due to a switch-over from the BS-III to BS-IV emission norms and the implementation of proposed GST.

Our Company is geared-up to meet the expected increase in demand through continued investment in capacity expansion, introduction of new products and improvement in quality.

In the Investment segment, challenges will remain with declining interest rates and a volatile stock market. However, the Company will continue to deploy its funds judiciously, keeping capital protection in mind.

The Company participated at the Automechanika Fair at Frankfurt, Germany in September, 2016. This is the largest Exhibition for Aftermarket Auto Components in the world. The Company also participated in i-Auto Connect 2016, an International reverse Buyers / Sellers Meet organized by ACMA and the Ministry of Commerce, in Gurgaon on 6^th September, 2016. The response of both the exhibitions was positive.

There was some improvement in the working of the Company’s joint venture ‘Compo-Advics (India) Pvt. Ltd.’. However, in view of highly competitive market conditions, the company was not able to reach the desired utilization of plant capacity.

There were no changes in the nature of business of the Company during the year under review. Similarly, there have been no material changes and commitments affecting the financial position of the Company between the end of the Company’s financial year to which the financial statements relate and up to the date of this report.

7. PRODUCTION RANGE

Your Company is engaged in the manufacture and marketing of fiber based Friction Materials, consisting of Brake Liners, Roll Linings, Clutch Facings, Disc Brake Pads used in Heavy and Light Trucks, Passenger Cars, 2 / 3 wheelers, off-road-vehicles and construction and mining equipment. Composition Brake Blocks for the Railways are also an important part of the Company’s product portfolio.

14. AUDIT COMMITTEE AND ITS COMPOSITION

As on 31^st March, 2017, the Audit Committee comprised of Mr. Deepak Sethi, Mr. A. B. Vaidya, Mr. Raghu Mody and Lt. Gen. (Retd.) K. S. Brar.

Mr. Deepak Sethi is Chairman of Audit Committee of the Company. Mr. Amit Goenka, V. P. - Finance and Company Secretary of the Company, acts as Secretary of the Audit Committee.

The Audit Committee of the Company reviews the reports to be submitted to the Board of Directors with respect to auditing and accounting matters. It also supervises the Company’s internal control, financial reporting process and vigil mechanism.

15. MEETINGS OF THE BOARD

The Board met five times during the year, the details of which are given in the Corporate Governance Report. The intervening gap between the two consecutive meetings was within the period prescribed under the Companies Act, 2013.

16. DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them and as required under Section 134 (5) of the Companies Act, 2013 state that:

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

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that 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;

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

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

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

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

17. DEPOSITS

During the year under review, the Company has not accepted any deposits within the meaning of Section 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

18. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT 2013

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on arm’s length basis and are entered into based on considerations of various business exigencies, such as synergy in operations, their specializations etc. and to further the Company’s interests.

During the financial year 2016-17, the Company had entered into contracts / arrangements / transactions with related party, the details of which as referred to in Section 188(1) of the Companies Act, 2013 in the prescribed Form AOC-2 under Companies (Accounts) Rules, 2014 is appended as ‘Annexure C’.

The policy on related party transactions as approved by the Board of Directors has been uploaded on the website of the Company. The web link of the same is as under: http://www.hindcompo.com/investor-relations/documents/ related-party-transaction-policy.pdf

19. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The details of loans, guarantee or investment under Section 186 of the Companies Act, 2013 are given under Notes to Accounts on financial statements.

20. CORPORATE SOCIAL RESPONSIBILITY INITIATIVE

Pursuant to the provisions of Section 135 read with Companies (Corporate Social Responsibility) Rules, 2014, the Company has formed Corporate Social Responsibility Committee and a policy on Corporate Social Responsibility (CSR). As part of its initiatives under CSR, the Company has undertaken project in the area of eradicating hunger. This project is in accordance with Schedule VII of the Companies Act, 2013.

The details as per the provisions of Rule 8 of Companies (Corporate Social Responsibility) Rules, 2014 is annexed herewith as “Annexure D”.

21. WHISTLE BLOWER/ VIGIL MECHANISM POLICY

The Company has a Vigil Mechanism / Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The mechanism also provides for adequate safeguards against victimization of directors and employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in the exceptional cases. The details of the Vigil Mechanism Policy is explained in the Corporate Governance Report and also posted on the website of the Company. We affirm that during the financial year 2016-17, no employee or director was denied access to the Audit Committee.

23. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. M Baldeva Associates, Company Secretaries, Thane to undertake Secretarial Audit of the Company for the year 2016-17. The Secretarial Audit Report is annexed herewith as ‘Annexure E’ and forming part of this report.

24. INTERNAL AUDIT

The Company has appointed M/s. Malpani & Associates, Chartered Accountants, Mumbai, as its Internal Auditor. The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliances with operating systems, accounting procedures and policies at all locations of the Company and reports the same on quarterly basis to the Audit Committee.

25. REMARKS ON QUALIFICATION BY STATUTORY AUDITORS AND SECRETARIAL AUDITORS

There is no qualification / observation/adverse remark in Statutory Auditor’ Report.

With respect to observation made by the Secretarial Auditors in their report, we would like to state that:

i) the Annual Audited Consolidated Financial Results for the year ended 31^st March, 2016 were approved and submitted to Stock exchanges on 22^nd July, 2016 which is beyond the stipulated time limit of 30^th May, 2016 -The Institute of Chartered Accountants of India (ICAI) vide its FAQs published on 24^th June, 2016 clarified that a company, which does not have subsidiary but has Joint venture or associate, is also required to prepare the Consolidated Financial Statements as required under the provision of Section 129(3) of the Companies Act, 2013 for the financial year ended 31^st March 2016. Accordingly the Company prepared and submitted the Consolidated Financial Statements on the basis of audited financial statements of the Company and its Joint Venture viz. Compo Advics (India) Pvt. Ltd. on 22^nd July 2016; and

ii) the delay in filing of some forms with Registrar of Companies were due to oversight.

26. CORPORATE GOVERNANCE REPORT

Pursuant to Regulation 34(3) and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the following have been made a part of the Annual Report and are attached to this report:

- Corporate Governance Report

- Auditors’ Certificate regarding compliance of conditions of Corporate Governance

27. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

There was no significant or material order passed by any regulator or court or tribunal, which impacts the going concern status of the Company or will have bearing on company''s operations in future.

28. INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has in place proper and adequate internal control systems commensurate with the nature of its business, size and complexity of its business operations. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, compliance with policies, procedures, applicable laws and regulations and that all assets and resources are acquired economically used efficiently and adequately protected.

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

Details regarding Conservation of energy, technology absorption, foreign exchange earnings and outgo is given in “Annexure F” annexed herewith.

30. INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has constituted an internal complaint committee under Section 4 of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year there was no complaint filed before the said Committee.

