Directors Report of CIE Automotive India Ltd.
Dec 31, 2022
Your Directors present their Report together with the Audited Financial Statements of your Company for the Financial Year (fy) ended 31st December, 2022.
A. FINANCIAL SUMMARY AND HIGHLIGHTS
|
('' in Million) |
||
|
PARTICULARS |
FY ended |
FY ended |
|
(STANDALONE) |
31st December, |
31st December, |
|
2022 |
2021 |
|
|
Total Income |
45,184 |
33,081 |
|
Profit before Interest, Depreciation, Exceptional Items and Tax |
7,422 |
4,461 |
|
Less: Depreciation |
1,332 |
1,193 |
|
Profit before Interest, Exceptional Items and Tax |
6,090 |
3,268 |
|
Less: Interest and Finance cost |
135 |
122 |
|
Profit before Exceptional Items and Tax |
5,955 |
3,146 |
|
Less: Exceptional items |
379 |
(128) |
|
Profit before tax |
6,334 |
3,018 |
|
Profit after tax |
5,120 |
1,103 |
During the Financial Year under review total standalone revenue of the Company increased to '' 45,184 Million from '' 33,081 Million for the previous year. Profit before Interest, Depreciation, Exceptional Items and Tax increased to '' 7,422 Million as against '' 4,461 Million for the previous year. The profit before exceptional items & tax for the Financial Year increased to '' 5,955 Million in the Financial Year 2022 from '' 3,146 Million in the Financial Year 2021.
There have been 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 and the date of this Report.
Dividend
As per the Dividend Distribution Policy of the Company, dividend pay-out will be determined based on available financial resources, business environment, funds required for organic as well as inorganic growth and other factors which will ensure optimal shareholder return. Within these parameters the Company would endeavor to maintain a total dividend pay-out ratio of upto 25% of the Annual
Consolidated Profits After Tax (Consolidated PAT) of the Company for the corresponding year.
Considering strong cash flows and operational performance, the internal and external factors as provided in the Dividend Distribution Policy, even though the Annual Consolidated Profits after Tax of the Company for the Financial Year is negatively affected by classification of the German Forgings Operations as held for sale (one-time non-cash impact), the Board proposes to keep the same dividend payout as of previous year. Accordingly, the Board of Directors is pleased to recommend dividend of '' 2.50/- (Two rupees and fifty paise only) per equity share of face value of '' 10/- for the financial year ended 31st December, 2022 out of the standalone profit after tax of the Company for the Financial Year ended 31st December, 2022. The equity dividend outgo for the Financial Year 2022 would absorb a sum of '' 948 Million.
Dividend will be payable subject to approval of members at the ensuing Annual General Meeting and deduction of tax at source, as may be applicable, to those members whose names appear in the Register of Members on record date as may be decided by the Board.
Transfer to Reserves
The Board of your Company decided not to transfer any amount to the General Reserve for the year under review.
B. OPERATIONAL PERFORMANCE - THE COMPANY AND SUBSIDIARIES
INDIA
Demand in the Indian automotive market in FY22 continued the growth trajectory from the previous year. The light vehicles segment recorded highest production levels since 2018 with many successful new model launches. The two wheelers and tractors segments were sluggish as rural incomes have not fully recovered post pandemic. On the raw material side, prices remained elevated during the year.
The order book situation was such that the company''s Indian operations required capital expenditure for increasing capacity. The key focus remains on how to balance order book requirements and investments in capacity such that both growth and profitability objectives are met. Process reengineering, automation and digitization with a view to improve operations went on as planned.
EUROPE
Light vehicles production in Europe fell for the third straight year as the semiconductor shortage extended to FY22 and the market was negatively affected by the war in Ukraine. Battery electric vehicles (EVs) remained buoyant, and their market penetration crossed 10%.
Electricity prices in Europe rose to unprecedented levels largely due to the war situation, putting lot of strain on profitability. The Company''s European operations concentrated on improving productivity, pruning other costs and in some cases passing on part of the energy price rise to customers, so that the impact of market factors on profitability was minimized. At the same time, the focus was on generating more EV related orders and on developing aluminum forgings to be used in EVs.
The German truck forgings operations is now held for sale to focus on other businesses in Europe viz. forgings for the light vehicle market and gears.
C. INVESTOR RELATIONS (IR)
The Company strives for excellence in its investor relations (âIR") engagement with international and domestic investors. There is a structured conference call every quarter to discuss published results. The management has periodic interactions with the financial community including investors and analysts, happen through individual meetings and investor conferences. The Company participated in several investors meets, conferences and roadshows organized by reputed global and domestic broking houses, during the year. It is ensured that critical information related to the company is uploaded on the company''s website and made available to the stock exchanges so that they can be accessed easily and equally by all.
D. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Total Income of the Company (from continued operation) for the financial year under review stood at '' 88,113 Million as against '' 68,119 Million in the previous year*. Profit before Interest, Depreciation, Exceptional Items and Tax stood at (from continued operation) '' 12,302 Million as against '' 9,885 Million for the previous year*. The profit before exceptional items & tax for the Financial Year (from continued operation) stood at '' 9,113 Million in Financial Year 2022 as against '' 6,805 Million in Financial Year 2021*.
The subsidiary companies continue to contribute to the overall growth of the Company.
CIE Galfor S.A. registered consolidated revenue from continued operations of '' 31,220 Million during the financial year ended 31st December, 2022 as compared to '' 24,375 million in the previous year*. The consolidated net profit after tax from continued operations for the financial year under review was '' 2,316 Million as compared to '' 2,365 Million in the previous year*.
*Previous year numbers have been restated due to classification of German Forging Operations as held for sale in accordance with applicable accounting standards. Please see note no23 of the notes to consolidated financial statements for more details.
Aurangabad Electricals Limited registered a revenue from operations of '' 10,060 Million during the year as compared to '' 9,645 Million in the previous year and the net profit after tax for the year stood at '' 730 Million as compared to '' 685 Million in the previous year.
CIE Hosur Limited, which was incorporated in the financial year 2021, commenced its operations during the year. It registered a revenue from operations of '' 74 Million during the year and the net loss after tax for the year stood at '' 132 Million.
The Company''s consolidated revenue from the continuing operations was '' 87,530 Million in the financial year ended 31st December, 2022, of which about 49.5% was derived from the subsidiaries whereas about 50.5% was derived from operations of the Company.
The Consolidated Financial Statements of the Company and its subsidiary companies, prepared in accordance with the Companies Act, 2013 (the Act) and applicable Accounting Standards along with all relevant documents and the Auditors'' Report forms a part of the Annual Report of 2022.
In accordance with section 136 of the Act, separate accounts in respect of each of the Subsidiaries are uploaded on the website of the Company and is accessible at the web-link: http://www.mahindracie.com/investors/ investor-relations/annual-reporthtml#subsidiaries-annual-report and soft copies of the same shall be provided to shareholders of the Company on request for such copies.
Subsidiary Companies
As on 31st December 2022, the Company has 14 subsidiaries namely Stokes Group Limited (U.K.), CIE Galfor S.A.U. (Spain), CIE Legazpi S.A. (Spain), UAB CIE LT Forge (Lithuania), CIE Forging Germany GmbH (Germany), Jeco Jellinghaus GmbH (Germany), Gesenkschmiede Schneider GmbH (Germany), Falkenroth Unformtechnik GmbH (Germany), Schoneweiss & Co. GmbH (Germany), Metalcastello S.p.A. (Italy), BF Precision Private Limited (India), Bill Forge de Mexico S. A. de. CV (Mexico), Aurangabad Electricals Limited (India) and CIE Hosur Limited (India).
CIE Forging Germany GmbH and its subsidiaries (German Forging Operations)
CIE Forging Germany GmbH (CFG) and its four subsidiaries namely Jeco Jellinghaus GmbH (operationally closed), Gesenkschmiede Schneider GmbH, Falkenroth Unformtechnik GmbH and Schoneweiss & Co. GmbH (together referred to as German Forging Operations) supply forging parts primarily for the European truck industry. CIE Galfor S.A., a first level wholly owned subsidiary of the Company and immediate holding company of CFG, also supplies forging parts to the light vehicles industry from its own plant and other subsidiaries in Europe. The light vehicles industry in Europe is seeing a rapid transition to Electric Vehicles (EVs) and the Company is focused on managing this transition.
In view of the above the Board of Directors of CIE Galfor S.A. at its meeting held on 14th December, 2022 approved the proposal to launch an active program to locate a buyer for the German Forging Operations comprising of CFG and its subsidiaries as mentioned above. In accordance with the applicable accounting standards all the German Forging Operation''s âassets and liabilities" are categorized as âassets and liabilities held for sale".
Stokes Group Limited
In 2018, the Board of Directors of the Company, after reviewing the business situation, had agreed with the proposed closure of Stokes Group Limited (Stokes) and its business was classified as dis-continued operations. Stokes has completely stopped its production in FY2019. On 17th June, 2022, the Company being the sole member of Stokes Group Limited approved voluntary winding up and liquidation of Stokes and appointed liquidator. The liquidation of Stokes is expected to be completed in accordance with the applicable laws, by first half of FY-2023.
All other subsidiaries are operational.
Associate Companies
The Company had Six Associates as on 31st December, 2022 namely Clean Max Deneb Power LLP (Deneb), Sunbarn Renewables Private Limited (Sunbarn), Renew Surya Alok Private Limited (Renew), Gescrap India Private Limited (Gescrap), Strongsun Solar Private Limited (Strongsun) and Galfor Eolica SL. The Company does not have any joint-venture.
The Company has been taking various steps to optimize its power cost and to increase the proportion of green energy in the total energy consumption of the Company. The investments in Deneb, Sunbarn, Strongsun and Renew are in furtherance of this objective. All these entities are major contributors for use of renewable source of energy in operation of the Company and will also results in savings in energy cost.
Gescrap is engaged in metal recycling and total waste management in India. The investment is made with the objective of preventing disruption in supply/demand of scrap for the business divisions of the Company and to enhance transparency and add best practices to scrap management in the group.
Galfor Eolica SL is an associate Company of CIE Galfor S.A.
A Report on the performance and financial position of each of the subsidiaries and associate companies included in the Consolidated Financial Statement and their contribution to the overall performance of the Company, is provided in Note No. 39 of the Consolidated Financial Statements of the Company and in Form AOC-1 attached to the Financial Statements.
The Company has formulated a Policy for determining Material Subsidiaries and Governance Requirements in respect of Subsidiaries and the same has been uploaded on the website of the Company and is accessible at the web-link: http://www.mahindracie.com/investors/ investor-relations/governance.html#policies-and-code-of-conduct
Credit Rating
ICRA Limited, the Credit Rating Agency, have reaffirmed / assigned rating(s) to the Commercial Paper and Line of Credit of the Company, details of the same is provided in the Corporate Governance Report.
The Company has not been identified as a âLarge Corporate" as per the criteria under SEBI Circular No. SEBI/ HO/DDHS/cir/p/2018/144 dated 26th November, 2018.
E. INTERNAL FINANCIAL CONTROLS
Your Company has put in place adequate internal financial controls commensurate with the size and complexity of its operations. The internal controls ensure the reliability of data and financial information to maintain accountability of assets.
Your Company uses ERP System as a business enabler and to maintain its books of accounts. The transactional controls built in ERP System provide segregation of duties, appropriate level of approval mechanism and maintenance of supporting records. It is further supplemented by documented policies, guidelines and procedures. These are reviewed by the management regularly and strengthened wherever required. These systems and controls are subject to audit program arrived at basis risk review and approved by the Audit Committee. Action plan is prepared by the management for all the audit findings and the same is reviewed by the Audit Committee on quarterly basis.
The controls have been assessed during the year under review, basis guidance-note issued by the Institute of Chartered Accountants of India on Audit of Internal Financial Controls over Financial Reporting. Based on the results of such assessments carried out by the management, no reportable or significant deficiencies, no material weakness in the design or operation of any control was observed. Nonetheless, your Company recognizes that any internal control framework, no matter how well designed, has inherent limitations and accordingly regular audits and review processes have been put in place.
F. MANAGEMENT DISCUSSION AND ANALYSIS
Management discussion and analysis of financial condition and results of operations of the Company along-with the performance and financial position of each of the subsidiaries is provided in the Management Discussion and Analysis Report which forms part of this Annual Report.
G. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions entered into with Related Parties of the Company, during the year under review, were in Ordinary Course of Business and were transacted at arm''s length basis.
The details of the transactions of the Company as required to be disclosed pursuant to Para A of Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, are disclosed at Note. No. 31 of the Notes to the Standalone Financial Statements.
Further, the Company had entered into Material Related Party Transactions i.e., transactions exceeding 10% percent of the annual consolidated turnover as per the last audited financial statements of the Company with
Mahindra & Mahindra Limited (m&m). These transactions were in Ordinary Course of Business of the Company and were at arm''s length basis. The details of these transactions, as required to be provided under section 134(3)(h) of the Companies Act, 2013 are disclosed in Form AOC-2 as Annexure I and forms part of this Report.
The Policy on materiality of and dealing with Related Party Transactions as approved by the Board is uploaded on the website of the Company and is accessible at the web-link:
https://www.mahindracie.com/investors/investor-
relations/governance.html#policies-and-code-of-
conduct.
Statutory Auditors
The members of the Company at the 23rd Annual General Meeting (agm) had appointed m/s. B S R & Co. LLP, Chartered Accountants (b S R LLP) (ICAI Firm No. 101248W/W - 100022) as the Statutory Auditors of the Company to hold office from the conclusion of 23rd AGM for a term of consecutive five years till the conclusion of 28th AGM of the Company to be held in the year 2027.
Auditor''s report
The Auditors'' Report on the Financial Statement for the year ended 3lst December, 2022, is unmodified i.e., it does not contain any qualification, reservation or adverse remark or disclaimer and notes thereto are selfexplanatory and do not require any explanations.
Secretarial Auditor and Secretarial Audit
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 had appointed Mr. Sachin Bhagwat, Practicing Company Secretary (Certificate of Practice No. 6029), Secretarial Auditor to undertake the Secretarial Audit of the Company for the Financial Year ended 31st December, 2022. The Secretarial Audit Report for the Financial Year ended 31st December, 2022 is appended to this Report as Annexure II. The report does not contain any qualification, reservation, or adverse remark or disclaimer.
Secretarial Audit of Material Unlisted Indian Subsidiary
Aurangabad Electricals Limited (ael), is a material subsidiary of the Company. The Secretarial Audit of AEL for the financial year ended 31st December, 2022 was carried out pursuant to Section 204 of the Companies Act, 2013 and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 by Mr. Sachin Bhagwat, Practicing Company Secretary (Certificate of Practice No. 6029). The Secretarial Auditor''s Report of AEL, does not contain any qualification, reservation or adverse remark and the same is enclosed herewith as
Annexure III.
Annual Secretarial Compliance Report
The Company has undertaken an audit for the Financial Year ended 31st December, 2022 for all applicable
compliances as per Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report duly signed by Mr. Sachin Bhagwat, Practicing Company Secretary (Certificate of Practice No. 6029) has been submitted to the Stock Exchanges within the prescribed timelines.
Cost Records
Your Company maintained cost accounts and records as required under Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit) Rules, 2014.
Cost Auditors
The Board had appointed Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune, (Firm Registration Number 000030) as Cost Auditor for conducting the audit of Cost Records of the Company for Financial year ended 31st December, 2022.
In accordance with Section 148 of the Companies Act, 2013, the Board of Directors of the Company, on recommendation of the Audit Committee, reappointed Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune (Firm Registration Number 000030) as the Cost Auditors of the Company to conduct the Audit of the Cost Accounting Records maintained by the Company for the Financial Year ending 31st December, 2023. Messrs. Dhananjay V. Joshi & Associates have confirmed that their appointment is within the limits of Section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under section 141(3) read with Section 148(5) of the Companies Act, 2013.
As per the provisions of the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution seeking Members'' ratification for the remuneration payable to Messrs. Dhananjay V. Joshi & Associates, Cost Auditors is included in the Notice convening the 24th Annual General Meeting.
Reporting of Frauds by Auditors
During the year under review, the Statutory Auditors, Cost Auditors and the Secretarial Auditor have not reported any instance of fraud committed in the Company by its Officers or Employees to the Audit Committee under section 143(12) of the Companies Act, 2013, details of which needs to be mentioned in this Report.
I. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES
Particulars of investments made by the Company, as required under Section 186 of the Companies Act, 2013, are provided in the Note No. 8 of the Notes to the Standalone Financial Statements.
Further, disclosure required pursuant to Regulation 34(3) read with Part A of Schedule V of the Listing Regulations in respect of loans or advances in the nature of loan given
by the Company to its Subsidiaries is provided at the end of this report.