31. DISCLOSURES PURSUANT TO REGULATION 14 OF SEBI (SHARE BASED EMPLOYEE BENEFITS) REGULATIONS, 2014

A. Details related to GEBS

a) Date of Shareholders’ approval:

Approved by the shareholders of the Company in the 51^stAnnual General Meeting held on 18^th September, 2015.

b) Kind of benefits to be granted under the Scheme:

Providing assistance to meet medical expenses, providing assistance/reimbursement to meet cost of tuition and other fees and expenses in connection with providing higher education/and professional courses, providing assistance to meet marriage expenses, to sponsor holidays trips and get-togethers and such other benefits as more particularly described in object clause of the Trust Deed.

c) Beneficiaries of the Scheme:

Such persons who are in permanent employment of the company for at least 5 years and are designated as Officers and Managers and their spouse, parents and children, who for the time being is nominated to be a beneficiary, as may be determined by the Nomination and Remuneration Committee from time to time, but shall not include directors or promoters of the company.

d) Total assets of the Scheme:

Rs. 109,513,340 as per the audited balance sheet of the Trust as on 31^st March, 2017.

e) Quantum of holding in own shares / listed holding company shares (both absolute and in percentage):

223,963 (4.55%) Equity Shares of Rs. 10 each of the Company.

f) Whether scheme is in compliance of regulation 26(2)/27(3) of the regulations, as applicable: No.

g) Variation in terms of Scheme: Not Applicable

B. Details related to Trust

i. General information on all schemes

Sr. No.	Particulars	Details
1	Name of the Trust	Carnation Welfare Trust
2	Details of the Trustee(s)	Mr. Snehal N. Muzoomdar Practicing Chartered Accountant Address: 52, Walchand Terraces, Tardeo Air Conditioned Market, Mumbai - 400034 IDBI Trusteeship Services Limited Private Trust Address: Asian Building, 17, R. Kamani Marg, Ballard Estate, Mumbai-400001.
3	Amount of loan disbursed by the Company/ any company in the group, during the year	Nil
4	Amount of loan outstanding (repayable to the company/ any company in the group) as at the end of the year	Rs. 93,000,000
5	Amount of loan, if any, taken from any other source for which company / any company in the group has provided any security or guarantee	Nil
6	Any other contribution made to the Trust during the year	Nil
i. Brief details of transaction in shares by the Trust
Sr. No.	Particulars	Details
A	Number of shares held at the beginning of the year	234,899
B	Number of shares acquired during the year through (i) primary issuance (ii) secondary acquisition, also as a percentage of paid up equity capital as at the end of the previous financial year, along with information on weighted average cost of acquisition per share;	Nil
C	Number of shares transferred to the employees / sold along with the purpose thereof;	10,936 (share sold for repayment of loan)
D	Number of shares held at the end of the year	223,963

iii. In case of secondary acquisition of shares by the Trust

Number of shares	As a percentage of paid-up equity capital as at the end of the year immediately preceding the year in which shareholders’ approval was obtained
Held at the beginning of the year	234,899 (4.77%)
Acquired during the year	Nil
Sold during the year	10,936(0.22%)
Transferred to the employees during the year	Nil
Held at the end of the year	223,963 (4.55%)

32. DISCLOSURE PURSUANT TO SECTION 67 OF THE COMPANIES ACT, 2013 READ WITH RULE 16(4) of THE COMPANIES (SHARE CAPITAL AND DEBENTURES) RULES, 2014:

Your Company has created a ‘General Employee Benefits Scheme (GEBS)’ under an irrevocable Trust named as “Carnation Welfare Trust” on 20^th June, 2011 for the benefit of its existing and future permanent employees, except directors and promoters. The Scheme is established for the general welfare of the beneficiaries i.e. permanent employees of the Company. Under the Scheme, the Trust has purchased 2,34,899 Equity Shares of the Company from secondary market for a total consideration of Rs.11,29,56,669. As no shares are allotted or transferred to any employee or option to purchase of these shares is given to any employee under this Scheme, no voting rights are directly exercised by employees of the Company on these shares. The trustees of the Trust are entitled to exercise vote on these shares, however as required under Regulation 3(5) of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, they have not exercised any voting right on these shares on resolutions transacted at the 52^nd Annual General Meeting held on 8^th September 2016.

33. CAUTIONARY STATEMENT

The statements in the Directors’ Report and Management Discussion and Analysis cannot be construed as holding out any forecasts, projections, expectations, invitations, offers, etc. within the meaning of applicable securities, laws and regulations. This Report basically seeks to furnish information, as laid down within the different headings to meet the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

34. APPRECIATIONS

The Directors would also like to place on record their sincere appreciation for the continued co-operation, guidance, support and assistance extended during the year under report by our bankers, customers, suppliers and Government agencies. The Board of Directors wishes to express its appreciation for the valuable contribution made by the employees at all levels during the year under report.

By order of the Board of Directors

^{Place: Mumbai} Raghu Mody

^{Date: 23}''^{d Ma}y ²⁰¹⁷ Chairman

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Mar 31, 2015

Dear Members,

The Directors are pleased to present the Fifty First Annual Report together with the Audited Financial Statements for the year ended 31st March, 2015.

1. FINANCIAL RESULTS

The Company's financial performance, for the year ended 31st March, 2015 is summarised below:

(Rs. in crores)

Particulars 2014-15 2013-14

Net Sales and Income from 150.25 137.75

Investments

Other Operating Income 1.81 0.68

Profit before Interest, Depreciation 35.93 28.25

and Other Income

Interest 0.16 0.74

Depreciation (Net) 6.46 7.03

Profit before Other Income 29.31 20.48

Other Income 0.27 1.14

Profit Before Tax 29.58 21.62

Provision for Tax 3.78 4.42

Profit After Tax 25.80 17.20

2. DIVIDEND

Your Directors have recommended a dividend of Rs. 1 per share, being 10% of the paid-up equity capital of the Company for the year ended 31st March, 2015. The Corporate Dividend Tax of Rs. 0.10 crore will be payable on the total dividend amount of Rs. 0.49 crore. The Dividend, if approved will be paid to those members whose names appears on the Register of Members / list of Beneficiaries as on 18th September, 2015.

3. RESERVES

During the year under review, Rs. 25 crore was transferred to the General Reserve.

4. OVERVIEW OF ECONOMY & PERFORMANCE OPERATIONS

After witnessing a low GDP growth in 2013-14, the year 2014-15 saw a moderate improvement in the economic climate. A new majority government at the Centre was formed after the historic general elections in May, 2014. There were high expectations that a strong Government, not constrained, by coalition politics, will usher in significant reforms that can accelerate the growth in the medium terms. However, despite positive sentiments, the year 2014-15 saw lackluster momentum in the investment cycle. The economy continued to battle with severe challenges from subdued demand and contraction of industrial production.

Against the above back-drop growth in demand for our products in Automotive, Railway and Industrial segment remained sluggish throughout the year.

Despite these constraints and a challenging environment, the Company posted improved results with higher sales and increased investment income. The turnover of the company increased by 4% to Rs. 110.25 crores from Rs. 106.26 crores in the previous year. It was achieved with a focused approach on its Export & Domestic aftermarket business.

Investment income during the year was substantially higher at Rs. 40.01 crores, as against Rs. 31.49 crores for the previous year. This was achieved with judicious deployment of funds in high yielding assets.

The gross profit of the Company increased by 27% from Rs. 28.25 crores to Rs. 35.93 crores. After considering interest of Rs. 0.16 crores, depreciation of Rs. 6.46 crores and Other Income of Rs. 0.27 crores, the Profit Before Tax was Rs. 29.58 crores and net Profit after providing Tax of Rs. 3.78 crores was Rs. 25.80 crores.