During the year under review the Company has not provided any guarantee or security in connection with the loan to any other person or body corporate. Apart from the loans or advances in the nature of loans given to the subsidiaries of the Company, the Company has not provided any loans or advances in the nature of loans to any other person or body corporate including to any firms/body corporates in which directors of the Company are interested. The particulars of loans given by the Company, as required under Section 186 of the Companies Act, 2013, are provided in Note No. 8B of the Notes to the Standalone Financial Statements.
J. PUBLIC DEPOSITS
Your Company has not accepted any deposits during the year under review.
K. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
During the year under review, pursuant to provisions of Section 124 of the Companies Act, 2013 and rules made thereunder, an amount of '' 5,10,073/- pertaining to sale proceeds of fractional shares arising out of consolidation of fractional entitlements in accordance with the Integrated Scheme and Composites Scheme of Amalgamation was transferred by the Company to Investors Education and Protection Fund (IEPF) on expiry of seven years.
Further, pursuant to the Integrated scheme and the Composites scheme of Amalgamation Mahindra Ugine Steel Company Limited (MUSCO) and Mahindra Composites Limited (MCL) merged with the Company, both MUSCO and MCL had unclaimed dividends which were transferred to IEPF by the Company in accordance with provisions of Section 124 of the Act. Details of all the unclaimed amounts transferred by the Company to IEPF in earlier years is uploaded on the website of the Company and is accessible at the web-link:
http://www.mahindracie.com/investors/downloads/ documents.html#unclaimed-amounts and also on the website of IEPF viz. www.iepf.gov.in.
No claim lies against the Company in respect of these Dividends/fractional entitlements.
For any claims that are lodged with IEPF for unclaimed amounts, the Company has nominated Mr. Pankaj Goyal, the Company Secretary of the Company as Nodal officer for the purposes of verification of claims and coordination with Investor Education and Protection Fund Authority as required under Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended from time to time, the Contact details of the nodal officer are available on the website of the Company.
L. EMPLOYEES
Key Managerial Personnel (KMP)
The following officers of the Company have been designated as the Whole-time Key Managerial Personnel in accordance with Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
1. Mr. Ander Arenaza - Executive Director
2. Mr. Manoj Menon - Executive Director and Chief Executive Officer - Stampings, Composites, Foundry, Magnetics and Gears Divisions
3. Mr. Anil Haridass - Executive Director and Chief Executive Officer - Forgings and Bill forge divisions (upto 22nd February, 2022)
4. Mr. Hari Krishnan - Chief Executive Officer - Forgings and Bill Forge Divisions (w.e.f. 22nd February, 2022)
5. Mr. K. Jayaprakash - Chief Financial Officer
6. Mr. Pankaj Goyal - Company Secretary and Compliance Officer
During the year under review, Mr. Anil Haridass demitted his executive responsibilities and stepped down as Whole-time Director and Chief Executive Officer -Forgings and Bill Forge Divisions of the Company with effect from 22nd February, 2022. He therefore ceased to be a KMP of the Company and re-designated as Nonexecutive Director of the Company with effect from 22nd February, 2022. After Mr. Anil Haridass demitted his executive responsibilities, the Board of Directors of the Company, on recommendation of the Nomination and Remuneration Committee, have appointed Mr. Hari Krishnan (then advisor) as Chief Executive Officer -Forgings and Bill Forge Divisions of the Company with effect from 22nd February, 2022.
Employees'' Stock Option Scheme
The Company has in force the following Employees Stock Options Schemes :
a) Mahindra CIE Automotive Limited - Employees'' Stock Option Scheme (ESOS-2007)
b) Mahindra CIE Automotive Limited - Employees'' Stock Options Scheme 2015 (ESOS-2015)
Voting rights on the shares issued to employees under above ESOS are either exercised by the employees directly or through their appointed proxies.
During the year, there have been no material changes to these schemes and no stock options were granted to the employees under the said schemes.
Both the schemes are in compliance with the SEBI (Share Based Employee Benefits) Regulations, 2021 (âSBEB Regulations"). The Certificate issued by the Secretarial Auditor of the Company to the effect that the Schemes
have been implemented in accordance with the said Regulations and the resolution passed by the members will be placed before the members at the ensuing Annual General Meeting.
The information as required to be disclosed, in relation to ESOS under the Companies Act, 2013, and the details of the ESOS being implemented, as specified by SEBI under the SBEB Regulations is uploaded on the website of the Company and is accessible at the web-link:
http://www.mahindracie.com/investors/downloads/
documents.html#other-documents-and-disclosures
The said information is also provided in the Note No. 36 of the Notes to Standalone Financial Statements.
Particulars of Employees and related disclosures
Disclosures with respect to the remuneration of Directors, KMPs and employees as required under Section 197 (12) of the Companies Act, 2013 read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure IV to this Report.
Further, as required under provisions of Section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement including the names and other details of the top ten employees in terms of remuneration drawn and the name of every employee, who were in receipt of remuneration not less than '' 10,200,000/- per annum during the year ended 31st December, 2022 or employees who were employed for a part of the Financial Year and were in receipt of remuneration of not less than '' 8,50,000/- per month during any part of the said year is annexed as Annexure V to this report.
The Company had no employee who was employed throughout the Financial Year or part thereof and was in receipt of remuneration, which in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or wholetime director or manager and holds by himself or along with his spouse and dependent children, not less than 2% of the equity shares of the Company.
Industrial Relations
The relationship between the Management and Worker''s Union continued to remain cordial.
The Management Discussion and Analysis gives an overview of the developments in Human Resources/ Industrial Relations during the year.
Retirement by rotation
Mr. Jesus Maria Herrera Barandiaran (DIN: 06705854) and Mr. Manoj Mullassery Menon (DIN: 07642469) are lia ble to retire by rotation a nd being elig ible, ha ve offered themselves for re-appointment at the 24th Annual General Meeting of the Company.
As required under Regulation 36 (3) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard 2, particulars of Directors seeking re-appointment at ensuing Annual General Meeting shall be provided in the Notice of 24th Annual General Meeting (AGM).
Changes in Board
During the year under review, the Board at its meeting held on 22nd February, 2022, on recommendation of the Nomination and Remuneration Committee, appointed Mr. Puneet Renjhen (DIN:09498488) as Additional Director of the Company. At 23rd AGM of the Company, the Members approved his appointment as a Director, liable to retire by rotation.
Further, Mr. Zhooben Bhiwandiwala (DIN: 00110373) and Mr. Puneet Renjhen (DIN: 09498488) resigned as Director(s) of the Company with effect from 22nd February, 2022 and 19th December, 2022 respectively. The Board of Directors of the Company places on record its appreciation of Mr. Bhiwandiwala''s and Mr. Renjhen''s contribution as Director during their association with the Company.
Further, Mr. Anil Haridass (DIN: 00266080) resigned as Whole-time Director and was re-designated as NonExecutive Director w.e.f. 22nd February, 2022.
Declaration of the Independent Directors
All the Independent Directors have confirmed that they meet the criteria as mentioned in Regulation 16(1)(b) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Section 149(6) of the Companies Act, 2013. The Independent Directors have also confirmed 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 judgement and without any external influence. Further, the Board after taking these declaration/disclosures on record and acknowledging the veracity of the same, opined that the Independent Directors are persons of integrity and possess the relevant expertise and experience, fulfils the conditions specified in the Listing Regulations and the Act for appointment of Independent Directors and are Independent of the Management.
Directors'' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, based on the representation received from the Operating Management and after due enquiry, confirm that:
a) in the preparation of the annual accounts for the financial year ended 31st December, 2022, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended on 31st December, 2022 and of the profit and loss of the Company for that financial year ended on that date.;
c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) the directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the financial year ended 31st December, 2022;
f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively during the financial year ended 31st December, 2022.
Board, Committee and Annual General Meeting
A calendar of Meetings is prepared and circulated in advance to the Directors.
The Board of Directors of the Company met five times during the Financial Year ended 31st December, 2022 i.e., on 22nd February, 2022, 25th April, 2022, 22nd July, 2022, 18th October, 2022 and 14th December, 2022. The 23rd Annual General Meeting of the Company was held on 25th April, 2022 through Video Conferencing.
Details of attendance of meetings of the Board, its Committees and the AGM are included in the Report on Corporate Governance, which forms part of this Annual Report.
Meeting of Independent Directors
The Independent Directors of the Company met on 21st February, 2022 and 13th December, 2022 without the presence of the Chairman, Executive Directors, other Non-Independent Director(s) and any other Managerial Personnel.
Performance Evaluation
During the year under review, the Nomination and Remuneration Committee and Independent Directors have ascertained and reconfirmed that the deployment of âquestionnaire" as a methodology, is effective for evaluation of performance of Board, its Committees and Individual Directors including non-independent Directors and the Chairman.
Accordingly, feedback was sought on the structured questionnaire from all the Directors of the Company, through electronic platform provided by an Independent Agency, covering various aspects, on performance evaluation of the Board, Committees of Board,
Independent Directors, Non-Independent Directors, and the Chairman. A report aggregating the responses of all the directors of the Company was generated by the system.
Performance Evaluation of Individual Directors
The reports of the performance evaluation of Individual Directors were shared with respective Directors and Chairman of the Nomination and Remuneration Committee (NRC). Based on the same the NRC evaluated the performance of all individual directors.
The Independent Directors at their meeting separately evaluated the performance of non-independent Directors and the Chairman.
Performance Evaluation of the Board and Committees of Board
The report of the feedback received from all the Directors on performance evaluation of Board and Committees of Board was shared with the Chairman of the Board and the Chairman of the respective Committees. The Board reviewed the reports and evaluated its own performance and performance of the Committees of the Board.
The Independent Directors at their meeting separately evaluated the performance of the Board. For details, please refer to the Report on Corporate Governance, which forms part of this Annual Report.
Familiarisation Programme for Independent Directors
The details of 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, and related matters are given in the Report on Corporate Governance. The familiarisation programme and other disclosures as specified under Regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is available on the website of the Company at the link:
http://www.mahindracie.com/investors/downloads/
documents.html#other-documents-and-disclosures.
Policy on Appointment and Remuneration
In line with the principles of transparency and consistency, the Company has adopted the following Policies which, inter-alia includes criteria for determining qualifications, positive attributes and independence of a Director.
i) Policy on appointment of Directors, Key Managerial Personnel and Senior Management Employees and succession planning;
ii) Policy on the remuneration of Directors, Key Managerial Personnel and other employees of the Company.
Salient features of these policies are enumerated in the Corporate Governance Report which forms part of the Annual Report.
During the year under review, there was no change in the Policy on the remuneration of Directors, Key Managerial
Personnel and other employees of the Company and Policy on Appointment of Directors, Key Managerial Personnel and Senior Management Employees and succession planning.
The Policies mentioned above are also uploaded on the website of the Company and is accessible at the web-link: http://www.mahindracie.com/investors/investor-
relations/governance.html#policies-and-code-of-conduct.
Your Company has duly constituted the Committees required under the Companies Act, 2013 read with applicable Rules made thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Committee comprises of four independent directors viz:
1) Mr. Dhananjay Narendra Mungale - Chairman,
2) Mr. Manojkumar Madangopal Maheshwari
3) Mrs. Roxana Meda Inoriza
4) Mr. Alan Savio D''Silva Picardo
All the Members of the Committee are Independent Directors and possess strong accounting and financial management knowledge.
The Company Secretary is the Secretary to the Committee. All the recommendations of the Audit Committee were accepted by the Board during the financial year under review.
N. GOVERNANCE Corporate Governance
Your Company believes in attainment of highest levels of transparency in all facets of its operations and maintains an unwavering focus on imbibing good Corporate Governance practices. Your Company continues to strengthen its governance principles to generate longterm value for its various stakeholders on a sustainable basis thus ensuring ethical and responsible leadership both at the Board and at the Management levels.
A Report on Corporate Governance along with a Certificate from the Mr. Sachin Bhagwat, Practicing Company Secretary (ACS Number - 10189, CP Number -6029) and Secretarial Auditor of the Company regarding the compliance with the conditions of Corporate Governance as stipulated in the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report.
Vigil Mechanism
The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules prescribed thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 is implemented through the Company''s Whistle Blower Policy to enable the directors, employees and all stakeholders of the Company to report their genuine concerns, to provide for adequate safeguards against victimisation of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee. The detail of the Policy is explained in the Corporate Governance Report and has been uploaded on the website of the Company and is accessible at the web-link: http://www.mahindracie.com/investors/ investor-relations/governance.html#whistle-blower.
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 (POSH Act) and Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment at all workplaces of the Company in compliance with the provisions of the POSH Act. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The framework ensures complete anonymity and confidentiality.
During the year under review, one complaint of sexual harassment was received by ICC of a business division and the same was pending at the end of the year.
Risk Management
The Board has constituted a Risk Management Committee which comprises of three members as at the end of the financial year namely, Mr. Manoj Mullassery Menon - Executive Director (Chairman of the Committee), Mr. Ander Arenaza Alvarez - Executive Director and Mr. Alan Savio D Silva Picardo - Independent Director. The Committee also has invitees from Senior Management team. The other details and terms of reference of the Committee are covered under the Corporate Governance report which forms part of this Annual Report.
In accordance with the requirement of the Act and Listing Regulations the Company has developed and implemented a Risk Control and Management Policy which establishes general framework for action, as well as the procedures and responsibilities to control and manage the risks which the Company must face efficiently and effectively. The risk management system of the Company (âRMS") allows it to reasonably ensure that all significant risks, both financial and non-financial, including those which in the opinion of the Board may threaten the existence of the Company, are prevented, identified, assessed, subjected to ongoing control and reduced to the defined levels of risk appetite and tolerance and are approved by the Risk Management Committee and ultimately by the Board.
The Risk Management Committee, Audit Committee as well as the Board reviews the risks and RMS periodically. The Company has established procedures to periodically
place before the Board, the risk assessment and minimisation procedures being followed by the Company and steps taken by it to mitigate the Risks.
Important element of risk is provided in the Management Discussion and Analysis.
O. SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY
Sustainability
Objectives
To ensure that the actions of the Company are governed by the principles as laid down in National Guidelines on Responsible Business Conduct (NGRBCs), to the extent applicable to our business and operations, which are more particularly provided in the ESG Policy of the Company.
Safety and Health
The Company is committed to provide a safe and healthy work environment across all manufacturing plants, and offices of the Company.
Developing and sustaining safety culture is a journey and the management continues to monitor adherence by all employee of the processes and procedures including the Safety Standards established across all manufacturing plants. The focus of FY22 was on improving our 5 key safety lead indicators which demonstrates commitment and accountability of our line managers in safety and health management at our manufacturing facilities. Our continuous efforts in safety of people have resulted in significant improvement in the overall safety and health performance in FY-22. During the year, Surveillance and Certificate Audit was carried out at 20 (out of 25) plants of the Company by a third party and have reassured compliance by the Company of the ISO-45001 standard at these facilities. The Five facilities which have yet not achieved the ISO-45001 certification have Safety Management Systems in place in line with requirements of ISO-45001 and are expected to complete their assessment and achieve the certification in FY-23.
To ensure wellbeing of all employees, the management continued conducting occupational health examination, periodic health checks up and workplace monitoring and ensures that there is no adverse impact on health of our employees.
The Company is an auto-component supplier to OEMs and their Tier-1 suppliers. Most of our products are as per the specifications provided by the Customers. Thus, we are more a Process Company than a Product Company. Our endeavor is to ensure that resource-efficient and low carbon processes and technologies are deployed for manufacturing of the products. The management is focused on making available goods and services to our customers in a manner that minimizes any environmental and social impacts of our operations.
To ensure that all environmental risks and opportunities related to our activities are taken care of, the Company has in place the Environment Management System which adheres to the specifications of the ISO-14001 standard. While most of our operations (20 out of 25) have been certified under ISO-14001 standards, the remaining plants have Environment Management System in place in line with requirements of ISO-45001 and are expected to complete their assessment and achieve the certification in FY-23.
On its pathway towards a circularity model, the Company emphasized on better managing natural resources, monitoring its consumption and waste generation to minimize impacts arising from our activities on environment.
The emphasis continued on increasing the share of green energy in total energy consumption. During FY 2022 the captive solar power plants set up in Maharashtra with capacity of 52.5 MW commissioned supply with the entire capacity. The proportion of the renewable energy consumption to the total energy consumption was about 51% in FY-2022. During the year, the Company has signed firm agreements to source additional 16 MW power from captive solar power plants to be set-up in Maharashtra, which are expected to commission in FY-2023.
Business Responsibility and Sustainability Report
In accordance with the nine business responsibility principles provided under National Guidelines on Responsible Business Conduct (NGRBCs) and Business Responsibility and Sustainability Reporting framework prescribed by Securities and Exchanges Board of India, the Board of Directors of the Company at its meeting held on 14th December, 2022 adopted Environmental, Social and Governance Policy (ESG Policy) replacing the existing Business Responsibility Policy of the Company.
Pursuant to Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has voluntarily opted to submit the Business Responsibility and Sustainability Report for the Financial Year ended on 31st December, 2022, which forms part of this Annual Report.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information pertaining to energy conservation, technology absorption and foreign exchange earnings and outgo, as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are provided in Annexure VI to this Report.
Corporate Social Responsibility (CSR)
The Company has constituted Corporate Social Responsibility (CSR) Committee in accordance with Section 135 of the Companies Act, 2013. The CSR Committee comprises of Mr. Kadambi Narhari (Chairman), Mr. Dhananjay Mungale, Mr. Manoj Menon and Mr. Anil Haridass.
The Board of Directors have approved and adopted Corporate Social Responsibility Policy (CSR Policy) as formulated and recommended to the Board by CSR Committee. The CSR Policy including a brief overview of the projects or programs undertaken by the Company in pursuance of its CSR Policy are hosted on the Company''s website and is accessible at the web-link: https://www. mahindracie.com/investors/investor-relations/csr.html
During the year under review the Company was required to spent '' 46.01 million in accordance with Section 135(1) of the Companies Act, 2013, as its CSR obligation. Out of the CSR Obligation of FY-2022, the Company has spent '' 35.17 million in accordance with the Annual Action Plan approved by the Board. The unspent amount of '' 10.84 million is allocated to the two Ongoing CSR projects, implementation of which shall be continued by the Company in FY-2023.
Further, during the previous financial year, the Company had transferred '' 37.51 million to unspent CSR account of the Company in accordance with Section 135(6) of the Act. The Company had spent this entire unspent CSR amount
i.e., '' 37.51 Million on the CSR Projects implemented by the Company during the year under review, in accordance with the Annual Action Plan.
The CSR Committee affirmed that the implementation and monitoring of the CSR projects during the year was in compliance with the CSR objectives and CSR policy of the Company.
A brief overview of the projects or programs undertaken by the Company is accessible at the web-link: https:// www.mahindracie.com/investors/investor-relations/csr. html
In accordance with the Companies (Corporate Social Responsibility Policy) Rules, 2014 the Annual Report on CSR Activities inter-alia providing brief outline of the CSR Policy, CSR activities undertaken by the Company during the year and the reason for not spending the entire CSR amount is annexed herewith as Annexure VII.
Change in Name of the Company
The Company is a subsidiary of CIE Automotive S.A., Spain having India as its major area of operations. Your Company therefore draws from the experience of CIE group to serve the evolving Indian automotive industry.
India is projected to be one of the fastest growing large economies in the world and CIE Automotive S.A.''s global strategy continues to focus on India as a key market. To reflect the above strategy, the Board of Directors of the Company at their meeting held on 14th December, 2022 have considered and approved the proposal to change the name of the Company from ''''Mahindra CIE Automotive Limited" to âCIE Automotive India Limited". Consequently, alteration in the ''Clause I'' i.e. ''Name Clause'' of the Memorandum of Association of the Company by substituting the existing ''Clause I'' by new name of the Company was also approved by the Board.
The Company had sought approval of the members of the Company in this regard by way of postal ballot.
Subject to approval of the members and in accordance with Section 13(2) of the Act, the proposed change in the name of the Company shall be effective, only with the approval the Central Government in writing (the powers of Central Government are delegated to RoC) and upon issuance of a fresh certificate of incorporation in the new name of the Company as per Section 13(3) of the Act. The change in the name shall be complete and effective from the date of issuance of such fresh certificate of incorporation.
Change in shareholding of Promoters of the Company
During the year under review, Participaciones Internacionales Autometal Dos (PIA2), one of the Promoters of the Company, purchased 1,89,56,240 Equity Shares representing 4.99% of the paid-up share capital of the Company from open market, increasing its shareholding to 65.70% of the paid-up share capital of the Company as at the end of the Financial Year. Further, Mahindra & Mahindra Limited (m&m), other Promoter of the Company, sold 8,242,444 Equity Shares representing 2.17% of the paid-up share capital of the Company thereby reducing its shareholding to 9.25% of the paid-up share capital of the Company as at the end of the Financial Year.
Pursuant to the SEBI (Substantial Acquisition of shares and Takeover) Regulations, 2011 and SEBI (Prohibition of Insider Trading) Regulations, 2015 necessary disclosure were submitted to stock exchanges. The Promoter and Promoter Group shareholding in the Company post the above transaction stands at 74.95% of the paid-up equity capital of the Company as on 31st December, 2022.
During the year under review, the Company has issued and allotted 2,66,424 equity shares of face value of '' 10/-each, pursuant to exercise of options by the employees under the Company''s Employee Stock Option Scheme -2015.
Compliance with the provisions of Secretarial Standard 1 and Secretarial Standard 2
The Company have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively. During the year under review the Company was in compliance with the Secretarial Standards, i.e., SS-1 and SS- 2, relating to âMeetings of the Board of Directors" and âGeneral Meetings" respectively.
Compliance with Downstream Investment conditionalities
The Company is a Foreign Owned and Controlled Company within the meaning of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 (âFDI
Regulations"). All the Downstream Investments made by the Company are in compliance with the conditionalities of Downstream Investment stipulated in the FDI Regulations.
The Company has obtained a certificate from the Statutory Auditors of the Company for compliance with the FDI Regulations in respect of the downstream investment made by the Company during financial year 2021. The Auditors have affirmed compliance with downstream investment conditionalities by the Company and have issued an unqualified report.
Pursuant to Section 92(3) read with section 134(3)(a) of the Companies Act, 2013, copies of the Annual Returns of the Company prepared in accordance with Section 92(1) of the Act read with Rule 11 of the Companies (Management and Administration) Rules, 2014 are placed on the website of the Company and is accessible at the web-link: http://www.mahindracie.com/investors/ downloads/documents.html.
Other Policies under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
In accordance with the provisions of Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has framed a Policy for determination of Materiality for disclosure of events or information. The same has been hosted on the website of the Company and is accessible at the web-link: http:// www.mahindracie.com/investors/investor-relations/ governance.html#policies-and-code-of-conduct.
Dividend Distribution Policy
Pursuant to regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a dividend distribution policy which became effective from 1st January, 2017 stipulating factors to be considered in case of Dividend declaration. The said policy was amended in financial year 2021 inter-alia to amend the Financial Parameters that shall be considered while declaring dividend. There was no change in the Policy during the Financial Year under review.
The Dividend Distribution Policy forms part of this report as Annexure VIII.
The same has also been hosted on the website of the Company and is accessible at the web-link: http:// www.mahindracie.com/investors/investor-relations/ governance.html#policies-and-code-of-conduct.
None of the Executive Directors (Whole-time Director or Managing Director) were in receipt of any commission from the Company hence the disclosure under Section 197(14) of the Act is not applicable.
Your directors state that no disclosure or reporting is required in respect of the following items as there were no transactions/ events relating to these items during the year under review:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of Shares (including sweat Equity shares) to employees of the Company under any Scheme save and except ESOS referred to in this Report.
3. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and the Company''s operation in future.
4. No application was made, or any proceedings is pending under the Insolvency and Bankruptcy Code, 2016 during the year in respect of the Company.
5. There has been no change in the nature of business of your Company.
6. There was no one-time settlement of loan obtained from Banks or Financial Institutions.
7. Voting rights which are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3) (c) of the Companies Act, 2013).
Acknowledgement
Your Directors wish to place on record their sincere appreciation to the Company''s Customers, Investors, Vendors and to the Bankers for their continued support during the year.
The Directors also wish to place on record their appreciation for the dedication and contribution of all employees at all levels and look forward to their support in future as well.
For and on behalf of the Board of Directors
Mahindra CIE Automotive Limited
Shriprakash Shukla Chairman
DIN: 00007418
Date: 22nd February, 2023 Place: Pune
Dec 31, 2018
DIRECTORSâ REPORT
Dear Shareholders
The Directors present their Report together with the audited financial statements of your Company for the Financial Year (FY) ended 31st December, 2018.
A. FINANCIAL HIGHLIGHTS (STANDALONE)
('' in Million)
|
PARTICULARS |
FY ended 31st December, 2018 |
FY ended 31st December, 2017 |
|
Total Revenue |
25,591 |
20,760 |
|
Profit before Interest, Depreciation, Exceptional Items and Tax |
3,340 |
2,084 |
|
Less: Depreciation |
739 |
759 |
|
Profit before Interest, Exceptional Items and Tax |
2,601 |
1,325 |
|
Less: Interest and Finance cost |
82 |
108 |
|
Profit before Exceptional Items and Tax |
2,519 |
1,217 |
|
Less: Exceptional items |
1,286 |
69 |
|
Profit before tax |
1,233 |
1,148 |
|
Profit after tax |
355 |
693 |
|
Other Comprehensive income |
(8) |
(5) |
|
Total Comprehensive income |
347 |
688 |
Financials
During the Financial Year under review your Company registered a total Revenue of? 25,591 Million as against '' 20,760 Million for previous year and Profit before Interest, Depreciation, Exceptional items and Tax of? 3,340 Million as against'' 2,084 Million for the previous year. The Profit before exceptional items & Tax for the Financial Year doubled to '' 2,519 Million in Financial Year 2018 from '' 1,217 Million in Financial Year 2017. The net profit after tax for the current Financial Year stood at '' 355 Million (after Exceptional item of'' 1,286 Million towards the closure of Stokes Group in UK & transfer of holding from Mahindra Forgings Europe AG to CIE Gal for S.A.) as against a net profit of'' 693 Million for the previous financial year.
There have been 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 and the date of this Report.
Dividend
The Company would need significant funds for its organic and inorganic growth. The present FDI regulations in India do notpermit acquisition of an Indian Company by Foreign Majority Owned Indian Companies through domestic borrowings. According to the FDI Regulations internal accruals are one of the permitted sources to fund domestic acquisitions. In view of this your Directors do not recommend any dividend for the Financial Year 2018.
Transfer to Reserves
The Company has not transferred any amount of profits to reserves.
B. OPERATIONAL REVIEW India
Your Company has pursued a strategy which is focused on increasing plant efficiency to improve margins through continuous improvements. We have endeavored to diversify our customer base by actively engaging with new customers and have seen some traction on this front. The integration between your Company and parent CIE means interventions are provided as required. The structured program to have MCIE employees go on plant visits to CIE plants to get first hand understanding of processes, has been received positively and the engagements are deepening.
Operations at Bill Forge Mexico Plant are ramping up; but have had some operational problems, which are being addressed by training, consolidation and rationalization of operations.
Thus, the approach has been to focus on improving plant operations, improving margins through continuous improvements and strive for growth.
Europe
The operations in Germany have been stable, but the management is focusing on improving the profitability in a sustainable manner. Also, during this year, your Company has decided to close down the UK operations and is exploring various options to shift machinery and customer orders to other locations.
Plants in Spain & Lithuania have been consistently profitable over the last few years and profit margins are in line with the margins of the CIE group worldwide. The strategic focus is to maintain profitability at these plants while growing with the market.
The Italian operations are showing positive results accruing from the successful ramp up of the key customerâs new orders.
C. Investor Relations (IR)
Your Company continuously strives for excellence in its Investor Relations (âIRâ) engagement with International and Domestic investors through structured conference-calls and periodic investor/analyst interactions like individual Meetings, participation in investor conferences, quarterly earnings calls and analyst meet from time to time. Your Company participated
Scheme of Merger
During the year under review, the Board of the Company approved the Scheme of Merger between Bill Forge Private Limited (Billforge) and Mahindra CIE Automotive Limited (MCIE or Company) and their respective shareholders (the Scheme). In October 2016, the Company completed the strategic acquisition of Billforge. The acquisition was intended to significantly enhance the Companyâs market position and to acquire various tangible and valuable intangible assets possessed by Billforge. The scheme of merger is expected to enable better realization of potential of the respective businesses and yield beneficial results and enhanced value for all the stakeholders. Since Billforge is a wholly owned subsidiary of the Company, no shares will be issued as consideration of the merger and shares held by the Company in Billforge shall stand cancelled. The shareholders of the Company will continue to remain beneficial owners of the Company in the same proportion in which they hold shares in the Company prior to the Merger.
The Company and Billforge had filed respective applications seeking necessary direction of Honâble National Company Law Tribunal, Mumbai and Bengaluru Bench. Honâble National Company Law Tribunal, Mumbai and Bengaluru Bench vide their respective orders dated 4th January, 2019 and 16th January, 2019 directed the companies to serve notices on statutory authorities and called meeting of unsecured creditors of Billforge. The effectiveness of the Scheme is conditional upon and subject to the approvals and / or sanctions as laid down in the respective Scheme.
Transfer of investment held in Mahindra Forgings Europe AG (MFE) to CIE Galfor S. A.
As a result of the past losses, the equity of MFE was fully eroded. Under the German laws, there was a requirement of capital infusion into MFE. MFE and its subsidiaries also required significant funding for their expansion plans. It was therefore proposed that this infusion be done by CIE Galfor S.A., another wholly owned subsidiary of the Company in Spain. To simplify the structure, the Company transferred its 100% stake in MFE to CIE Galfor S.A. at a consideration of Euro 82.6 Million (equivalent in '' 6,849 Million) being the fair value of MFEâs equity as per the valuation report issued by independent valuer. The transfer of shares of MFE to CIE Galfor S.A. consolidated all businesses and legal entities in Europe under CIE Galfor S.A.
Closure of Stokes Group Limited
The Board of Directors of the Company at its meeting held on 16th October, 2018, reviewed the business situation and the requirement of infusion of additional equity in Stokes Group Limited (Stokes). Sales and profit of Stokes has ramped down considerably and old projects are close to end of life. The business of Stokes is reliant on the British market which does not have significant growth opportunities in the short term. The few long term projects the Company are not sufficient to maintain sustained profitability. The last sales forecast of Stokes clearly suggest that the long term viability of its business is suspect. Hence the Board agreed with the proposed closure of Stokes in a number of investor meets organized by reputed Global and Domestic Broking Houses, during the year.
Your Company always believes in building a relationship of mutual understanding with investor/analysts. Your Company ensures that critical information about the Company is available to all the investors, by uploading all such information on the Companyâs website.
D. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company and its subsidiary companies prepared in accordance with the Companies Act, 2013 (the Act) and applicable Accounting Standards along with all relevant documents and the Auditorsâ Report forms a part of this Annual Report.
In accordance with section 136 of the Act, separate accounts in respect of each of the Subsidiaries are uploaded on the website of the Company at Web-link: http://www.mahindracie.com/ investors/investor-relations/annual-report.html#subsidiaries-annual-report and copies of the same shall be provided to shareholders of the Company on request for such copies.
Subsidiary Companies
The subsidiary companies also continue to contribute to the overall growth of the Company.
CIE Galfor S.A. which is the holding company of Mahindra Forgings Europe AG and Metalcastello, Italy registered consolidated revenue of '' 47,522 Million (includes MFE & Metalcastello revenue) during the financial year ended 31st December, 2018 as compared to '' 37,030 Million in the previous year. The consolidated net profit after tax for the financial year under review was '' 3,239 Million (including MFE & Metalcastello) as compared to '' 2,266 Million in the previous year.
Bill Forge Private Limited registered consolidated revenue from operations of '' 8,713 Million during the financial year ended 31st December 2018 against'' 7,381 Million in the previous year. The consolidated net profit after tax for the Financial Year 2018 stood at '' 656 Million against'' 604 Million in the previous year.
The Companyâs consolidated total revenue from the continuing operations was '' 80,315 Million in the financial year ended 31st December, 2018, of which about 68% was derived from the subsidiaries whereas about 32% was derived from operations of the Company.
The Company has 15 subsidiaries namely Stokes Group Limited (U.K.), CIE Galfor S.A. (Spain), Mahindra Forgings Europe AG (Germany), Jeco Jellinghaus GmbH (Germany), Stokes Forgings Ltd. (U.K.), Stokes Forgings Dudley Ltd. (U.K.), Gesenkschmiede Schneider GmbH (Germany), Falkenroth Umformtechnik GmbH (Germany), Schoneweiss & Co. GmbH (Germany), Metalcastello S.p.A. (Italy), CIE Legazpi S.A. (Spain), UAB CIE LT Forge (Lithuania), Bill Forge Private Limited (India) [Billforge], BF Precision Private Limited (India) and Bill Forge de Mexico S de RL de CV (Mexico).
are reviewed by the management. These systems and controls are audited by the Internal Auditors and their findings and recommendations are reviewed by the Audit Committee which ensures its implementation.