Looking ahead, an effective implementation of the economic agenda will hold the key to the nation's progress. The Government's new initiative of 'Make in India' should bring back the investment cycle and the year 2015-16 may prove to be a year in transition before the economy accelerates on a fast track growth. Our Company is capable of meeting the growing customer demands with capacity expansion and the introduction of new products.

In the Investment segment, there will be some pressure mainly because of declining interest rates and NPA challenges. The Company will continue to deploy its funds judiciously in high yielding assets but capital protection will be high on our agenda.

The Company participated at the Automechanika Fair at Frankfurt, Germany in September, 2014, thus improving its exposure to new products and global markets.

The Company entered into a Long Term Settlement with the workmen at its Bhandara plant for a period of 3 years, effective from August, 2014.

The Company's Joint Venture "Compo ADVICS India Pvt. Ltd." has commenced commercial production of disc brake pads for Passenger Vehicles effective from 22nd September, 2014 at Bhalgaon, Aurangabad. There were a few teething problems related to manufacturing, which are being appropriately handled.

There were no changes in the nature of business of the Company during the year also there were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate, up to the date of this report.

5. SHARE CAPITAL OF THE COMPANY

The paid-up equity share capital of your Company is Rs. 4,92,30,000/- (Rupees Four crore Ninety Two Lakhs Thirty Thousand only) divided into 49,23,000 Equity Shares having face value of Rs. 10 (Rupee Ten) each.

6. PRODUCTION RANGE

Your Company is engaged in the manufacture & marketing of fiber based Friction Materials, consisting of Brake Liners, Roll Linings, Clutch Facings, Disc Brake Pads used in Heavy and Light Trucks, Passenger Cars, 2 / 3 wheelers, off-road-vehicles and construction & Mining equipment. Composition Brake Blocks for the Railways are also an important part of the Company's product portfolio.

8. SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES

Your Company has a Joint Venture Company namely "Compo Advics (India) Private Limited". The company had no subsidiary or associate company during the year under review.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the Joint Venture Company in Form AOC 1 is attached to the financial statements of the Company.

9. EXTRACT OF ANNUAL RETURN

An extract of Annual Return in Form MGT 9 is annexed herewith as "Annexure A".

10. DIRECTORS AND KMP

a) Retirement by rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014 and Articles of Association of the Company, Mr. Raghu Mody (DIN: 00053329), Executive Chairman & Whole time Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment and your Board recommends his re-appointment.

b) Appointment

The Board of Directors of the Company has appointed Mrs. Sakshi Mody (DIN: 06518139) as an Additional (Non-executive) Director of the Company w.e.f. 2nd September, 2014 and holds office upto the date of ensuing Annual General Meeting and Mr. Deepak Sethi (DIN: 07165462) was appointed as an Additional Independent Director of the Company w.e.f. 23rd April, 2015 for a period of 5 years, subject to approval of shareholders at the ensuing Annual General Meeting. The Company has received notices along with requisite deposit from a member of the Company under Section 160 of Companies Act, 2013 proposing their candidature for the office of Director of the Company. Your Board recommends their appointment.

c) Cessation

The Board records its appreciation for the valuable contribution made by Mr. Brijmohan Rai Bahl, the Independent Director of the Company, who passed away on 24th January, 2015, after a brief illness.

d) Declaration from Independent Directors

The Company has received declaration from all the Independent Directors of the Company confirming that they have met the criteria of independence as prescribed both under Section 149(6) of the Companies Act, 2013 and under Clause 49 of the Listing Agreement entered into with the Stock Exchanges.

e) Annual Performance and Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit and Nomination & Remuneration Committees. The Board has devised questionnaire to evaluate the performances of each of executive and non-executive and Independent Directors. Such questions are prepared considering the business of the Company and the expectations that the Board have from each of the Directors. The evaluation framework for assessing the performance of Directors comprises of the following key areas:

i. Attendance of Board Meetings and Board Committee Meetings;

ii. Quality of contribution to Board deliberations;

iii. Strategic perspectives or inputs regarding future growth of Company and its performance;

iv. Providing perspectives and feedback and going beyond information provided by the management.

The details of the programmes for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at the link: http://www.hindcompo.com/investor- relations/documents/familiarisation-programes- for- independent-directors.pdf

f) Key Managerial Personnels (KMP)

The details of Key Managerial Personnel of the Company are as follows:

1. Mr. Raghu Mody Executive Chairman

2. Mr. Varunn Mody Executive Director, Treasury and Strategy

3. Mr. P. K. Managing Director Choudhary

4. Mr. Sunil Kumar Chief Financial Officer Jindal

5. Mr. Amit Goenka V.P. Finance and Company Secretary

Mr. Sunil Kumar Jindal, was appointed as Chief Financial officer of the Company w.e.f. May 29, 2014.

11. MANAGERIAL REMUNERATION AND OTHER DETAILS:

The necessary details / disclosures of Ratio of Remuneration to each Director to the median employee's remuneration and other details pursuant to the Section 197(12) of the Companies Act, 2013 and as per Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as "Annexure B".

12. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

13. AUDIT COMMITTEE AND ITS COMPOSITION

As on 31st March, 2015, the Audit Committee comprised of Mr. A. B. Vaidya, Mr. Raghu Mody and Lt. Gen. (Retd.) K. S. Brar.

Mr. A. B. Vaidya is the Chairman of Audit Committee of the Company. Mr. Amit Goenka, V. P. - Finance and Company Secretary of the Company, acts as Secretary of the Audit Committee.

The Audit Committee of the Company reviews the reports to be submitted with the Board of Directors with respect to auditing and accounting matters. It also supervises the Company's internal control, financial reporting process and vigil machanism.

14. MEETINGS OF THE BOARD

The Board met five times during the year, the details of which are given in the Corporate Governance Report. The intervening gap between the two consecutive meetings was within the period prescribed under the Companies Act, 2013.

15. DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them and as required under Section 134 (5) of the Companies Act, 2013 state that:

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

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;

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

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

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

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

16. DEPOSITS

During the year under review, the Company has not accepted any deposits within the meaning of Section 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

17. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT 2013

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 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 materiality of related party transactions. Hence the Company is not required to disclose details of the related party transactions in Form AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company. The web link of the same is as under: http://www.hindcompo.com/investor-relations/documents/ related-party-transaction-policy.pdf

18. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The details of loans, guarantee or investment under Section 186 of the Companies Act, 2013 is given under Notes to Accounts of financial statements.

19. CORPORATE SOCIAL RESPONSIBILITY INITIATIVE

Pursuant to the provisions of Section 135 read with Companies (Corporate Social Responsibility) Rules, 2014, the Company has formed Corporate Social Responsibility Committee and a Policy on Corporate Social Responsibility (CSR) has also been formulated by them. As part of its initiatives under CSR, the Company has undertaken project in the area of education. This project is in accordance with Schedule VII of the Companies Act, 2013.

The details as per the provisions of Rule 8 of Companies (Corporate Social Responsibility) Rules, 2014 is annexed herewith as "Annexure C".