Your Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. Such controls have been assessed during the year under review taking into consideration the essential components of internal controls stated in the Guidance note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Based on the results of such assessments carried out by the management, no reportable or significant deficiencies, no material weakness in the design or operation of any control was observed. Nonetheless your Company recognizes that any internal control framework, no matter how well designed, has inherent limitations and accordingly, regular audits and review processes ensure that such system are re-enforced on an ongoing basis. The internal financial controls with reference to the Financial Statements are commensurate with the size and nature of business of the Company.
G. MANAGEMENT DISCUSSION AND ANALYSIS
Management discussion and analysis of financial condition and results of operations of the Company along-with the performance and financial position of each of the subsidiaries is provided in the Management Discussion and Analysis which forms part of this Annual Report.
H. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All Related Party Transactions entered during the year were in the Ordinary Course of Business and at arm''s length basis. During the year under review, your Company had entered into Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements of the Company with Mahindra & Mahindra Limited. These transactions were in the Ordinary Course of Business of your Company and were at arm''s length basis. The details of these transactions, as required to be provided under section 134(3)(h) of the Companies Act, 2013 are disclosed in Form AOC-2 as Annexure I and forms part of this Report.
The Policy on materiality of and dealing with Related Party Transactions as approved by the Board is uploaded on the website of the Company at http://www.mahindracie.com/ imaaes/pdf/resources/Governance/Policv on Related Party Transaction.pdf
I. AUDITORS
Statutory Auditors and Auditorâs report
The members of the Company at the 18th Annual General Meeting (AGM) had appointed Price Waterhouse Chartered Accountants LLP (Firm Registration No. 012754N/N500016) as the Statutory Auditors of the Company to hold office from the conclusion of 18th within a period of next two years. The Company had already provided for impairment of all the investments it had in Stokes and its goodwill is fully impaired in previous years. Further, to facilitate closure the Company also infused Euro 14 Million in equity of Stokes during the financial year.
Stokes Forgings Limited and Stokes Forgings Dudley Limited are dormant companies and Jeco Jellinghaus GmbH has been operationally closed.
All other subsidiaries are operational.
Associate Company
Gescrap India Private Limited (Gescrap India) was incorporated on 27th March, 2018 which is engaged in metal recycling and total waste management in India. The Company has subscribed 30% of the capital of Gescrap India, thus it is an associate of the Company. Scrap is the main raw material of the Company''s Foundry division. Further, more than 10% revenue of the Stampings division comes from scrap sale. Gescrap India will add transparency and best practices to scrap management within the group.
Galfor Eolica SL is an associate Company of CIE Galfor S.A.
As required under section 129(3) of the Companies Act, 2013 read with the Rules, a statement containing the salient features of the financial statement of the subsidiaries in prescribed form AOC-1 is attached to the financial statements. This statement reports the performance and financial position of each of the subsidiaries included in the consolidated financial statement.
The Company has formulated a Policy for determining Material Subsidiaries and the same has been uploaded on the website of the Company at http://www.mahindracie.com/imaaes/pdf/ resources/Governance/Policv on Material Subsidiarv.pdf
E. CHANGE IN SHAREHOLDING OF PROMOTER AND PROMOTER GROUP
During the year under review, Participations Internationals Auto metal, Dos S.L, one of the Promoters acquired 18,926,895 equity shares of the Company, increasing its holding from 51.34% to 56.28%.
Shareholding of Mahindra Vehicle Manufacturers Limited, one of the Promoters of the Company has reduced its holding from 17.25% to 11.44% and Prudential Management and Services Private Limited, a member of Promoter Group, liquidated its entire holding.
As a result, as on 31st December, 2018 the aggregate promoter and promoter group holding of the Company was at 67.73%.
F. INTERNAL FINANCIAL CONTROLS
Your Company uses SAP ERP System as a business enabler and also to maintain its books of accounts. The transactional controls built in SAP ERP System provide segregation of duties, appropriate level of approval mechanism and maintenance of supporting records. The System, Standard Operating Procedures
Number 000030) as Cost Auditor for conducting the audit of Cost Accounting Records of the Company for Financial year ended 31st December, 2018.
In accordance with Section 148 of the Companies Act, 2013, the Board of Directors of the Company, on recommendation of the Audit Committee, re-appointed Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune (Firm Registration Number 000030) as the Cost Auditors of the Company to conduct the Audit of the Cost Accounting Records maintained by the Company for the current Financial Year ending 31st December, 2019. Messrs. Dhananjay V. Joshi & Associates have confirmed that their appointment is within the limits of section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under section 141(3) and proviso to section 148(3) read with section 141(4) of the Companies Act, 2013.
The Audit Committee has also received a Certificate from the Cost Auditor certifying their independence and armâs length relationship with the Company.
As per the provisions of the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution seeking Membersâ ratification for the remuneration payable to Messrs. Dhananjay V. Joshi & Associates, Cost Auditors is included in the Notice convening the 20th Annual General Meeting.
Reporting of Frauds by Auditors
During the year under review, the Statutory Auditors, Cost Auditors and the Secretarial Auditor have not reported any instance of fraud committed in the Company by its Officers or Employees to the Audit Committee under section 143(12) of the Companies Act, 2013, details of which needs to be mentioned in this Report.
J. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES
Particulars of loans given, investments made, guarantees given or securities provided and the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient of the loan or guarantee or security are provided in the Note No. 8 of the Notes to the Standalone Financial Statements.
The Company has not made any loans and advances in the nature of loans to subsidiaries or to firms/companies in which directors are interested. Hence disclosure pursuant to Regulation 34(3) read with Part A of Schedule V of the Listing Regulations is not required.
K. PUBLIC DEPOSITS AND LOANS/ADVANCES
Your Company has not accepted any deposits from the public or its employees during the year under review.
L. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
The Company has not declared any dividend so far however, pursuant to the Integrated scheme and the Composites scheme AGM until the conclusion of the 23rd AGM of the Company to be held in the year 2022.
The Securities and Exchange Board of India ("SEBI") vide its order number WTM/GM/DRA1/ 83 /2017-18dated 10th January, 2018 banned the firms practicing as Chartered Accountants in India under the brand and banner of Price Waterhouse (PW), from directly or indirectly issuing, any certificate of audit to listed companies, compliance of obligations to listed companies for the period of two years. Against the said order PW has filed an appeal before the Honâble Securities Appellate Tribunal (Tribunal). By the order dated 15th February, 2018 passed by the Securities Appellate Tribunal (SAT), PW firms were allowed to continue with the auditing assignments of their existing clients till 31st March, 2019 or a newly constituted Bench takes an appropriate final decision in the matter, whichever is earlier. PW had filed a miscellaneous application seeking extension of the period of interim relief granted by SAT till 31st march, 2020. However, vide its Order dated 17th October, 2018 SAT dismissed the said application without granting any additional relief against the said order. PW firms filed an appeal before the Supreme Court of India for extension of the period of interim relief on the SEBI order on 7th December, 2018. The Honâble Supreme Court heard the PW firmsâ petition for extension of the period of interim relief and allowed PW firms to continue statutory audits and other related certification work for existing listed clients till at least 31stMarch, 2019 or final disposal of the matter by a properly constituted SAT. The Court has also allowed the PW firms to seek extension beyond 31st March, 2019, ifrequired.
Price Waterhouse Chartered Accountants LLP, Chartered Accountants have, under Section 139(1) of the Act and the Rules framed thereunder furnished a certificate of their eligibility and has confirmed that they are eligible to act as statutory auditor of the Company for financial year 2019.
The Auditorsâ Report on the Financial Statement for the year ended 31st December, 2018, is unmodified i.e. it does not contain any qualification, reservation or adverse remark and notes thereto are self-explanatory and do not require any explanations.
Secretarial Auditor
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 had appointed Mr. Sachin Bhagwat, Practicing Company Secretary (Certificate of Practice No. 6029), Secretarial Auditor to undertake the Secretarial Audit of the Company for the Financial Year ended 31st December, 2018. The Secretarial Audit Report for the Financial Year ended 31st December, 2018 is appended to this Report as Annexure II.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark or disclaimer.
Cost Auditors
The Board had appointed Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune, (Firm Registration
CEO, Mr. Luthra volunteered to demit executive responsibilities and he ceased to be a Key Managerial Personnel with effect from 31st March, 2018.
Further, on the recommendation of the Nomination and Remuneration Committee the Board of Directors of the Company at its meeting held on 16th October, 2018 appointed Mr. Romesh Kaul as Executive Directorwith effectfrom 17th October, 2018.
There has been no other change in the KMPs during the year under review.
Employeesâ Stock Option Scheme
The Company has in force the following Schemes which are covered under the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 (âSBEB Regulationsâ):
a) Mahindra CIE Automotive Limited - Employeesâ Stock Option Scheme (ESOS-2007)
b) Mahindra CIE Automotive Limited - Employeesâ Stock Options Scheme 2015 (ESOS-2015)
Voting rights on the shares issued to employees under above ESOS are either exercised by the employees directly or through their appointed proxies.
During the year, there have been no material changes to these schemes. No stock options have been granted to the employees under ESOS-2007 and ESOS-2015.
Both the schemes are in compliance with the SBEB Regulations. The Certificate issued by the Statutory Auditors of the Company to the effect that the Schemes have been implemented in accordance with the said Regulations and the resolution passed by the members will be placed before the shareholders at the ensuing Annual General Meeting.
The information as required to be disclosed, in relation to ESOS under the Companies Act, 2013, and the details of the ESOS being implemented, as specified by SEBI under Clause 14 of SBEB Regulations, 2014 is uploaded on the website of the Company at http://www.mahindracie.com/investors/investor-relations/aovernance.html
The said information is also provided in the Note No. 14 of the Notes to Financial Statements.
Particulars of Employees and related disclosures
Disclosures with respect to the remuneration of Directors, KMPs and employees as required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure III to this Report.
Further, as required under provisions of section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement including the names and other details of the top ten employees in terms of remuneration drawn and the name of every employee, who were in receipt of remuneration not less than '' 10,200,000/per annum during the year ended 31st December, 2018 or of Amalgamation Mahindra Ugine Steel Company Limited (MUSCO) and Mahindra Composites Limited (MCL) merged with the Company, both MUSCO and MCL had unclaimed dividends which were transferred in the Books of the Company.
During the year, pursuant to the provisions of section 124 of the Companies Act, 2013 and Companies (Declaration and Payment of Dividend) Rules, 2014, the Company has transferred '' 269,170/- to Investor Education and Protection Fund (IEPF) in respect of the dividend declared by MCL (Transferor Company amalgamated with MCIE) for Financial Year ended on 31st March, 2011. With this the Company has transferred the entire unclaimed dividend pertaining to MUSCO and MCL which was transferred in the books of the Company to IEPF. No claim lies against the Company in respect of these dividends. The Company has uploaded the details of said unpaid and unclaimed amounts transferred to IEPF by the Company on its website at http://www.mahindracie.com/investors/downloads/documents. html#unclaimed-amounts and also on the website of IEPF viz. www.iepf.aov.in.
Further, pursuant to the Integrated scheme and the Composites scheme, the fractional entitlement of the Shareholder(s) of the Transferor Companies were consolidated and equity shares arising out of such consolidation were allotted to an Trustee who in turn had sold said shares in the open market at the prevailing market prices and transferred the net sale proceeds thereof to the Company and the Company had inturn distributed the said proceeds to respective shareholders in the ratio of their fractional entitlements by permitted mode. The details of the shareholders whose fractional entitlements are lying unclaimed with the Company is uploaded on the website of the Company at http://www.mahindracie.com/investors/downloads/documents. html#unclaimed-amounts and also on the website of IEPF viz. www.iepf.aov.in
M. EMPLOYEES
Key Managerial Personnel (KMP)
The following have been designated as the Key Managerial Personnel of the Company in accordance with Section 2(51) and 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
1) Mr. Ander Arenaza - Executive Director
2) Mr. Romesh Kaul - Executive Director (with effect from 17th October, 2018)
3) Mr. Manoj Menon, Chief Executive Officer - Foundry, Magnetics and Gears Divisions
4) Mr. K. Jayaprakash - Chief Financial Officer
5) Mr. Krishnan Shankar - Company Secretary and Head-Legal
Mr. Hemant Luthra was appointed as Executive Director of the Company fora period of 3 years from 1st April, 2015. The term of his appointment expired on 31st March, 2018 in consonance with the spirit of separating the role of Chairman from the executive function which has been assumed by Mr. Ander Arenaza, the informed that, he assumed the role of Non-Executive Chairman of CIE Automotive S.A. and as part of the process of separating executive and non-executive functions, he was stepping down as a Director from the subsidiaries of CIE and his resignation from the Board of the Company was in line with the said process.
Mr. Ander Arenaza Alvarez (DIN: 07591785) and Mr. Jesus Maria Herrera Barandiaran (DIN: 06705854), Directors on the Board, are liable to retire by rotation at the 20th Annual General Meeting (AGM), pursuant to provisions of section 152 of the Act and the Articles of Association of the Company and offered themselves for re-appointment. Further, Section 149, 152 and all other applicable provisions of the Companies Act, 2013, the appointment of Mr. Kaul as Director of the Company is proposed to be regularized at the ensuing Annual General Meeting.
Detailed profile of the Directors seeking re-appointment and appointment along with other details as may be required are provided in the Corporate Governance Report which forms part of this Annual Report and in the Notice of 20th Annual General Meeting.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Directorsâ Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, your Directors, based on the representation received from the Operating Management and after due enquiry, confirm that:
a) in the preparation of the annual accounts for the Financial Year ended 31st December, 2018, the applicable accounting standards had been followed;
b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year ended 31st December, 2018 and of the profit of the Company for the year ended on that date;
c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) the directors had laid down adequate Internal Financial Controls to be followed by the Company and that such Internal Financial Controls were operating effectively during the Financial Year ended 31st December2018;
f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and employee who were employed for a part of the Financial Year and were in receipt of remuneration of not less than '' 850,000/- per month during any part of the said year is annexed as Annexure IV to this report.
The Company do not have any employee who was employed throughout the Financial Year or part thereof and was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of remuneration drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the Company.
Industrial Relations
Employee Relations in the Pune region in general have been challenging, however relationship between the Management and Workerâs Union continued to remain cordial.
The Management Discussion and Analysis gives an overview of the developments in Human Resources/Industrial Relations during the year.
N. BOARD AND COMMITTEES Directors
Mr. Hemant Luthra ceased to be Executive Director of the Company with effect from 31st March, 2018. Mr. Luthra had played a key role in the inorganic and organic growth the Company and the Company wished to have continued advice and guidance of Mr. Luthra and accordingly requested for his continued support. The Board of Directors, on recommendation of Nomination and Remuneration Committee, decided to take advantage of the continued advice and guidance of Mr. Luthra, for another two years starting from 1st April, 2018 to 31st March, 2020, in Companyâs growth strategy which will inter-alia include managing stakeholders relationship, identifying mergers, acquisition and investment opportunities and leveraging these investments to facilitate the maximization value of the Brand and the Company. Accordingly, Mr. Luthra has been Non-Executive Chairman of the Company with effect from 1st April, 2018.
Further, on the recommendation of the Nomination and Remuneration Committee the Board of Directors of the Company at its meeting held on 16th October, 2018 appointed Mr. Romesh Kaul as an Additional Director of the Company who holds office till the date of ensuing Annual General Meeting. Further, Mr. Kaul was also appointed as an Executive Director of the Company for a period of one year with effect from 17th October, 2018.
Mr. Jose Sabino Velasco Ibanez resigned as an Independent Director of the Company with effect from 20thFebruary, 2018 owing to his other professional commitments which did not allow him to devote the time required for carry out the responsibilities of Independent Director of the Company. Mr. Antonio Maria Pradera Jauregui resigned as Director of the Company with effect from 16th October, 2018. Mr. Pradera in his communication to the Board
Familiarization Programme for Independent Directors
The details of 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 given in the Report on Corporate Governance. The familiarization programme and other disclosures as specified under regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is available on the website of the Company at the link: http://www.mahindracie.com/investors/investor-relations/aovernance.html
Policy on Appointment and Remuneration
In line with the principles of transparency and consistency, your Company has adopted the following Policies which, inter alia includes criteria for determining qualifications, positive attributes and independence of a Director.
i) Policy on Appointment of Directors and Senior Management and succession planning for orderly succession to the Board and the Senior Management;
ii) Policy for the remuneration of Directors, Key Managerial Personnel and other employees of the Company.
During the year under review, no changes were made in the above policies. Salient features of these policies are enumerated in the Corporate Governance Report which forms part of the Annual Report.
The Policies mentioned above are also uploaded on the website of the Company at http://www.mahindracie.com/investors/ investor-relations/aovernance.html
Committees of the Board
Your Company has duly constituted the Committees required under the Companies Act, 2013 read with applicable Rules made thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Audit Committee
The Committee comprises of four directors viz:
1) Mr. Daljit Mirchandani - Chairman,
2) Mr. Juan Maria Bilbao Ugarriza
3) Mr. Manoj Maheshwari
4) Mr. Dhananjay Mungale
Mr. Jose Sabino Velasco Ibanez ceased to be member for Audit Committee upon his resignation from the Board with effect from 20th February, 2018.
All the Members of the Committee are Independent Directors and possess strong accounting and financial management knowledge. The Company Secretary is the Secretary to the Committee. All the recommendations of the Audit Committee were accepted by the Board during the financial year under review.
that such systems were adequate and operating effectively throughout the financial year ended 31st December, 2018;
Board, Committee and Annual General Meeting
A calendar of Meetings is prepared and circulated in advance to the Directors.
The Board of Directors of the Company met six times during the Financial Year ended 31st December, 2018, on 20th February, 2018, 19th April, 2018, 18th July, 2018, 25th September, 2018, 16th October, 2018 and 13thDecember, 2018.
Details of attendance of meetings of the Board, its Committees and the AGM are included in the Report on Corporate Governance, which forms part of this Annual Report.
Meeting of Independent Directors
The Independent Directors met once during the financial year under review. The Meeting was conducted in an informal manner without the presence of the Chairman, Executive Directors, other Non-Independent Directors, Chief Financial officer and any other Managerial Personnel.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance and that of its Committees as well as performance of the Directors individually.
Feedback was sought by way of a structured questionnaire, based on criteria approved by the Nomination and Remuneration Committee, for evaluation of performance of Board, Committees of Board and Individual Directors. The feedback of all the Directors on the said Questionnaire was obtained through electronic platform provided by an Independent Agency a web link of the electronic platform along with username and passwords of the board members for accessing such platform was forwarded by the Independent Agency. The members were also able to give qualitative feedback apart from the standard questionnaire.
The Board Members provided their feedback through the electronic platform. The reports of feedback received from all Directors on performance evaluation of Individual Directors were shared with respective Directors and Chairman of the Nomination and Remuneration Committee. The Committee evaluated the performance of all individual directors based on the feedback so received.
The report of the feedback received from all the Directors on performance evaluation of Board and Committees of Board were shared with the Chairman of the Company. The Board on the basis of feedback so received evaluated performance of its own and Committees of Board. The Performance Evaluation of the Chairman of the Company was carried out by the Independent Directors of the Company, taking into account the views of all the Directors including the Executive and Non-Executive Directors.
Risk Management
Your Company has a well-defined risk management framework in place. The risk management framework works at various levels. The Company has a robust organizational structure for managing and reporting on risks. In terms of the requirement of the Act, the Company has developed and implemented the Risk Management Framework. Your Company has constituted a Risk Management council comprising of Senior Executives of the Company. The terms of reference of this counsel comprises review of risks and risk management policy on periodic intervals. The Audit Committee of the Board as well as the Board reviews the risks periodically. Your Company has also established procedures to periodically place before the Board, the risk assessment and minimization procedures being followed by the Company and steps taken by it to mitigate the Risks.
Brief of the Risk Management Framework is provided in corporate governance report. Important element of risk, including risk which may threaten the existence of the Company are provided in the Management Discussion and Analysis.
P. SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY
Sustainability
Your Companyâs vision on sustainability is to continuously improve our capability by integrating environmental, social and economic aspects in operations for creating better tomorrow than today. In line with its vision the Company has identified and implemented various projects for reduction in waste, energy and GHG emissions, to achieve the targets set under its Sustainability Roadmap.
Awareness on sustainability
Awareness about the need and the ways to drive sustainable business practices among all stakeholders is key to perpetual growth. The Company continues its initiatives to generate this awareness among employees who are the most important internal stakeholders of the organization. External stakeholders, suppliers, contractors and vendors were also made aware of this campaign.
Safety, Health and Environmental Performance
Your Company has a Safety, Occupational Health and Environmental (SH&E) policy through which every employee is made responsible for the observance of the measures designed to prevent accidents, damage to property, occupational ill-health and avoidable environmental pollutants.
Safety and Health
During year 2018, two of our plants upgraded the OHSMS certification from BS OHSAS 18001:2007 to ISO 45001:2018 version. Five of our plants upgraded their EMS certification from ISO 14001:2004 to ISO 14001:2015 version. The OHSAS system aims to eliminate or minimize risk to employees and other parties who may be exposed to Occupational Safety risks
O. GOVERNANCE Corporate Governance
Your Companyâs philosophy on Corporate Governance sets the goal of achieving the highest level of transparency, accountability in all its dealings with the stakeholders, employees and the government. The practice of responsible governance has enabled your Company to achieve sustainable growth. Your Company is committed to transparency in all its dealings and places high emphasis on business ethics. A Report on Corporate Governance along with a Certificate from the Mr. Sachin Bhagwat, Practicing Company Secretary (ACS Number - 10189, CP Number - 6029) and Secretarial Auditor of the Company regarding the compliance with the conditions of Corporate Governance as stipulated under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report.
Vigil Mechanism
The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules prescribed thereunder and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is implemented through the Companyâs Whistle Blower Policy to enable the directors, employees and all stakeholders of the Company to report genuine concerns, to provide for adequate safeguards against victimization of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee. The detail of the Policy is explained in the Corporate Governance Report and has been uploaded on the website of the Company at http://www. mahindracie.com/investors/investor-relations/aovernance.html
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The Policy is gender neutral.
During the year, there was no complaint of discrimination and harassment including sexual harassment received by the committee.
Business Responsibility Report
The Business Responsibility Report (BRR) of your Company for the Financial year 2018 forms part of this Annual Report as required under Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Your Company strongly believes that sustainable and inclusive growth is possible by using the levers of environmental and social responsibility while setting aspirational targets and improving economic performance to ensure business continuity and rapid growth.
Magnetic products division have taken good initiatives. Due to such initiatives our Company has recycled about 100,109 cubic meters of water and used in process and also has re-used about 66,913 cubic meters of water for alternative applications like Gardening I Die washing. Rain water harvesting is done at Foundry, Urse and Forgings Chakan which resulted in saving 6,165 Cubic meters of fresh water.
2) Energy: Each plant continued their focused programs for energy conservation like Use of battery-operated vehicles, VFD installations, LED lighting, Arresting air leakages, use of calendar timers, use of servo motor. These projects have helped achieving specific energy consumption targets in most of the plants. In absolute terms, we have saved about 14.05 Lakh units of electricity & 40,536 liters of diesel. This has resulted in reduction of GHG emissions by 4.58% compared to CY17. We are also exploring possibilities for using solar energy on a large scale.
During the year, your Company used 13.2% of its total energy consumption as renewable energy, mainly wind and solar.
3) Waste Management: Waste reduction efforts have been continued across all the plants. Commendable efforts have been made by Forgings, Foundry and Stampings for waste reduction. One of the projects for hazardous waste reduction at Stampings, Rudrapur (Having mechanical arrangement at sludge pit collection area to reduce the water contents of the wet sludge (putting weight on the wet sludge) has resulted in reduction of about 3.9% waste). All the plants are now looking at waste management as waste to wealth opportunities. Next year Stampings, Rudrapur and Foundry are planning to reduce paint sludge reduction.
4) Green Supply Chain Management (GSCM): The
Company continued its interactions with the suppliers, transporters and contractors on GSCM primarily to ensure EHS legal compliance, safety, occupational health, human rights and resource conservation. This initiative is being further utilized to relook at our logistics, packaging and milk run systems so that overall waste in supply chain is minimized and the scope of 3 GHG emissions are reduced.
5) EHS Legal Compliances: All the plants have robust systems for ongoing EHS legal compliance monitoring, evaluation and corrective actions. The fire NOC, fire hydrant systems development projects have been undertaken at Stampings, Kanhe and Foundry divisions. The legal requirements for fire NOC at Composites Mangaon plant are being re-examined through fire safety and legal experts and adequate alternative arrangements are being ensured.
Corporate Social Responsibility (CSR)
Your Company has constituted a CSR Committee in accordance with section 135 of the Companies Act, 2013; it has developed in the Company. At the end of CY 2018, Composites-Pimpri plant has been relocated to Kanhe. After one complete year of operations at this new location, the plant will establish and get the EHSMS certified as per relevant international standards like ISO 14001:2015 and ISO 45001:2018.
All the Stampings division plants including Zaheerabad location and Gears-Rajkot are in the process of completing their EMS and OHSMS re-certifications by February 2019. The renowned certification bodies who are associated with this process are Bureau Veritas, TUVNord, TUVSUD and DNV.
For further enhancement in the performance, near miss incident reporting system, property damage incident investigations and behavioral based safety systems are being launched in each site in a phased manner. The TMSW guidelines are being used for ensuring that our safety culture is more pro-active, preventive and high performing.
The ESG council reviews and each divisionâs monthly Operation reviews are focused on total employee involvement in safety, sustainability and social responsibility.
The Safety Committee of each plant meets periodically to review the status of safety issues and reporting of accidents, if any. Your Companyâs plant continues to improve their wellbeing of all its personnel by organizing Occupational Health Examination Camps, Periodic Health Check-ups etc.
Environmental Initiatives
Since the last few years, your Company has been focusing external certifications for achieving world class environmental standards. All the plants will be upgrading their EMS to include the requirements of the revised international standard by February 2019.
Sustainable development is promoted through sharing of best practices in the fields of Safety, Occupational Health & Environment.
Your Company considers safety as a value and not just a priority. The Company has taken all possible safety measures to prevent injuries. In CY 2018, your Company had 8 reportable accidents. The Company has investigated all these accidents thoroughly and has taken comprehensive corrective and preventive actions. All legal and social responsibilities with respect to these accidents have been fulfilled and the injured persons have been provided all needed medical and financial assistance. During this year, an increased focus has been given on reporting of near miss incidents and taking preventive measures. All first aid injuries are also analysed and improvements done for preventing recurrence. More emphasis is being given on increasing awareness and use of personal protective equipment.
The highlights of different initiatives taken by your Company at its various plants for environment and sustainability are as under:
1) Water: On the whole, all plants have continued their efforts for water conservation. The major water consuming plants like Forging, Paint shop in Stampings, Rudrapur and onwards. This will help Company in addressing the community specific needs by directing its resources towards CSR Projects which will provide practical and sustainable solutions to the identified issues.
With this, the Company will have enough opportunities to spend the money carried forward, for the chosen Projects in areas more efficiently and effectively.
The CSR Policy of the Company is hosted on the Companyâs website at http://www.mahindracie.com/imaaes/pdf/resources/ Governance/csr-policv-mcie.pdf and a brief outline of the CSR Policy and the CSR initiatives undertaken by the Company during the year as prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as Annexure V.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information pertaining to energy conservation, technology absorption and foreign exchange earnings and outgo, as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are provided in Annexure VI to this Report.
Q. SECRETARIAL
Issue of Shares
During the year under review, the Company has issued and allotted 413,690 equity shares of face value of'' 10/- each, the same were issued and allotted due to exercise of options by the employees under the Companyâs Employee Stock Option Scheme - 2007 and Employee Stock Option Scheme - 2015.
Pursuant to the above, as on 31st December, 2018 the issued capital of the Company was increased to '' 3,787,818,770/and subscribed and paid-up equity capital increased to '' 3,787,809,320/-.
Compliance with the provisions of Secretarial Standard 1 and Secretarial Standard 2
The Company have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems are adequate and operating effectively. During the year under review the Company was in compliance with the Secretarial Standards, i.e., SS-1 and SS-
2, relating to âMeetings of the Board of Directorsâ and âGeneral Meetingsâ respectively.
Pursuant to Section 92(3) of the Companies Act, 2013, the Company have placed a copy of the Annual Return of the Company on its website at: http://www.mahindracie.com/ investors/downloads/documents.html
Other Policies under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
In accordance with the provisions of Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has framed a Policy for determination of Materiality for disclosure of events or information. The same has been hosted on the website of the Company at: http://www. mahindracie.com/imaaes/pdf/resources/Governance/policv-on-criteria-for-determinina-materialitv-of-events.pdf
Dividend Distribution Policy
Pursuant to regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a dividend distribution policy which became effective from 1st January, 2018 stipulating factors to be considered in case of Dividend declaration which forms part of this report as Annexure VII.
The same has also been hosted on the website of the Company at: http://www.mahindracie.com/imaaes/pdf/resources/Governance/ dividend-distribution-policv.pdf
Further the Company has also framed
i) Policy for preservation of documents
ii) Archival Policy for disclosures hosted on the website, beyond five years.
R. GENERAL
None of the Executive Directors (Whole-time Director or Managing Director) were in receipt of any commission from the Company or any remuneration from the Subsidiaries of the Company.
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions/ events relating to these items during the year under review:
Compliance with Downstream Investment conditionalityâs
The Company is a Foreign Owned and Controlled Company within the meaning of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2017 (âFDI Regulationsâ). All the Downstream Investments made by the Company are in compliance with the FDI Regulations.
and implemented the policy on Corporate Social Responsibility. The CSR Committee comprises of Mr. Daljit Mirchandani (Chairman), Mr. Dhananjay Mungale and Mr. Hemant Luthra. The Committee, inter alia, monitors the CSR activities. The CSR thrust areas have been identified where the Company wishes to create equity and also lay down guiding criteria for selecting projects which includes sustainability, social impact etc.
The Company was required to spend an amount of Rs, 34.28 Million (including Rs, 16.57 Million unspent amount of last year carried forward). The Company could spend an amount of Rs, 16.13 Million during the year.
During the year the Company had approved to undertake various CSR projects including in the areas of Education and Skill Development, Rural Development, Sanitation and Social Need Assessment Survey. The Budgeted Expenditure of these projects is Rs, 55.79 Million over three years.
The unspent amount in CY18 of? 18.15 Million is primarily for two reasons
1. In year CY18 at Rajkot the Company undertook the major project (Project Vidya) to impart social skills, life skills and on job technical skilling opportunity to young students from ITI Gondal and Women, ITI Rajkot. While we could complete the Soft Skills imparting program, on job technical skilling portion could not be sufficiently covered due to Students getting engaged with their academic and examination schedules. In CY19 we will use this learning and re-adjust the program to fulfill the originally planned objectives.
2. The Company CSR Board reviewed the Swachh Bharat -Community Toilet Block project at Village Urse in mid CY18 and advised CSR implementation committee to focus more on long term strategic initiatives of developing technically qualified youth for the Automobile and Auto ancillaries industry. The Company is in the process of developing a technical skilling centre in Pune and the ground work including identification of strategic partner and development of Syllabi, course material etc. is in progress. In CY19 this project will be driven as one of the top priorities.
Given the challenges and associated learnings seen during the implementation, including obtaining certain legal clearances, changes in members of CSR teams, the implementation of the projects was delayed and related expenditure is deferred to the next year. The implementation of these approved projects is now on track, although with some delays, the Company is confident ofachieving its social objective.
The Company, in order to a boost efforts and pinpoint those to the needs of the Society, engaged an NGO for carrying out âSocial Need Assessment Surveyâ to identify the needs of the communities around the plant locations of the Company, from social, economic and environmental aspect. We have obtained the report and Plant execution committees are studying the same for identifying Projects and initiatives to be focused in year CY19
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of Shares (including sweat Equity shares) to employees of the Company under any Scheme save and except ESOS referred to in this Report.
3. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and the Companyâs operation in future.
4. Voting rights which are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3) (c) of the Companies Act, 2013).
Acknowledgement
Your Directors wish to place on record their sincere appreciation to the Companyâs Customers, Investors, Vendors and to the Bankers for their continued support during the year.
The Directors also wish to place on record their appreciation for the dedication and contribution made by employees at all levels and look forward to their support in future as well.
For and on behalf of the Board
Hemant Luthra
Chairman DIN:00231420
Date: 20th February, 2019
Place: Mumbai
Dec 31, 2017
Dear Shareholders
The Directors present their Report together with the audited financial statements of your Company for the Financial Year (FY) ended 31st December, 2017.