20. WHISTLE BLOWER/ VIGIL MECHANISM POLICY

The Company has a Vigil Mechanism / Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The mechanism also provides for adequate safeguards against victimization of directors and employees who avail the mechanism and also provide for direct access to the Chairman of the Audit Committee in the exceptional cases. The details of the Vigil Mechanism Policy is explained in the Corporate Governance Report and also posted on the website of the Company. We affirm that during the financial year 2014-15, no employee or director was denied access to the Audit Committee.

21. STATUTORY AUDITORS

M/s. Lodha & Company, Chartered Accountants (Firm Registration No. 301051E), Mumbai, the 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 a letter from them to the effect that they are willing to continue as Statutory Auditors and if re-appointed, their re- appointment would be within the limits prescribed under Section 139 of the Companies Act, 2013 and they are not disqualified from being appointed as Auditors.

Your Directors recommend the re-appointment of M/s. Lodha & Company, Chartered Accountants, Mumbai, as Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting upto the conclusion of next Annual General Meeting of the Company and to audit financial statements for the financial year 2015-16.

22. COST AUDITORS

The Company has appointed M/s. M. R. Pandit & Co., Cost Accountant, Aurangabad, as Cost Auditors of the Company to conduct audit of cost records for the financial year 2015- 16, at a remuneration of Rs. 65,000/- p.a. subject to approval of the shareholders of the Company. However, as per the provisions of Companies (Cost Records and Audit) Rules, 2014 notified on 30th June, 2014, the Company is not required to appoint Cost Auditors any more.

23. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed M/s. Manish Ghia & Associates, Company Secretaries to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure D" and forming part of this report.

24. INTERNAL AUDIT

The Company has appointed M/s. Malpani & Associates, Chartered Accountants, Mumbai, as its Internal Auditor. The Internal Auditor monitors and evaluates the effectiveness and adequacy of internal control system in the Company, its compliances with operating systems, accounting procedures and policies at all locations of the Company and reports the same on quarterly basis to the Audit Committee.

25. REMARKS ON QUALIFICATION BY STATUTORY AUDITORS AND SECRETARIAL AUDITORS

There was no qualification / adverse remark in both Statutory and Secretarial Audit Report.

26. CORPORATE GOVERNANCE REPORT

Pursuant to Clause 49 of the Listing Agreement entered into with the stock exchange, the following have been made a part of the Annual Report and are attached to this report:

* Corporate Governance Report

* Auditors' Certificate regarding compliance of conditions of Corporate Governance

27. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:

There was no significant or material order passed by any regulator, court or tribunal, which impacts the going concern status of the Company or will have bearing on Company's operations in future.

28. INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has in place proper and adequate internal control systems commensurate with the nature of its business, size and complexity of its business operations. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, compliance with policies, procedures, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and are adequately protected.

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

Details regarding Conservation of energy, technology absorption, foreign exchange earnings and outgo is given in "Annexure E" annexed herewith.

30. INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has constituted an internal complaint committee under Section 4 of The Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year no complaint was filed before the said committee.

31. CAUTIONARY STATEMENT

The statements in the Directors' Report and Management Discussion and Analysis cannot be construed as holding out any forecasts, projections, expectations, invitations, offers, etc. within the meaning of applicable securities, laws and regulations. This Report basically seeks to furnish information, as laid down within the different headings to meet the Listing Agreement requirements.

32. APPRECIATIONS

The Directors would also like to place on record their sincere appreciation for the continued co-operation, guidance, support and assistance extended during the year under report by our bankers, customers, suppliers and Government agencies. The Board of Directors wishes to express its appreciation for the valuable Contribution made by the employees at all levels during the year under report.

For and on behalf of the Board of Directors

Raghu Mody Chairman

Place : Mumbai Date : 7th May, 2015

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Mar 31, 2014

The Directors have pleasure in presenting the Fiftieth Annual Report together with Financial Statements of the Company for the financial year ended 31st March 2014.

1. FINANCIAL RESULTS

(in Lacs)

Particulars Year Year ended ended 31st 31st March March 2014 2013

Net Sales and Income 13,774.02 11,699.41 from Investments

Other Operating Income 68.78 19.65

Profit before Interest, Depr- 2,825.31 1,835.73 eciation, exceptional item and other income

Interest (74.15) (28.53)

Depreciation (Net) (703.29) (615.23)

Profit before Other Income and 2,047.87 1,191.97

Tax

Other Income 113.95 24.48

Profit Before Tax 2,161.82 1,216.45

Provision for Tax 441.93 196.42

Profit After Ta x 1,719.89 1,020.03

2. DIVIDEND

The Directors are pleased to recommend a dividend of Rs. 2/- per share, being 20% of the paid-up equity capital of the company for the year ended 31st March, 2014. It includes a special Golden Jubilee Dividend of 10%. The Corporate Dividend Tax of Rs. 16.73 Lacs will be payable on the total dividend amount of Rs. 98.46 Lacs.

3. PERFORMANCE

During the year 2013-2014, the Company posted improved results with higher sales and increased investment income. The turnover of the company increased by 14% to Rs. 106.25 Crores from Rs. 93.01 Crores in the previous year. This growth was achieved despite significant slow-down in the Automotive Sector and was possible with a focused approach on its Export and domestic Aftermarket business. Investment income during the year was much higher at Rs. 31.49 Crores, as against Rs. 23.98 Crores. This was achieved with judicious deployment of funds in high yielding assets.

The gross profit of the Company was increased by 54% from Rs. 18.35 Crores to Rs. 28.25 Crores. After considering interest of Rs. 0.74 Crores, depreciation of Rs. 7.03 Crores and Other Income of Rs. 1.14 Crores, the Proft before Tax was Rs. 21.62 Crores and net Profit after providing Tax of Rs. 4.42 Crores was Rs. 17.20 Crores. The profitability of manufacturing segment was improved mainly due to various cost control measures taken at both the Plants.

During the year under review, overall economy remained subdued and there was sharp reduction in demand from Automotive Sector. This has resulted into low order-book from OEM customers, particularly Commercial Vehicle segment. However, this was compensated by higher sale in domestic Aftermarket & Export business. With the recent Political stability at the Centre, we foresee better future for Indian economy, which in turn will boost the demand in both Automobile and Auto Component sector. We also foresee stability in the financial market, which should improve the yield on our Investment.

The Company participated at the Auto Expo 2014 at Pragati Maidan, New Delhi in February, 2014. This is the largest Exhibition for Automobile Show in Asia. The response from Domestic as well as International customers was encouraging.

The Company has entered into a Joint Venture Agreement with ADVICS North India Private Limited, an Affiliate of ADVICS Company Limited, Japan and formed a new Company namely Compo ADVICS (India) Private Limited, which was incorporated on 28th November, 2013. This new Joint Venture Company will manufacture Disc Brake Pads for Passenger Vehicle at a green field site at Bhalgaon, Aurangabad. Our Company holds 49% Shares, its associate holds 2% Shares and ADVICS North India Private Limited holds 49% Shares.

4. PUBLIC DEPOSITS

There were no deposits at the beginning of the year and the Company did not accept any deposits from the public during the year within the meaning of Section 58A and 58AA of the Companies Act, 1956.

5. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

Particulars as required under Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption are given in an Annexure I to this Report.

6. INFORMATION UNDER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has constituted an Internal Complaint Committee under Section 4 of the Sexual Harassment of women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year, no complaint was made before the Committee.

7. PARTICULARS OF EMPLOYEES

The particulars required pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, are given in Annexure II to this report.

However, in terms of the provisions of Section 219(1)(b) (iv) of the Companies Act, 1956, the Directors'' Report (excluding Annexure II) is being sent to all the shareholders of the Company. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the registered offce of the Company.

8. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange earnings from exports amounted to Rs. 859 Lacs (previous year Rs. 731 Lacs) of FOB value whilst the outgo for Raw Materials and Capital Goods amounted to Rs. 734 Lacs (previous year Rs. 743 Lacs).

9. DIRECTORS

The Board of Directors of the Company re-appointed Mr. Raghu Mody, as Executive Chairman of the Company for a further period of 3 years, effective from 1st October, 2014 to 30th September, 2017.

The Board of Directors at its meeting held on 29th May, 2014 re-designated Mr. Varunn Mody from "Executive Director – Treasury" to "Executive Director-Treasury and Business Development". In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Companies (Management & Administration) Rules, 2014 and Articles of Association of the Company, Mr. Varunn Mody, Executive Director of the Company, retires by rotation and being eligible, offers himself for re-appointment.

In terms of the provisions of Section 149 and 152 of the Companies Act, 2013 read with Companies (Management & Administration) Rules, 2014 which became effective from 1st April, 2014, an Independent Director of a Company can be appointed for a term of 5 consecutive years and shall not be liable to retire by rotation.

To comply with above provisions, it is proposed to appoint Mr. K. M. Robinson, Mr. Brijmohan Rai Bahl, Lt. Gen. (Retd.) K.S. Brar and Mr. A. B. Vaidya as Independent Directors of the Company to hold offce as such upto 31st March, 2019, who shall not be liable to retire by rotation.

The Company has received declarations from all the Independent Directors of the Company confrming that they meet the criteria of independence as prescribed under sub- section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered with the Stock Exchanges. Your Board recommends for their appointment as Independent Directors of the Company in terms of the provisions of the Companies Act, 2013.

Brief resume of the Directors proposed to be appointed/ re-appointed as stipulated under Clause 49 of the Listing Agreement entered with the BSE Limited and National Stock Exchange of India Limited are given in the Notice convening 50th Annual General Meeting.

10. AUDITORS

M/s Lodha & Company, Chartered Accountants, Mumbai, the Statutory Auditors of your Company hold offce upto the conclusion of the ensuing Annual General Meeting

and are eligible for re-appointment. The Company has received a letter from them to the effect that they are willing to continue as Statutory Auditors and if re-appointed, their re-appointment would be within the limits prescribed under Section 139 of the Companies Act, 2013.

Your Directors recommend the re-appointment of M/s Lodha & Company, Chartered Accountants, Mumbai as Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting up to the conclusion of next Annual General Meeting of the Company and to audit financial statements for the financial year 2014- 2015.

11. COST AUDITORS

Pursuant to the provisions of Section 233B of the Companies Act, 1956 and in terms of of Circular No. F. No. 52/26/CAB- 2010 dated 30th June, 2011 and 52/26/CAB-2010 dated 24th January, 2012 issued by the Ministry of Corporate Affairs, Cost Audit Branch, the Company, with the prior approval of the Central Government has appointed M/s. M. R. Pandit & Co., Aurangabad as Cost Auditors of the Company for audit of the cost accounting records of the financial year 2013-2014.

As per the provisions of Section 148 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014 the Board of Directors of the Company has appointed M/s. M. R. Pandit & Co., Aurangabad as Cost Auditors of the Company to conduct the cost Audit for the financial year 2014-2015, on a remuneration of Rs. 65,000/- (Rupees Sixty Five Thousand only) plus service tax and out of pocket expenses. The approval of Shareholders is sought for payment of remuneration to said Cost Auditors.

12. CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement entered into with various Stock Exchanges, the Corporate Governance Report, including Management Discussion and Analysis Report alongwith the Certifcate of Compliance from the Auditors, are attached and forms part of this Report.

13. DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217 (2AA) of the Companies Act, 1956 the Board of Directors of the Company hereby confirms that –

(i) The applicable Accounting Standards have been followed and proper explanations relating to material departures have been given wherever necessary;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2014 and of the profit of the Company for that period;

(iii) The Directors had 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; and

(iv) The Directors have prepared the Annual Accounts on a going concern basis.

14. LISTING OF SECURITIES

The Equity Shares of the Company are listed at BSE Limited and National Stock Exchange of India Limited. The Company has paid the Annual listing fees for the year 2014-2015 to the said Stock Exchanges and custodian fees to the National Securities Depository Limited and Central Depository Services (India) Limited.

The Equity Shares of the Company were also listed at The Calcutta Stock Exchange Association Limited, but in view of no active trading of shares and disproportionate to the listing fees payable by the Company to the said Stock Exchange, the Company decided to delist the same from the Calcutta Stock Exchange Association Limited. Upon making application for delisting of the equity shares, the said Stock Exchange, vide its delisting approval letter CSE/ LD/8173/2013 dated 23rd August, 2013, delisted the equity shares of the Company from the Stock Exchange w.e.f. 27th August, 2013.

15. ACKNOWLEDGEMENT

The Directors gratefully acknowledges the support and co- operation given by all its customers, suppliers, employees, shareholders and bankers and look forward to their continued support.

By order of the Board of Directors

Varunn Mody P.K. Choudhary

Executive Director Managing Director

Treasury & Business Development

Place: Mumbai

Date : 29th May, 2014

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Mar 31, 2013

The Directors present their Forty Ninth Annual Report together with the Audited Accounts for the year ended 31st March, 2013.

1. FINANCIAL RESULTS

(Rupees in Lacs)

Year ended Year ended 31st March, 31st March, 2013 2012

Net Sales and Income from Investments 11,699 11,902

Other Operating Income 44 40

Profit before Interest, Depreciation and exceptional item 1,860 3,025

Interest (29) (157)

Depreciation (Net) (615) (455)

Profit before Exceptional items and tax 1,216 2,413

Profit on sale of Fixed Assets - 347

Profit Before Tax 1,216 2,760

Provision for Tax 196 668

Profit After Tax 1,020 2,092

2. DIVIDEND

The Directors are pleased to recommend a dividend of Re. 1 per share, being 10% of the paid-up equity capital of the Company for the year ended 31st March, 2013. The Corporate Dividend Tax of Rs. 10 Lacs will be payable on the total dividend amount of Rs. 49 Lacs.

3. PERFORMANCE

The Company''s turnover increased by 10% to Rs. 93.01 Crores, from Rs. 84.27 Crores in the previous year. This growth was achieved despite significant slow-down in the Automotive Sector and was possible with a focused approach on its Railway and Institutional business.

Investment income during the year was lower at Rs. 23.98 Crores, as against Rs. 34.74 Crores. This was mainly due to prevailing conditions of lower interest rates and the Company''s cautious approach towards safer investment opportunities.

The gross profit of the Company was Rs. 18.60 Crores, as against Rs. 30.25 Crores. After considering interest and depreciation, profit before tax was Rs. 12.16 Crores and net profit after providing for tax was Rs. 10.20 Crores.