A. FINANCIAL HIGHLIGHTS (STANDALONE)#
(Rs, in Million)
|
PARTICULARS |
FY ended 31st December, 2017 |
FY ended 31st December, 2016 |
|
Total Revenue |
20,760 |
18,086 |
|
Profit before Interest, |
2,074 |
1,660 |
|
Depreciation, Exceptional |
||
|
Items and Tax |
||
|
Less: Depreciation |
759 |
710 |
|
Profit before Interest, |
1,315 |
950 |
|
Exceptional Items and Tax |
||
|
Less: Interest and |
98 |
71 |
|
Finance cost |
||
|
Profit before Exceptional |
1,217 |
879 |
|
Items and Tax |
||
|
Less: Exceptional items |
69 |
90 |
|
Profit before tax |
1,148 |
789 |
|
Profit after tax |
693 |
515 |
|
Other Comprehensive |
||
|
Income |
||
|
A) i. Items that will not |
(8) |
(29) |
|
be reclassified as |
||
|
profit or loss |
||
|
ii. Income tax relating |
3 |
10 |
|
to items that will not |
||
|
be reclassified as |
||
|
profit or loss |
||
|
B) i. Items that will be |
- |
- |
|
reclassified as |
||
|
profit or loss |
||
|
ii. Income tax relating |
- |
- |
|
to items that will not |
||
|
be reclassified as |
||
|
profit or loss |
||
|
Other Comprehensive |
(5) |
(19) |
|
income/ (loss) |
||
|
Total Comprehensive |
688 |
496 |
|
income |
Financials
During the Financial Year under review your Company registered a total Revenue of Rs, 20,760 Million as against Rs, 18,086 Million for previous year and Profit before Interest, Depreciation, Exceptional items and Tax of Rs, 2,074 Million as against Rs, 1,660 Million for the previous year. The net profit after tax for the current financial year stood at Rs, 693 Million as against a net profit of Rs, 515 Million over the previous financial year.
There have been 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 and the date of this Report.
# Consequent to the effectiveness of the Scheme of Amalgamation for merger of Wholly Owned Subsidiaries with the Company, standalone results for the Financial Year ended 31st December 2017 include the results of the amalgamated companies and hence are not comparable to those of the previous year which do not include the results of the amalgamated companies.
Dividend
Your Directors do not recommend any dividend for the Financial Year 2017.
Transfer to Reserves
The Company has not transferred any amount of profits to reserves.
B. OPERATIONAL REVIEW India
Your Company continue its focus on increasing plant efficiency and has improved margins through continuous improvements. The Company has endeavored to diversify its customer base by actively engaging with new customers and have seen some traction on this front. The integration between your Company and Parent CIE has become even tighter with full time operational experts from CIE being stationed at the plants in Pune. There is also a structured program to have MCIE employees go on plant visits to CIE plants to get first hand understanding of processes. There have already been visits from various verticals at operational levels. The integration of Bill Forge Private Limited (Bill Forge) has progressed smoothly and has resulted in good results and growth expectations. With the help of CIE, the different verticals of the Indian operations are continuing to develop new products and will pursue business with western OEMS in India, where CIE in Europe has a strong presence.
Thus, the approach has been to focus on improving plant operations, enhance margins through continuous improvements and strive for growth.
Europe
The operations in Germany have been largely on track after the setbacks from the previous year and the measures taken during the last few quarters have been focused on margin improvement.
Plants in Spain & Lithuania have been consistently profitable over the last few years. The focus is to maintain the good profitability levels while growing with the market.
The Italian operations are showing positive results accruing from the turnaround efforts in the past few years. Volumes are increasing with new orders as OEM''s are outsourcing more.
C. Investor Relations (IR)
Your Company continuously strives for excellence in its Investor Relations (âIRâ) engagement with International and Domestic investors through structured conference-calls and periodic investor/analyst interactions like individual Meetings, participation in investor conferences, quarterly earnings calls and analyst meet from time to time. Your Company interacted in a number of investor meets organized by reputed Global and Domestic Broking Houses, during the year.
Your Company always believes in building a relationship of mutual understanding with investor/analysts. Your Company ensures that critical information about the Company is available to all the investors, by uploading all such information on the Company''s website.
D. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company and its subsidiary companies prepared in accordance with the Companies Act, 2013 (the Act) and applicable Accounting Standards along with all relevant documents and the Auditors'' Report form a part of this Annual Report.
In accordance with section 136 of the Act, the separate accounts in respect of each of the Subsidiaries are uploaded on the website of the Company at Web-link: http://www.mahindracie.com/ investors/investor-relations/annual-report.html#subsidiaries-annual-report and copies of the same shall be provided to shareholders of the Company on receipt of request for such copies.
Subsidiary Companies
The subsidiary companies continue to contribute to the overall growth of the Company.
Mahindra Forgings Europe registered consolidated revenue from operations of '' 16,268 Million during the financial year ended 31st December, 2017 as compared to '' 14,861 Million in the previous year. The consolidated net profit after tax for the financial year under review was '' 200 Million as compared to net loss of '' 886 Million in the previous year.
CIE Galfor S.A. registered consolidated revenue from Rs, 16,874 Million during the financial year ended 31st December, 2017 as compared to Rs, 14,863 Million in the previous year. The consolidated net profit after tax for the financial year under review was Rs, 1,751 Million as compared to Rs, 1,735 Million in the previous year.
Metalcastello S.p.A. registered revenue from operations of Rs, 3,888 Million during the financial year ended 31st December, 2017 as compared to Rs, 3,637 Million in the previous year. The consolidated net profit after tax for the financial year under review was Rs, 315 Million as compared to Rs, 252 Million in the previous year.
Bill Forge Private Limited registered consolidated revenue from operations of Rs, 7,381 Million during the financial year ended 31st December 2017 against Rs, 1,752 Million during the previous period (1st October 2016 to 31st December, 2016) after acquisition. The consolidated net profit after tax for the year 2017 stood at Rs, 604 Million against Rs, 81 Million for previous period (1st October to 31st December, 2016).
The Company''s consolidated total revenue from operations was Rs, 66,899 Million in the financial year ended 31st December, 2017, 69% of which was derived from the subsidiaries whereas 31% was derived from operations of the Company.
At the beginning of the Financial Year the Company had 21 subsidiaries namely Mahindra Forgings International Limited (Mauritius), Mahindra Forgings Global Limited (Mauritius), Stokes Group Limited (U.K.), Mahindra Gears & Transmissions Private Limited (India), Mahindra Gears Global Limited (Mauritius), CIE Galfor S.A. (Spain), Mahindra Forgings Europe AG (Germany), Jeco Jellinghaus GmbH (Germany), Stokes Forgings Ltd. (U.K.), Stokes Forgings Dudley Ltd. (U.K.), Gesenkschmiede Schneider GmbH (Germany), Falkenroth Umformtechnik GmbH (Germany), Schoneweiss & Co. GmbH (Germany), Metalcastello S.p.A. (Italy), CIE Legazpi S.A. (Spain), UAB CIE LT Forge (Lithuania), Crest Geartech Private Limited (India), Bill Forge Private Limited (India) [BFPL], BF Precision Private Limited (India), Bill Forge Global DMCC (Dubai) and Bill Forge de Mexico S de RL de CV (Mexico).
During the year, in a considerable simplification of the structure and with a view of reducing the number of entities of the group as a whole, the Company had taken specific steps and closed six subsidiaries. Keeping a separate structure was no longer profitable from an organization point of view and scarcely efficient in terms of costs, compliance and administrative charges to the group.
The Hon''ble National Company Law Tribunal, Mumbai Bench (Tribunal) vide its order dated 13th December, 2017 approved the Scheme of Amalgamation of Mahindra Forgings Global Limited (âMFGLâ), Mahindra Forgings International Limited (âMFILâ), Mahindra Gears & Transmissions Private Limited (âMGTPLâ) and Crest Geartech Private Limited (âCrestâ) with Mahindra CIE Automotive Limited (âMCIEâ or âCompanyâ) (the Scheme). The scheme became effective on 31st December, 2017. Accordingly, MGTPL and Crest dissolved without winding up and the names of MFIL and MFGL has been struck off from the registers by the concerned Registrar of Companies, Mauritius in accordance with its Law. Appointed date for the Scheme was 1st July, 2017.
Bill Forge Global DMCC (Dubai) de-registered during the year with effect from 25th September, 2017 and therefore cease to exist.
Further the plan of reverse merger of Mahindra Gears Global Limited (MGGL) into Metalcastello S.p.A. (the Plan) was approved by the Board of Directors and Shareholders of respective companies. The process of reverse merger has been completed in accordance with Laws of Italy and the Plan is effective from 1st June, 2017. Accordingly name of MGGL was struck off from the registers by the concerned Registrar of Companies, Mauritius in accordance with the Law.
In accordance with Italian Laws, post the merger of MGGL into Metalcastello, the entire share capital of Metalcastello could have eroded. Hence in order to avoid such situation, Metalcastello offered to issue new shares to shareholders of MGGL. Accordingly, MCIE received a right to subscribe in the new shares offered by Metalcastello, which right was renounced in favour of the wholly owned subsidiary Galfor S.A. In light of the above, for accounting purposes, the cost of investment of MCIE in Galfor is increased by the investment it had in MGGL and MCIE continue to hold 99.96% of the operating step down subsidiary i.e. Metalcastello S.p.A.
Bill Forge de Mexico S de RL de CV (Mexico) commenced its operation during FY 2017 though it was still in a ramp-up stage as on the end of the financial year.
Stokes Forgings Limited and Stokes Forgings Dudley Limited are dormant companies. Further Jeco Jellinghaus GmbH has been operationally closed. All other subsidiaries are operational.
As required under section 129(3) of the Companies Act, 2013 read with the Rules, a statement containing the salient features of the financial statement of the subsidiaries in prescribed form AOC-1 is attached to the Financial Statements. This statement reports the performance and financial position of each of the subsidiaries included in the consolidated financial statement.
The Company has formulated a Policy for determining Material Subsidiaries and the same has been uploaded on the website of the Company at http://www.mahindracie.com/images/pdf/ resources/Governance/Policy on Material Subsidiary.pdf
E. INTERNAL FINANCIAL CONTROLS
Your Company uses SAP ERP System as a business enabler and also to maintain its books of accounts. The transactional controls built in SAP ERP System provide segregation of duties, appropriate level of approval mechanism and maintenance of supporting records. The System, Standard Operating Procedures are reviewed by the management. These systems and controls are audited by the Internal Auditors and their findings and recommendations are reviewed by the Audit Committee which ensures its implementation.
Your Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. Such controls have been assessed during the year under review taking into consideration the essential components of internal controls stated in the Guidance note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Based on the results of such assessments carried out by the management, no reportable or significant deficiencies, no material weakness in the design or operation of any control was observed. Nonetheless your Company recognizes that any internal control framework, no matter how well designed, has inherent limitations and accordingly, regular audits and review processes ensure that such system are re-enforced on an ongoing basis. The internal financial controls with reference to the Financial Statements are commensurate with the size and nature of business of the Company.
F. MANAGEMENT DISCUSSION AND ANALYSIS
Management discussion and analysis of financial condition and results of operations of the Company along-with the performance and financial position of each of the subsidiaries is provided in the Management Discussion and Analysis which forms part of this Annual Report.
G. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All Related Party Transactions entered during the year were in the Ordinary Course of Business and at arm''s length basis.
During the year under review, your Company had entered into Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements of the Company with Mahindra & Mahindra Limited. These transactions were in the Ordinary Course of Business of your Company and were at arm''s length basis. The details of these transactions, as required to be provided under section 134(3)(h) of the Companies Act, 2013 are disclosed in Form AOC-2 as Annexure I and forms part of this Report.
The Policy on materiality of and dealing with Related Party Transactions as approved by the Board is uploaded on the website of the Company at http://www.mahindracie.com/ images/pdf/resources/Governance/Policy on Related Party Transaction.pdf
H. AUDITORS Statutory Auditors and Auditorâs report
The members of the Company at the last Annual General Meeting (AGM) had appointed Price Waterhouse Chartered Accountants LLP (Firm Registration No. 012754N/N500016) as Statutory Auditors of the Company to hold office from the conclusion of 18th AGM until the conclusion of the 23rd AGM of the Company to be held in the year 2022, subject to ratification by the Members at every AGM till the 22nd Annual General Meeting. Accordingly, ratification of appointment of Statutory Auditors is being sought from the Members of the Company at the ensuing AGM.
The Securities and Exchange Board of India ("SEBI") vide its order number WTM/GM/DRA 1/ 83 /2017-18 dated 10th January, 2018 banned the firms practicing as Chartered Accountants in India under the brand and banner of Price Waterhouse (PW), which shall not directly or indirectly issue any certificate of audit of listed companies, compliance of obligations of listed companies for the period of two years.
Against the said order PW has filed an appeal before the Hon''ble Securities Appellate Tribunal (Tribunal). The Tribunal in its interim order has clarified that audit assignments already undertaken by PW for clients whose Financial Year has commenced on 1st January, 2018 would not be impacted by the SEBI''s order and accordingly PW can audit the accounts of the Company for Financial Year which commenced on 1st January, 2018 and end on 31st December, 2018. The eligibility of the audit of accounts of the Company for the remaining period of their appointment continues to be sub-judice in view of the appeal made by PW before the Tribunal. Price Waterhouse Chartered Accountants LLP, Chartered Accountants have, under Section 139(1) of the Act and the Rules framed there under furnished a certificate of their eligibility and consent for appointment.
The Auditors'' Report on the Financial Statement for the year ended 31st December, 2017, is unmodified i.e. it does not contain any qualification, reservation or adverse remark and notes thereto are self-explanatory and do not require any explanations.
Secretarial Auditor
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 Mr. Sachin Bhagwat, Practicing Company Secretary (Certificate of Practice No. 6029), Pune as Secretarial Auditor to conduct the Secretarial Audit of the Company for the Financial Year ended 31st December, 2017. The Secretarial Audit Report for the Financial Year ended 31st December, 2017 is appended to this Report as Annexure II.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
Cost Auditors
The Board had appointed Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune, (Firm Registration Number 000030) as Cost Auditor for conducting the audit of Cost Accounting Records of the Company for the last Financial year ended 31st December, 2017.
In accordance with Section 148 of the Companies Act, 2013, the Board of Directors of the Company, on recommendation of the Audit Committee, re-appointed Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune (Firm Registration Number 000030) as the Cost Auditors of the Company to conduct the Audit of the Cost Accounting Records maintained by the Company for the current Financial Year ending 31st December, 2018. Messrs. Dhananjay V. Joshi & Associates have confirmed that their appointment is within the limits of section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under section 141(3) and proviso to section 148(3) read with section 141(4) of the Companies Act, 2013.
The Audit Committee has also received a Certificate from the Cost Auditor certifying their independence and arm''s length relationship with the Company.
As per the provisions of the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in a General Meeting for their ratification. Accordingly, a resolution seeking Members'' ratification for the remuneration payable to Messrs. Dhananjay V. Joshi & Associates, Cost Auditors is included in the Notice convening the 19th Annual General Meeting.
Reporting of Frauds by Auditors
During the year under review, the Statutory Auditors, Cost Auditors and the Secretarial Auditor have not reported any instance of fraud committed in the Company by its Officers or Employees to the Audit Committee under section 143(12) of the Companies Act, 2013, details of which needs to be mentioned in this Report.
I. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES
Particulars of loans given, investments made, guarantees given or securities provided and the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient of the loan or guarantee or security are provided in the Note No. 8 of the Notes to the Standalone Financial Statements.
The Company has not made any loans and advances in the nature of loans to subsidiaries or to firms/companies in which directors are interested. Hence disclosure pursuant to Regulation 34(3) read with Part A of Schedule V of the Listing Regulations is not required.
J. PUBLIC DEPOSITS AND LOANS/ADVANCES
Your Company has not accepted any deposits from the public or its employees during the year under review.
K. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
The Company has not declared any dividend so far however, pursuant to the Integrated scheme and the Composites scheme of Amalgamation Mahindra Ugine Steel Company Limited (MUSCO) and Mahindra Composites Limited (MCL) merged with the Company, both MUSCO and MCL had unclaimed dividends which were transferred in the Books of the Company.
During the year, pursuant to the provisions of section 124 of the Companies Act, 2013 and Companies (Declaration and Payment of Dividend) Rules, 2014, the Company has transferred '' 5,48,449/- to Investor Education and Protection Fund (IEPF) in respect of the dividend declared by MCL & MUSCO (Transferor Company amalgamated with MCIE) for Financial Year ended on 31st March, 2010. No claim lies against the Company in respect of these dividends.
The Company has uploaded the details of said unpaid and unclaimed amounts now lying with the Company on the website of the Company at http://www.mahindracie.com/investors/ downloads/documents.html#unclaimed-amounts.
The Company has uploaded the details of unpaid and unclaimed amounts lying with the Company as on 27th April, 2017 (date of last Annual General Meeting) on the website of the Company (www.mahindracie.com) as also on the website of the Ministry of Corporate Affairs viz. http://www.iepf.gov.in.
L. EMPLOYEES Key Managerial Personnel (KMP)
As on 31st December, 2017, following officers were designated as the Key Managerial Personnel of the Company in accordance with Section 2(51) and Section 203 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
1) Mr. Hemant Luthra - Chairman & Executive Director
2) Mr. Ander Arenaza - Executive Director
3) Mr. Romesh Kaul, Chief Executive - Stampings, Composites and Forgings Divisions
4) Mr. Manoj Menon, Chief Executive - Foundry, Magnetics and Gears Divisions (with effect from 14th December, 2017)
5) Mr. K. Jayaprakash - Chief Financial Officer
6) Mr. Krishnan Shankar - Company Secretary and Head-Legal
Mr. K. Ramaswami retired as Managing Director of the Company on expiry of his tenure on 3rd October, 2017.
Further, on the recommendation of the Nomination and Remuneration Committee the Board of Directors of the Company at its meeting held on 14th December, 2017 appointed Mr. Manoj Menon as Chief Executive Officer - Foundry, Magnetics and Gears divisions of the Company with effect from 14th December,
2017.
There has been no other change in the KMPs during the year under review.
Employeesâ Stock Option Scheme
The Company has in force the following Schemes which are covered under the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 (âSBEB Regulationsâ):
a) Mahindra CIE Automotive Limited - Employees'' Stock Option Scheme (ESOS-2007)
b) Mahindra CIE Automotive Limited - Employees'' Stock Options Scheme 2015 (ESOS-2015)
Voting rights on the shares issued to employees under above ESOS are either exercised by the employees directly or through their appointed proxies.
During the year, there have been no material changes to these schemes. During the year no fresh stock options were granted by the Company under ESOS-2007 and ESOS-2015.
Both the schemes are in compliance with the SBEB Regulations. The Certificate issued by the Statutory Auditors of the Company to the effect that the Schemes have been implemented in accordance with the said Regulations and the resolution passed by the members will be placed before the shareholders at the ensuing Annual General Meeting.
The information as required to be disclosed, in relation to ESOS under the Companies Act, 2013, and the details of the ESOS being implemented, as specified by SEBI under Clause 14 of SBEB Regulations, 2014 is uploaded on the website of the Company at http://www.mahindracie.com/investors/investor-relations/governance.html
The said information is also provided in the Note No. 14 of the Notes to Financial Statements.
Particulars of Employees and related disclosures
Disclosures with respect to the remuneration of Directors, KMPs and employees as required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure III to this Report.
Further, as required under provisions of section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement including the names and other details of the top ten employees in terms of remuneration drawn and the name of every employee, who were in receipt of remuneration not less than '' 10,200,000/- per annum during the year ended 31st December, 2017 or employee who were employed for a part of the Financial Year and were in receipt of remuneration of not less than '' 8,50,000/- per month during any part of the said year is annexed as Annexure IVto this report.
The Company do not have any employee who was employed throughout the Financial Year or part thereof and was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of remuneration drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.
Industrial Relations
Employee Relations in the Pune region in general have been challenging, however relationship between the Management and Worker''s Union continued to remain cordial.
The Management Discussion and Analysis gives an overview of the developments in Human Resources/Industrial Relations during the year.
M. BOARD AND COMMITTEES Directors
During the year under review, Mr. K. Ramaswami, retired from the services of the Company and ceased to be Managing Director of the Company on expiry of his term of appointment with effect from 3rd October, 2017. In accordance with Section 168(2) of the Companies Act, 2013 he ceased to be a Director of the Company with effect from 3rd October, 2017. The Board of Directors of the Company appreciated the role played by Mr. Ramaswami and for his contribution and wished him well in his future pursuits.
Mr. Shriprakash Shukla (DIN:00007418) and Mr. Hemant Luthra (DIN:00231420), Directors on the Board, are liable to retire by rotation at the 19th Annual General Meeting (AGM), pursuant to provisions of section 152 of the Act and the Articles of Association of the Company and offered themselves for re-appointment.
Detailed profile of the Directors seeking re-appointment alongwith other details as may be required are provided in the Corporate Governance Report which forms part of this Annual Report and in the Notice of 19th AGM.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Directorsâ Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, your Directors, based on the representation received from the Operating Management and after due enquiry, confirm that:
a) in the preparation of the annual accounts for the Financial Year ended 31st December, 2017, the applicable accounting standards had been followed;
b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the Financial Year ended 31st December, 2017 and of the profit of the company for the year ended on that date;
c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act,
2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts on a going concern basis;
e) the directors had laid down adequate Internal Financial Controls to be followed by the company and that such Internal Financial Controls were operating effectively during the Financial Year ended 31st December 2017;
(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively throughout the financial year ended 31st December, 2017;
Meetings of Board of Directors
A calendar of Meetings is prepared and circulated in advance to the Directors. The Board of Directors of the Company met five times during the Financial Year ended 31st December, 2017, on 23rd February, 2017, 27th April, 2017, 20th July, 2017, 24th October, 2017 and 14th December, 2017.
Details of attendance of meetings of the Board, its Committees and the AGM are included in the Report on Corporate Governance, which forms part of this Annual Report.
Meeting of Independent Directors
The Independent Directors met once during the financial year under review. The Meeting was conducted in an informal manner without the presence of the Chairman & Executive Director or other Non-Independent Directors or Chief Financial officer or any other Managerial Personnel.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance and that of its Committees as well as performance of the Directors individually.
During the year under review the criteria for performance evaluation of the Board as a whole, individual Directors, Committees of the Board and of the Chairman was further strengthened in alignment with the Guidance Note on Board Evaluation issued by Securities and Exchange Board of India, vide its Circular dated 5th January, 2017.
Feedback was sought by way of a structured questionnaire, based on criteria approved by the Nomination and Remuneration Committee, for evaluation of performance of Board, Committees of Board and Individual Directors. The members were also able to give qualitative feedback apart from the standard questionnaire. The Board on recommendation of the Nomination and Remuneration Committee, approved to obtain the feedback of all the Directors on the said Questionnaire through electronic platform. An Independent Agency was appointed to provide the electronic platform. Web link of the electronic platform along- with username and passwords of the board members for accessing such platform was forwarded by the Independent Agency.
The Board Members provided their feedback on the standard questionnaire through the electronic platform.
The reports of feedback received from all Directors on performance evaluation of Individual Directors were shared with respective Directors and Chairman of the Nomination and Remuneration Committee. The Committee evaluated the performance of all individual directors based on the feedback so received.
The report of the feedback received from all the Directors on performance evaluation of Board and Committees of Board were shared with the Chairman of the Company. The Board on the basis of feedback so received evaluated performance of its own and Committees of Board. The Performance Evaluation of the Chairman of the Company was carried out by the Independent Directors of the Company, taking into account the views of all the Directors including the Executive and Non-Executive Directors.
Familiarization Programme for Independent Directors
The details of 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 given in the Report on Corporate Governance. The familiarization programme and other disclosures as specified under regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is available on the website of the Company at the link: http://www.mahindracie.com/investors/ investor-relations/governance.html
Policy on Appointment and Remuneration
In line with the principles of transparency and consistency, your Company has adopted the following Policies which, inter alia includes criteria for determining qualifications, positive attributes and independence of a Director.
i) Policy on Appointment of Directors and Senior Management and succession planning for orderly succession to the Board and the Senior Management;
ii) Policy for the remuneration of Directors, Key Managerial Personnel and other employees of the Company.
The Policies mentioned at (i) and (ii) above are attached as Annexure V & VI respectively and forms part of this Report.
Committees of the Board
Your Company has duly constituted the Committees required under the Companies Act, 2013 read with applicable Rules made there under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Audit Committee
The Committee comprises of five directors viz:
1) Mr. Daljit Mirchandani - Chairman,
2) Mr. Jose Sabino Velasco Ibanez,
3) Mr. Juan Maria Bilbao Ugarriza
4) Mr. Manoj Maheshwari
5) Mr. Dhananjay Mungale
All the Members of the Committee are Independent Directors and possess strong accounting and financial management knowledge. The Company Secretary of the Company is the Secretary to the Committee. All the recommendations of the Audit Committee were accepted by the Board during the financial year under review.
N. GOVERNANCE
Corporate Governance
Your Company''s philosophy on Corporate Governance sets the goal of achieving the highest level of transparency, accountability in all its dealings with the stakeholders, employees and the government. The practice of responsible governance has enabled your Company to achieve sustainable growth. Your Company is committed to transparency in all its dealings and places high emphasis on business ethics. A Report on Corporate Governance along with a Certificate from the Sachin Bhagwat, Practicing Company Secretary (ACS Number-10189, CP Number-6029) and Secretarial Auditor of the Company regarding the compliance with the conditions of Corporate Governance as stipulated under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of the Annual Report.
Vigil Mechanism
The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules prescribed there under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is implemented through the Company''s Whistle Blower Policy to enable the directors, employees and all stakeholders of the Company to report genuine concerns, to provide for adequate safeguards against victimization of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee. The detail of the Policy is explained in the Corporate Governance Report and has been uploaded on the website of the Company at http://www.mahindracie.com/ investors/investor-relations/governance.html
The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The Policy is gender neutral.
During the year, there was no complaint of discrimination and harassment including sexual harassment received by the committee or by any of the senior executives.
Business Responsibility Report
The Business Responsibility Report (BRR) of your Company for the year 2017 forms part of this Annual Report as required under Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Your Company strongly believes that sustainable and inclusive growth is possible by using the levers of environmental and social responsibility while setting asp rational targets and improving economic performance to ensure business continuity and rapid growth.
Risk Management
Your Company has a well-defined risk management framework in place. The risk management framework works at various levels. The Company has a robust organizational structure for managing and reporting on risks. In terms of the requirement of the Act, the Company has developed and implemented the Risk Management Framework and the Audit Committee of the Board as well as the Board reviews the same periodically. Your Company has also established procedures to periodically place before the Board, the risk assessment and minimization procedures being followed by the Company and steps taken by it to mitigate the Risks.
Brief of the Risk Management Framework is provided in corporate governance report. Important element of risk, including risk which may threaten the existence of the Company are provided in the Management Discussion and Analysis.
O. SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY
Sustainability
Your Company''s vision on sustainability is to continuously improve our capability by integrating environmental, social and economic aspects in operations for creating better tomorrow than today. In line with its vision the Company has identified and implemented various projects for reduction in waste, energy and GHG emissions, to achieve the targets set under its Sustainability Roadmap.
Awareness on sustainability
Awareness about the need and the ways to drive sustainable business practices among all stakeholders is key to perpetual growth. The Company continues its initiatives to generate this awareness among employees who are the most important internal stakeholders of the organization. This awareness campaign was taken to the external stakeholders, suppliers, contractors and vendors.
Safety, Health and Environmental Performance
Your Company has a Safety, Occupational Health and Environmental (SH&E) policy through which every employee is made responsible for the observance of the measures designed to prevent accidents, damage to property, occupational ill-health and avoidable environmental pollutants.
Safety and Health
All our existing plants continued their EHSMS certification status through external assessment by renowned bodies like Bureau Veritas, TUV Nord, TUV SUD and DNV. For further enhancement in the performance, near miss incident reporting system, property damage incident investigations and behavioral based safety systems are being launched in each site in a phased manner. Stampings unit at Zaheerabad will complete its EHSMS certification along with the upgraded version of ISO 14001 during this year.
The Safety Committee of each plant meets periodically to review the status of safety issues and reporting of accidents, if any. Your Company''s plant continues to improve their wellbeing of all its personnel by organizing Occupational Health Examination Camps, Periodic Health Check-ups etc.
Environmental Initiatives
Since the last few years, your Company has been focusing external certifications for achieving world class environmental standards. All the plants will be upgrading their EMS to include the requirements of the revised international standard before September 2018.
All plants of the Company except Zaheerabad Plant are certified for EHSMS certification using ISO 14001 and BS OHSAS 18001 standards. The OHSAS system aims to eliminate or minimize risk to employees and other interested parties who may be exposed to Occupational Safety risks in the Company. Sustainable development is promoted through sharing of best practices in the fields of Safety, Occupational Health & Environment. The Company has already started preparations for upgrading its OHSMS using the forthcoming standard ISO 45001.
Your Company considers safety as a value and not just a priority. The Company has taken all possible safety measures to prevent injuries. In the year FY 2017, your company has improved its safety performance with respect to reportable incidents which reduced over 50%. In FY 2017, 10 out of 12 plants worked with zero reportable injuries which is a significant achievement.
The highlights of different initiatives taken by your Company at its various plants for environment and sustainability are as under:
1) Water: On the whole, all plants have continued their efforts for water conservation. The major water consuming plants like Forging, Paint shop in Stampings, Rudrapur and
Magnetic products division have taken good initiatives. Due to such initiatives your Company has recycled about 82,595 cubic meters of water used in process and also has re-used about 66,189 cubic meters of water for alternative applications like Gardening / Die washing.
Rain water harvesting is done at Foundry, Urse and Forging, Chakan which resulted in saving use of 11522 Cubic meters of fresh water.
2) Energy: While each plant continued their focused programs for energy conservation like increase output of furnace, VFD installations, LED lighting, Arresting air leakages, A.C. Energy saver etc. these projects have helped achieving specific energy consumption targets in most of the plants. In absolute terms, we have saved about 12.57 Lakh units of electricity & 85,500 cubic mtr of gas. This has resulted in reduction of GHG emissions equivalent to 1218 Tons of Co2. The Gear plants in Pune, are also exploring possibilities for using solar energy on a large scale. Heat recovery projects are implemented at Magnetic products division. Forgings division participated in the annual contests organized by state level energy development agency. Fuel change over from Diesel to LPG project is completed at Composite, Pimpri plant.
During the year, your Company used 6.80 % of its total energy consumption as renewable energy, mainly wind and solar.
3) Waste Management: Waste reduction efforts have been continued across all the plants. Commendable efforts have been made by Forgings, Foundry and Stampings for waste reduction. One of the projects for hazardous waste reduction at Forging Division has resulted in reduction of about 40% waste. All the plants are now looking at waste management as waste to wealth opportunities.
4) Green Supply Chain Management (GSCM): The
Company continued its interactions with the suppliers, transporters and contractors on GSCM primarily to ensure safety, occupational health, human rights and resource conservation.
5) EHS Legal Compliances: All the plants have robust systems for ongoing EHS legal compliance monitoring, evaluation and corrective actions. The fire NOC, fire hydrant systems development projects have been undertaken at Stampings, Kanhe and Foundry divisions.
Corporate Social Responsibility (CSR)
Your Company has constituted a CSR Committee in accordance with section 135 of the Companies Act, 2013; it has developed and implemented the policy on Corporate Social Responsibility. The CSR Committee comprises of Mr. Daljit Mirchandani (Chairman), Mr. Dhananjay Mungale and Mr. Hemant Luthra. The Committee, inter alia, monitors the CSR activities. The CSR thrust areas have been identified where the Company wish to create equity and also laid down guiding criteria for selecting projects which includes sustainability, social impact etc.
The Company was required to spend an amount of '' 28.04 Million (including '' 12.83 Million unspent amount of last year carried forward). The Company could spend an amount of '' 10.23 Million during the year. Further, Mahindra Gears and Transmissions Private Limited, which was amalgamated with the Company during the year, was required to spend an amount of '' 2.69 million (including '' 1.41 million unspent amount of last year carried forward).
During the year the Company had approved to undertake various CSR projects including in the areas of Education and Skill Development, Rural Development and Sanitation. The Budgeted Expenditure of these projects is '' 49.64 Million over three years. Given the challenges and associated learnings seen during the implementation, including obtaining certain legal clearances, changes in members of CSR teams, the implementation of the projects was delayed and related expenditure is deferred to next year. The implementation of these approved projects is now on track, although with some delays, the Company is confident of achieving its social objective.
During the year your Company continued to implement following CSR Projects in the areas of education and skill development through its implementing partner ''Naandi Foundation'':
a) Pathway to Excellence - BM Pawar High School & Junior College, Birdawadi, Chakan
b) Enhancing Employability Quotient (EmQ) of Babasaheb Ambedkar Technological University (BATU) students in Mangaon.
c) Open âN Star - Life skills Center for Girlsâ
All the above projects will require a long-term engagement from Company''s side.
During the year the Company initiated following new projects:
a) Enhancing Road Safety by providing Street Lights at Village Kanhe, Maval, Pune
b) Building Community Toilet Blocks at Village Urse, Pune thereby contributing to ''Swachh Bharat Abhiyanâ
For the above projects the Company has selected implementing partners depending upon the relevant competencies needed.
Further, your Company encourages its employees to participate in the Employee Social Options Program (ESOPs), to drive positive change in society, through Health checkup camps, tree plantation, vocational guidance to school children in the nearby schools etc. During the year under review, the employees of your Company participated in various education, health and environment related programs in local communities.
For addressing community needs in a structured manner, the Company has set up CSR Working Committee at every plant of the Company which meets every month to discuss the social needs of the communities around such plant and solutions required to address the same. These projects are evaluated by CSR co-ordination Committee and are finally approved by the CSR Committee of Board. While the Company is taking some time to define and articulate internally generated CSR Projects better, seeking help from external experts and incorporating the key suggestions of the Committee, the Company is satisfied with the progress that it made in CSR efforts. The Company is in the process of procuring an IT enabled tool for effective monitoring and accounting of various CSR projects and activities. The Company is confident that, the CSR governance structure will deliver an accelerated level of progress in times to come. What the Company is experiencing today is initial learning and ramp-up.