Although, the Company increased its turnover in its manufacturing division, operating margins continued to remain under severe pressure due to its limited ability in obtaining price increases commensurate with increases in raw material and fuel costs, in view of depressed economic conditions in the Automotive sector.

The year witnessed an unprecedented decline in demand from the Indian Automotive sector, more particularly for commercial vehicles, largely linked to the general economic slow-down. This resulted in a sharp reduction in volumes from the OEM''s and to lesser extent from the aftermarket, leading to lower profitability. This was partly compensated by higher Railway & Institutional business through tenders, at competitive prices. Although, there are signs of economic stability due to recent Government Policy initiatives, the forecast remains uncertain due to the prevailing political uncertainty.

In order to successfully meet this challenge, the Company has embarked aggressively to introduce products in new segments and will continue to emphasis on higher productivity with prudent cost control measures.

Due to the prevailing uncertainties in financial markets, the Company will continue to adopt a cautious and prudent investment approach for its available funds prioritising safety over high interest revenues.

During the year, the Company entered into a Long Term Settlement with the Workmen in its Paithan Plant for a period of 3 years effective from 1st December, 2012.

The Company participated at the Automechanika Fair at Frankfurt, Germany in September, 2012, thus improving its exposure to new products and global markets.

4. RECOGNITION

The Ministry of Commerce and Industry has awarded status of "Export House" to the Company for 5 years w.e.f. 1stApril, 2012.

5. PUBLIC DEPOSITS

There were no deposits at the beginning of the year and the Company did not accept any deposits from the public during the year.

6. PARTICULARS OF EMPLOYEES

The particulars required pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, are given in Annexure II to this report.

However, in terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors'' Report (excluding Annexure II) is being sent to all the shareholders of the Company. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the registered office of the Company.

7. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

Particulars required under Section 217 (1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption are given in an Annexure I to this Report.

8. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange earnings from exports amounted to Rs. 731 Lacs, on FOB value whilst the outgo for Raw Materials, Capital Goods and Spares amounted to Rs. 743 Lacs.

9. DIRECTORS

Mr. A. B. Vaidya and Lt. Gen (Retd.) K. S. Brar will retire by rotation and being eligible, offer themselves for re- appointment.

Mr. P. K. Choudhary was re-appointed as Managing Director for a period from 18th March, 2013 to 30th June, 2016.

10. AUDITORS

M/s Lodha & Co., the Auditors of your Company who hold office until the conclusion of the forthcoming Annual General Meeting, being eligible, offer themselves for re- appointment.

11. COST AUDITOR

Pursuant to the provisions of Section 233B of the Companies Act, 1956 and in terms of order no. 53/26/CAB-2010 dated 24th January, 2012 issued by Central Government, the Company with the prior approval of Central Government has appointed M/s M. R. Pandit & Co., Aurangabad as Cost Auditors of the Company for audit of the cost accounting records for the financial year 2012-13.

12. CORPORATE GOVERNANCE

As required by the Listing Agreement, the Corporate Governance Report, including Management Discussion and Analysis Report, alongwith the Certificate of Compliance from the Auditors, is attached and forms part of this Report.

13. DIRECTORS'' RESPONSIBILITY STATEMENT

On the basis of information placed before them, the Directors state that -

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

(ii) appropriate accounting policies have been selected and applied consistently and they have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(iii) 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 annual accounts have been prepared on a going concern basis.

14. ACKNOWLEDGEMENT

The Directors gratefully acknowledge the support and co- operation given by all its customers, suppliers, employees, shareholders and bankers and look forward to their continued support.

By order of the Board of Directors

Raghu Mody

Executive Chairman

Place: Mumbai

Date : 10th May, 2013

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Mar 31, 2012

1. FINANCIAL RESULTS

(Rupees in Lacs)

Year ended Year ended Particulars 31st March, 31st March, 2012 2011

Net Sales and Income from Investments 11902 12394

Other Operating Income 40 87

Profit before Interest, Depreciation & Amortization exp. and exceptional item 3025 2985

Interest (157) (136)

Depreciation and Amortization expenses(Net) (455) (444)

Profit before Exceptional items and tax 2413 2405

Exceptional items 347 228

Profit Before Tax 2760 2633

Provision for Taxes (668) (628)

Profit After Tax 2092 2005

Profit available for appropriation 2601 2123

Appropriations

Proposed Dividend 98 98

Corporate Dividend Tax 16 16

Transfer to General Reserve 1500 1500

Surplus carried to Balance Sheet 987 509

2. DIVIDEND

The Directors are pleased to recommend a dividend of Rs. 21- per share being 20% of the Paid-Up Equity Capital of the Company [previous year Rs. 21- (20%) per share] for the year ended 31st March, 2012. The Corporate Dividend Tax of Rs. 16 Lacs (previous year Rs. 16 Lacs) will be payable on the total dividend amount of Rs. 98 Lacs (previous year Rs. 98 Lacs).

3. PERFORMANCE

During the year 2011-12, the Company could achieve turnover of Rs. 84.28 Crores, as against Rs. 95.72 Crores. The decline in turnover was mainly because of the discontinuation of the Jointing / Textile business, consequent to the sale of its Jalna Unit in March, 2011.

Investment income during the year increased from Rs. 28.22 Crores to Rs. 34.74 Crores. This was achieved with judicious deployment of funds in high yielding assets.

The gross profit of the Company increased to Rs. 30.25 Crores from Rs. 29.80 Crores. There was a one time profit of Rs. 3.47 Crores on the sale of a residential property. After considering Interest of Rs. 1.57 Crores, depreciation of Rs. 4.55 Crores and exceptional profit of Rs. 3.47 Crores, the profit before tax was Rs. 27.60 Crores. The net profit after providing tax of Rs. 6.68 Crores was Rs. 20.92 Crores

Profitability of the manufacturing segment was adversely affected on account of major cost escalation in raw material and other inputs, which could not be passed on to customers due to fixed annual rate contracts with a few of the Government / Institutional customers and on account of competitive market conditions.

Although, the current economic scenario appears subdued due to high inflation, political uncertainty and the depreciating Rupee, the Company will continue to put its focus on upgradation of process technology, improvement in productivity and cost control measures. The Company will also provide necessary focus for growth in the OEM business.

The Company will continue to deploy its funds in a prudent and judicious manner in order to optimize the return on its investments, amongst various asset classes.

During the year, the Company entered into a Long Term ' Settlement with the Workmen in its Bhandara Plant for a period of 3 years effective from 1st August, 2011.

The Company participated at the Auto Expo 2012 at Pragati Maidan, New Delhi, in January, 2012. This is rated as the largest exhibition of its kind in Asia. The response from both domestic and international customers was encouraging.

4. PUBLIC DEPOSITS

There were no deposits at the beginning of the year and the Company did not accept any deposits from the public during the year.

5. PARTICULARS OF EMPLOYEES

In accordance with the provisions of Section 217(2A) read with Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors' Report as an addendum thereto. However, as per the provisions of Section 219(1 )(b)(iv) of the Companies Act, 1956, the Reports and accounts as set out therein are being sent to all members of the Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office and the same shall be made available.

6. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

Particulars required under Section 217(1)(e) of the Companies Act, 1956 relating to Conservation of Energy and Technology Absorption are given in an Annexure to this Report.

7. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange earnings from exports amounted to Rs. 770 Lacs (PY Rs. 929 Lacs) of FOB value whilst the outgo for raw materials, capital goods and spares amounted to Rs. 776 Lacs (PY Rs. 1178 Lacs).

8. DIRECTORS

The Board of Directors appointed Mr. Raghu Mody as an Executive Chairman for a period of 3 (three) years w.e.f. 1st October, 2011.

During the year under review, Mr. D.L. Lyon, Mr. V, Sarin and Mr. V.D. Ingle resigned from the Directorship w.e.f. 25th May, 2011. Further, Mr. V.B. Haribhakti ceased to be

Director of the Compnay w.e.f. 9thAugust, 2011, who was liable to retire by rotation and shown his unwillingness to be re-appointed. However, Mr. V. Sarin and Mr. V.D. Ingle continue in service of the Company as part of the Senior Management Team.

Your Directors have placed on record their appreciation for the services rendered to the Company by the outgoing Directors during their tenure.

Mr. Ramchandra Rao and Mr. Brijmohan Rai Bahl were appointed as Additional Directors of the Company w.e.f. 16thMay, 2012. Mr. Ramchandra Rao was also appointed as the Joint Managing Director w.e.f. 16thMay2012. Pursuant to the provisions of Section 260 of the Companies Act, 1956, they hold office upto the ensuing Annual General Meeting of the Company. The Company has received notices pursuant to Section 257 of the Companies Act, 1956 in writing alongwith necessary deposits, proposing their candidature for the office of Director of the Company.

Mr. K. M. Robinson and Mr. Varunn Mody will retire by rotation and being eligible, offer themselves for re-appointment.

Your Directors recommend the above appointment / re-appointment for your approval.

9. AUDITORS

M/s Lodha & Co..Chartered Accountants, Mumbai, the Statutory Auditors of your Company who holds office until the conclusion of the forthcoming Annual General Meeting, being eligible, offer themselves for re-appointment.

The Company has received a letter from them to the effect that they are willing to continue as Statutory Auditors and if re-appointed, their reappointment would be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

10. CORPORATE GOVERNANCE

As required by the Listing Agreement, the Corporate Governance Report, including Management Discussion and Analysis Report, alongwith the Certificate of Compliance from the Auditors, is attached and forms part of this Report.

11. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Board of Directors of the Company hereby confirm that:

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

(ii) appropriate accounting policies have been selected and applied consistently and they have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(iii) 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 annual accounts have been prepared on a going concern basis.

(iv) the annual accounts have been prepared on a going concern basis.

12. ACKNOWLEDGEMENT

The Directors gratefully acknowledges the support and co- operation given by all its customers, suppliers, employees, shareholders and bankers and look forward to their continued support.

By order of the Board of Directors

Raghu Mody

Executive Chairman

Place: Mumbai

Date : 16th May, 2011

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Mar 31, 2011

Dear Members,

The Directors present their Forty Seventh Annual Report together with the Audited Accounts for the year ended 31st March 2011.

1. FINANCIAL RESULTS

Rs./Lacs Rs./Lacs Year ended Year ended 31st March 31st March 2011 2010

Net Sales and other Operating/ Investment Income 12481 9539

Profit before Interest, Depreciation and Exceptional item 2980 1471

Interest (131) (193)

Depreciation (Net) (444) (382)

Profit before Exceptional items and tax 2405 896

Profit on sale of Fixed Assets 261 56703

Expenses on Buy-back of Shares (13) -

Employees separation/othercost (20) (309)

Profit before tax 2633 57290

Provision for Taxes 628 9769

Profit after taxation 2005 47521

Profit available for appropriation 2123 47562

Appropriations

Proposed Dividend 98 550

Corporate Dividend Tax 16 93

Transferto General Reserve 1500 46800

Surplus carried to Balance Sheet 509 119

2. DIVIDEND

The Directors are pleased to recommend a dividend of Rs. 2 per share being 20% of the paid-up equity capital of the company for the year ended 31s1 March 2011. Corporate Dividend Tax of Rs. 16 Lacs will be payable on the total dividend amount of Rs. 98 Lacs.

3. PERFORMANCE

During the year 2010-11, the Company posted improved results with higher sales and increased investment income.

The turnover of the Company increased by 6% to Rs. 95.72 Crores from Rs. 89.90 Crores in the previous year, despite the discontinuation of business from the Jalna Unit in the later part of the year. Investment and other Operating income of the Company also increased substantially to Rs. 29.09 Crores from Rs. 5.49 Crores.

The gross profit of the Company increased to Rs. 29.80 Crores from Rs. 14.71 Crores. There was one time profit of Rs. 2.61 Crores on the sale of Jalna fixed assets. After considering this and other extra-ordinary cost of Rs. 0.33 Crores, profit before tax was Rs. 26.33 Crores. Net profit after providing tax of Rs. 6.28 Crores, was Rs. 20.05 Crores.

Although, the Company's manufacturing turnover increased, the operating margin remained under pressure, primarily on account of major cost escalation in raw material and other inputs, which could not be passed on to customers due to annual rate contracts with a few of the Government / Institutional customers and competitive market conditions. Higher than normal expenses, necessited on account of the company's focus on Asbestos-free business, was an additional factor adversely impacting profitability.

Prudent and judicious investments made by the Company during the year have yielded better results on account of optimizing the investments in various asset classes.

As reported, in earlier years, the working of the Company's Jalna Unit has continued to under-perform and remained below expectations. Having exhausted all efforts to revive, the Unit was ultimately sold in March, 2011, after taking requisite approvals.

With the sale of the Jalna facility, the Company will now focus on its Automotive & Industrial Friction Material business. Simultaneously, the surplus funds in the Company continue to be judiciously deployed to maximise its returns in an efficient mannner.

The Company participated at the Automechanika Fair at Frankfurt, Germany in September, 2010, thus improving its exposure to new products and global markets.

Judicious and Prudent investments made by the Company during the year have yielded better results on account of optimizing the investments in various asset classes.

4. SHARE CAPITAL

Pursuant to the Board approval dated 24th January, 2011 and various other approvals, the Company successfully bought back 5,77,000 Nos. of its Equity Shares. Accordingly, the Share Capital of the Company reduced from Rs. 550 Lacs to Rs. 492 Lacs, divided into 49,23,000 Equity Shares of Rs. 10 each.

5. PUBLIC DEPOSITS

There were no deposits at the beginning of the year and the Company did not accept any deposits from the public during the year.

6. PARTICULARS OF EMPLOYEES

The particulars required pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, are given in Annexure II to this report.

However, in terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors' Report (excluding Annexure II) is being sent to all the shareholders of the Company. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the registered office of the Company.

7. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

Particulars required under Section 217 (1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption are given in an Annexure to this Report

8. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange earnings from exports amounted to Rs. 954 Lacs, of FOB value whilst the outgo for raw materials, components and spares amounted to Rs. 1178 Lacs.

9. DIRECTORS

The Board of Directors appointed Mr. Varunn Mody as an Executive Director for a period of five years w.e.f. 17th January, 2011, re-appointed Mr. P. K. Choudhary, as Managing Director for a period of two years w.e.f. 18th March 2011,Mr. Vinay Sarin as Executive Director- Marketing for a period of 1 year w.e.f. 9th August 2010 and Mr. V. D. Ingle as Executive Director - Manufacturing, for a period of one year w.e.f. 1st April, 2011, subject to approval of the members of the company.

Lt. Gen. (Retd.) K.S. Brar & Mr. A.B. Vaidya, Directors, retire by rotation and, being eligible, offer themselves for re- • appointment.

Mr. V.B. Haribhakti, retire by rotation, but not offers himself for re-appointment.

Mr. V. D. Ingle, Mr. Vinay Sarin and Mr. D. L. Lyon Resigned from the Directorship of the Company w.e.f. 25* May 2011.

The Board places its gratitude towards them for valuable services extended by them during the tenure as a Director of the company.

10. AUDITORS

M/s Lodha & Co., the Auditors of your Company who hold office until the conclusion of the forthcoming Annual General Meeting, being eligible, offer themselves for re-appointment.

11. CORPORATE GOVERNANCE

As required by the Listing Agreement, the Corporate Governance Report, including Management Discussion and Analysis Report and the Certificate of Compliance from the Auditors, is attached and forms part of this Report.

12. DIRECTORS'RESPONSIBILITY STATEMENT

On the basis of information placed before them, the Directors state that

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

(ii) appropriate accounting policies have been selected and applied consistently and they have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;

(iii) 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 annual accounts have been prepared on a going concern basis.

12. ACKNOWLEDGEMENT

The Directors gratefully acknowledges the support and co- operation given by all dealers, distributors, employees, shareholders and bankers and look forward to their continued support.

By order of the Board of Directors

Raghu Mody Chairman Place: Mumbai Date: 25th May 2011

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Mar 31, 2010

The Directors present their Forty Sixth Annua! Report together with the Audited Accounts for the year ended 31st March 2010.

1. FINANCIAL RESULTS

Rs./Lacs Rs./Lacs

Year ended Year ended

31 st March 31st March

2010 2009

Net Sales 8990 7731

Other Income 549 306

Profit before Interest, Depreciation

and Exceptional item 1471 1124

Interest (193) (283)

Depreciation (Net) (382) (350)

Profit before Exceptional

items and tax 896 491

Profit on sale of Land &

Building at Ghatkopar 56703 _

Employees separation cost (309) (346)

Profit before tax 57290 145

Provision for Taxes 9769 104

Profit after taxation 47521 41

Profit available for appropriation 47562 41

Appropriations

Proposed Dividend 550 _

Corporate Dividend Tax 93 _

Transfer to General Reserve 46800 _

Surplus carried to Balance Sheet 119 41

2. DIVIDEND

The Directors are pleased to recommend a dividend of Rs. 10 per share being 100% of the paid-up equity capital of company, for the year ended 31st March, 2010. The Corporate Dividend Tax of Rs. 0.93 Crores will be payable on total dividend amount of Rs.5.50 Crores.

3. PERFORMANCE

The Companys performance for the year 2009-10 displayed higher sales and improved profitability.

Your Directors are pleased to state that during the year under review, the Company successfully sold its Land & Buildings at Ghatkopar with a realisation of Rs. 571 Crores. The entire consideration was received on 18th January, 2010, upon execution of necessary documents. This has laid to unlocking of large unutilised resources of the Company, which can hitherto be employed towards Companys expansion plan, to take advantage of the current business opportunties.

The turnover of the Company increased by 16% to Rs. 89.90 Crores from Rs. 77.31 Crores in the previous year. This growth was achieved with a focus on the Railway and Trade segments. The gross profit also increased to Rs. 14.71 Crores from Rs. 11.24 Crores. After considering interest and depreciation, the profit before exceptional items was much higher at Rs. 8.96 Crores, as against Rs. 4.91 Crores. There was a one time profit of Rs. 567.03 Crores on the sale of the Ghatkopar Land & Buildings. After considering this and cost towards employees separation of Rs. 3.09 Crores, the Profit before Tax was Rs. 572.90 Crores, as against Rs. 1.45 Crores. Profit after taxation was much higher at Rs. 475.21 Crores as against Rs. 0.41 Crores in the previous year.

With the achievement of planned production, the performance at the Companys Paithan Unit was satisfactory. The Management entered into a productivity linked agreement with the Union for a period of 3 years, during the year under review.

The Performance of the Bhandara Unit was also satisfactory with increased production of Clutch Facings and Industrial Brake Linings.

The Performance of the Jalna Unit was not upto the expectations, mainly due to stiff competition from the unorganized sector. Specific steps are being undertaken in order to increase the productivity and reduce the cost.

The Company participated in the "Auto Expo 2010" at Pragati Maidan, New Delhi, which is rated as the largest Automobile Exhibition in Asia. This would improve the Companys visibility to present and potential customers leading to increased business.

With the present improved economic business outlook specially in the Automotive & Industrial sectors, the Company is poised for future growth, in order to fully take advantage of new business opportunities. With the substantial funds now available, the Company is now exploring various avenues for business expansion. In the meanwhile, the surplus funds available with the Company are being judiciously employed to maximise returns in a prudent and efficient manner.

4. PUBLIC DEPOSITS

There were no deposits at the beginning of the year and the Company did not accept any deposits from the public during the year.

5. PERSONNEL

The information required under Section 217 (2A) of the Companies Act, 1956 is not given as none of the employee was in receipt of remuneration in excess of the limits specified there under.

6 CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

Particulars required under Section 217 (1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption are given in an Annexure to this Report

7 FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange earning from exports amounted to Rs 772 Lacs, on FOB value basis whilst the outgo for raw materials, components and spares amounted to Rs. 962 Lacs.

8. DIRECTORS

The Board of Directors re-appointed Mr. Vinay Sarin as Executive Director Marketing for a period of one year w.e.f. 9" August, 2009 and Mr. V. D. Ingle as Executive Director Manufacturing, for a period of one year w.e.f. 1st April, 2010, subject to approval at the forthcoming Annual General Meeting.

Mr. Raghu Mody and Mr. K. M. Robinson, Directors, retire by rotation and, being eligible, offer themselves for reappointment.

9. AUDITORS

M/s Lodha & Co., the Auditors of your Company who hold office until the conclusion of the forthcoming Annual General Meeting, being eligible, offer themselves for re-appointment.

10. CORPORATE GOVERNANCE

As required by the Listing Agreement, the Corporate Governance Report, including Management Discussion and Analysis Report and the Certificate of Compliance from the Auditors, is attached and forms part of this Report.

11. DIRECTORS RESPONSIBILITY STATEMENT

On the basis of information placed before them, the Directors state that

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

(ii) appropriate accounting policies have been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;

(iii) 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 annual accounts have been prepared on a going concern basis.

12. ACKNOWLEDGEMENT

The Directors gratefully acknowledges the support and co- operation given by all dealers, distributors, employees, shareholders and bankers and look forward to their continued support.

For and on behalf of the Board of Directors

Raghu Mody Chairman

Place: Mumbai Date :20th May, 2010