The Company, in order to give a boost to efforts and pinpoint those to the needs of the Society, has engaged an NGO for carrying out ''Social Need Assessment Survey'' to identify the needs of the communities around the plant locations of the Company, from social, economic and environmental aspect. The survey report is expected to be received by the Company in first half of FY 2018. This will help Company in addressing the community specific needs by directing its resources towards CSR Projects which will provide practical and sustainable solutions to the identified issues.
With this, the Company will have enough opportunities to spend the money carried forward, for the chosen Projects in areas more efficiently and effectively.
The CSR Policy of the Company is hosted on the Company''s website at http://www.mahindracie.com/images/pdf/resources/ Governance/csr-policy-mcie.pdf and a brief outline of the CSR Policy and the CSR initiatives undertaken by the Company during the year as prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as Annexure VII.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information pertaining to energy conservation, technology absorption and foreign exchange earnings and outgo, as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are provided in Annexure VIII to this Report.
P. SECRETARIAL
Issue of Shares and change in Promoters shareholding
During the year under review, the Company has issued and allotted 278,977 equity shares of face value of Rs, 10/- each, were issued and allotted due to exercise of options by the employees under the Company''s Employee Stock Option Scheme - 2007 and Employee Stock Option Scheme - 2015.
Pursuant to the above, as on 31st December, 2017 the issued capital of the Company was increased to Rs, 3,783,681,870/and subscribed and paid-up equity capital increased to Rs, 3,783,672,420/-.
Increase in Authorised Share Capital pursuant to scheme of Amalgamation
During the year, Mahindra Gears & Transmissions Private Limited and Crest Geartech Private Limited were merged with the Company and the Authorised share capital of these Transferor Companies was also merged with the Authorised Share Capital of the Company. Accordingly the Authorised Share Capital of the Company was increased to Rs, 5,131,926,365 (Rupees Five Thousand One Hundred Thirty One Million Nine Lakh Twenty Six Thousand Three Hundred and Sixty Five only) divided into 513,192,621 (Five Hundred Thirteen Million One Lakh Ninety Two Thousand Six Hundred and Twenty One) Equity Shares of Rs, 10 (Rupees ten only) each aggregating Rs, 5,131,926,210 (Rupees Five Thousand One Hundred Thirty One Million Nine Lakh Twenty Six Thousand Two Hundred and Ten only) and 5 (Five) 4% (four percent) Non-Cumulative Redeemable NonConvertible Preference Shares of Rs, 31 (Rupees thirty one only) each aggregating Rs, 155 (Rupees One Hundred Fifty Five). Pursuant to the Scheme the relevant clauses of Memorandum and Articles of Association of the Company were also altered reflecting the above increased authorized share capital.
Extract of Annual Return
Pursuant to Section 134 (3)(a) and Section 92(3) of the Companies Act, 2013, read with Rule 12(1) of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return as at 31st December, 2017 in Form No. MGT -9 is attached herewith as Annexure IX and forms part of this report.
Other Policies under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
In accordance with the provisions of Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has framed a Policy for determination of Materiality for disclosure of events or information. The same has been hosted on the website of the Company at http://www. mahindracie.com/images/pdf/resources/Governance/policy-on-criteria-for-determining-materiality-of-events.pdf
Dividend Distribution Policy
Pursuant to regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated a dividend distribution policy which became effective from 1st January, 2017 stipulating factors to be considered in case of Dividend declaration which forms part of this report as Annexure X.
The same has also been hosted on the website of the Company at http://www.mahindracie.com/images/pdf/resources/ Governance/dividend-distribution-policy.pdf
Further the Company has also framed i) Policy for preservation of documents ii) Archival Policy for disclosures hosted on the website, beyond five years.
Q. GENERAL
None of the Executive Directors (Whole-time Director or Managing Director) were in receipt of any commission from the Company or any remuneration from the Subsidiaries of the Company.
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions/ events relating to these items during the year under review:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of Shares (including sweat Equity shares) to employees of the Company under any Scheme save and except ESOS referred to in this Report.
3. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and the Company''s operation in future.
4. Voting rights which are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3) (c) of the Companies Act, 2013).
Acknowledgement
Your Directors wish to place on record their sincere appreciation to the Bankers of the Company, Company''s customers, vendors and investors for their continued support during the year.
The Directors also wish to place on record their appreciation for the dedication and contribution made by employees at all levels and look forward to their support in future as well.
For and on behalf of the Board
Hemant Luthra
Chairman & Executive Director
DIN: 00231420
Date: 20th February 2018
Place: Mumbai
Dec 31, 2016
Dear Shareholders
The Directors present their Report together with the audited financial statements of your Company for the Financial Year (FY) ended 31st December, 2016.
A. FINANCIAL AND OPERATIONAL HIGHLIGHTS (STANDALONE)
(Rs. in Millions)
|
PARTICULARS |
FY ended 31st December, 20161 (12 months period) |
FY ended 31st December, 2015* (9 months period) |
|
Total Revenue |
18,085.5 |
13,368.1 |
|
Profit before Interest, Depreciation, Exceptional Items and Tax |
1,660.3 |
1,070.3 |
|
Less : Depreciation |
710.3 |
538.3 |
|
Profit before Interest, Exceptional Items and Tax |
950.0 |
532.0 |
|
Less : Interest and Finance cost |
71.0 |
32.6 |
|
Profit before Exceptional Items and Tax |
879.0 |
499.4 |
|
Less: Exceptional items |
90.2 |
- |
|
Profit before tax |
788.7 |
499.4 |
|
Profit after tax Other Comprehensive Income |
514.5 |
313.1 |
|
A) i. Items that will not be reclassified as profit or loss |
(29.0) |
(9.0) |
|
ii. Income tax relating to items that will not be reclassified as profit or loss |
10.0 |
3.1 |
|
B) i. Items that will be reclassified as profit or loss |
||
|
ii. Income tax relating to items that will not be reclassified as profit or loss |
||
|
Other Comprehensive income/ (loss) |
(19.0) |
(5.9) |
|
Total Comprehensive income |
495.2 |
307.3 |
* The figures are not comparable. Current Financial Year of the Company ended on 31st December, 2016 covering a period of 12 months and Previous Financial Year covered a period of 9 months from 1st April, 2015 to 31st December, 2015. Current year and previous year figures have been prepared under Ind AS.
Financials
During the Financial Year under review your Company registered a total Revenue ofRs. 18,085.5 Million for 12 months as against '' 13,368.1 Million for 9 months in the previous year and Profit before Interest, Depreciation, Exceptional items and Tax of Rs. 1,660.3 Million for 12 months as against. 1,070.3 Million for 9 months in the previous year. The net profit after tax for the current financial year stood at Rs. 514.5 Million as against a net profit of Rs. 313.1 Million over the 9 months in the previous financial year.
There have been 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 and the date of this Report.
Dividend
Your Directors do not recommend any dividend for the Financial Year.
Transfer to Reserves
The Company has not transferred any amount of profits to reserves.
OPERATIONAL REVIEW India
Your Company has focused on increasing plant efficiency and has focussed on improving margins through continuous improvements. With the help of CIE, the different verticals of the Indian operations will pursue business with Western OEMS in India such as VW, Renault, GM and Ford where CIE in Europe has a strong presence. Thus the approach has been to focus on improving plant operations, maintaining margins through continuous improvements and strive for growth.
Acquisition of Bill Forge Private Limited (âBFPLâ)
During the Financial Year, the Board at its meeting held on 12th September, 2016 approved the proposal for acquisition of BFPL for a total consideration ofRs. 13,312 Million. At the Extra-ordinary General Meeting held on 13th October, 2016 shareholders of the Company approved the proposal to issue of 54,491,563 equity shares by way of preferential allotment of equity shares to part finance the acquisition of BFPL. The Company completed the acquisition of entire share capital of BFPL on 25th October, 2016.
BFPL is an Indian supplier of forged and machined automotive components which expect to result in expansion of business and creation of further growth opportunities, widen our forgings-based product portfolio. Bill Forge acquisition resulted in the increased access to customers focusing on two-wheelers, three-wheelers and passenger cars, which help us in diversifying our customer portfolio.
Germany and UK
The turnaround in Germany is in the process and the endeavor would be to ensure that profit margins are brought to acceptable levels in the next few quarters. As reported earlier, the JECO plant has been closed down and its products have been shifted to the other plants in Germany. The UK operations are very small and with acceptable level of performance.
Spain and Lithuania
These plants have been consistently profitable over the last few years and profit margins are in line with the consolidated margins of the CIE group worldwide. The strategic focus is to maintain profitability at these plants while growing with the market.
Italy
The Italian operations were successfully turned around in 2015 and now the efforts are towards maintaining margins. The operations also aims at improving revenues by exploring new market segments since the existing market segment of off-road and Agricultural machinery has not performed so well over the last few years.
Gears India
Gears India has significant dependence on the Indian tractor market. It is continuously diversifying its customer base, focusing on exports and the domestic four wheeler market.
Investor Relations (IR)
Your Company continuously strives for excellence in its Investor Relations (âIRâ) engagement with International and Domestic investors through structured conference-calls and periodic investor/analyst interactions like individual Meetings, Telepresence Meetings, participation in investor conferences, quarterly earnings calls and annual analyst meet from time to time. Your Company interacted in a number of investor meets organized by reputed Global and Domestic Broking Houses, during the year.
Your Company always believes in building a relationship of mutual understanding with investor/analysts. Your Company ensures that critical information about the Company is available to all the investors by uploading all such information at the Companyâs website.
B. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company and its subsidiary companies prepared in accordance with the Companies Act, 2013 (the Act) and applicable Accounting Standards along with all relevant documents and the Auditorsâ Report thereon forms a part of this Annual Report. The Consolidated Financial Statements presented by the Company include the financial results of subsidiary companies.
In accordance with section 136 of the Act, the separate accounts in respect of each of the Subsidiaries are uploaded on the website of the Company at Web-link: http://www.mahindracie.com/ investors/investor-relations/annual-report.html#subsidiaries-annual-report and copies of the same shall be provided to shareholders of the Company on receipt of request for such copies.
Subsidiary Companies
The subsidiary companies continue to contribute to the overall growth of the Company.
Mahindra Forgings Europe registered a consolidated revenue from operations of Rs. 14,861 Million during the financial year ended 31st December, 2016 as compared to Rs. 12,072 Million in the previous period of nine months from 1st April to 31st December, 2015. The consolidated net loss after tax for the financial year under review was Rs. 886 Million as compared to net profit of Rs. 47 Million in the previous period.
CIE Galfor S.A. registered a consolidated revenue from operations of Rs. 14,863 Million during the financial year ended 31st December, 2016 as compared to Rs. 10,554 Million in the previous period of nine months from 1st April to 31st December 2015. The consolidated net profit after tax for the financial year under review was Rs. 1,735 Million as compared to Rs. 817 Million in the previous period.
Metalcastello S.p.A. registered a revenue from operations of Rs. 3,637 Million during the financial year ended 31st December, 2016 as compared toRs. 2,530 Million in the previous period of nine months from 1st April to 31st December, 2015. The consolidated net profit after tax for the financial year under review was Rs. 252 Million as compared to Rs. 101 Million in the previous period.
Bill Forge Private Limited registered a consolidated revenue from operations of Rs. 1,752 Million during the period from 1st October 2016 to 31st December, 2016 after acquisition. The consolidated net profit after tax for the same period (1st October to 31st December, 2016) was Rs. 81 Million.
Mahindra Gears and Transmissions Private Limited registered a consolidated revenue from operations ofRs. 1,592.8 Million during the financial year ended 31st December, 2016 as compared to Rs. 1,059 Million in the previous period of nine months from 1st April to 31st December 2015. The consolidated net profit after tax for the financial year under review was Rs. 72 Million as compared to Rs. 52 Million in the previous period.
The Companyâs consolidated total revenue from operations was Rs. 55,245 Million in the financial year ended 31st December, 2016, 67.6% of which was derived from the subsidiaries whereas 32.4% was derived from operations of the Company.
At the beginning of the Financial Year the Company had 17 subsidiaries namely Mahindra Forgings International Limited (Mauritius), Mahindra Forgings Global Limited (Mauritius), Stokes Group Limited (U.K.), Mahindra Gears & Transmissions Private Limited (India), Mahindra Gears Global Limited (Mauritius), CIE Galfor S.A. (Spain), Mahindra Forgings Europe AG (Germany), Jeco Jellinghaus GmbH (Germany), Stokes Forgings Ltd. (U.K.), Stokes Forgings Dudley Ltd. (U.K.), Gesenkschmiede Schneider GmbH (Germany), Falkenroth Umformtechnik GmbH (Germany), Schoneweiss & Co. GmbH (Germany), Metalcastello S.p.A. (Italy), CIE Legazpi S.A. (Spain), UAB CIE LT Forge (Lithuania) and Crest Geartech Private Limited (India).
During the year, Bill Forge Private Limited (India) [BFPL], became a subsidiary of the Company w.e.f. 19th October, 2016 and a wholly owned subsidiary of the Company with effect from 25th October, 2016. The subsidiaries of BFPL namely BF Precision Private Limited (India), Bill Forge Global DMCC (Dubai) and Bill Forge de Mexico S de RL de CV (Mexico) became step down wholly owned subsidiaries of the Company from dates mentioned above.
No subsidiaries were liquidated or sold during the Financial Year under review.
Crest Geartech Private Limited, Stokes Forgings Limited and Stokes Forgings Dudley Limited are dormant companies. Further Jeco Jellinghaus GmbH has been operationally closed, however as on 31st December, 2016 formalities for legal closure of Jeco were in progress.
Mahindra Forgings International Limited (MFIL), Mahindra Forgings Global Limited (MFGL) and Mahindra Gears Global Limited (MGGL) are not carrying on any business operations except for investing in operating entities abroad. Further, Bill Forge de Mexico S de RL de CV (Mexico) has not commenced its operation yet. All other subsidiaries were operational.
With a view of rationalizing multiple foreign subsidiaries in the group and to ensure optimized legal entity structure more aligned with the business and thereby obtaining simplification benefits and cost savings by elimination of administrative functions and multiple record-keeping, the Board of Directors of the Company at its meeting held on 12th December, 2016 approved the scheme of Amalgamation of MFIL and MFGL with the Company. The Board also accorded its approval for reverse merger of MGGL with Metalcastello S.p.A. Further the Board of Directors of Bill Forge Private Limited approved the proposal for closure of Bill Forge Global DMCC (Dubai) at its meeting held on 5th January, 2017.
Since MFGL and MFIL are wholly-owned subsidiaries of the Company, no shares will be issued as consideration for the amalgamation and the shares held by MCIE in MFGL and MFIL shall stand cancelled. As a result, the shareholders of MCIE will continue to remain beneficial owners of MCIE in the same proportion in which they hold shares in MCIE prior to amalgamation.
As required under section 129(3) of the Companies Act, 2013 read with the Rules, a statement containing the salient features of the financial statement of the subsidiaries in prescribed form AOC-1 is attached to the Financial Statements. This statement reports the performance and financial position of each of the subsidiaries included in the consolidated financial statement.
The Company has formulated a Policy for Determining Material Subsidiaries and the same has been uploaded on the website of the Company at http://www.mahindracie.com/imaaes/pdf/ resources/Governance/Policv on Material Subsidiarv.pdf
C. INTERNAL FINANCIAL CONTROLS
Your Company uses SAP ERP System as a business enabler and also to maintain its books of accounts. The Transactional Controls built in SAP ERP System ensure appropriate segregation of duties, appropriate level of approval mechanism and maintenance of supporting documents. The System, Standard Operating Procedures are reviewed by management. These systems and controls are audited by the Internal Auditors and their findings and recommendations are reviewed by the Audit Committee along-with the action taken reports on the same.
Your Company has in place adequate internal financial controls commensurate with the size, scale and complexity of its operations. Review of the internal financial controls environment of the Company was undertaken during the previous year which covered verification of entity level control, process level control and IT controls, identification, assessment and definition of key business processes and analysis of risk control matrices, etc. During the period under review, effectiveness of internal financial controls was evaluated. Reasonable Financial Controls are operative for all the business activities of the Company and no material weakness in the design or operation of any control was observed. The internal financial controls with reference to the Financial Statements are commensurate with the size and nature of business of the Company.
Indian Accounting Standards (Ind AS)
Your Company has adopted Indian Accounting Standards (âInd ASâ) for the accounting periods beginning on 1st January, 2016 pursuant to Ministry of Corporate Affairs Notification dated 16th February, 2015 notifying the Companies (Indian Accounting Standards) Rules, 2015.
D. MANAGEMENT DISCUSSION AND ANALYSIS
Management discussion and analysis of financial condition and results of operations of the Company along-with the performance and financial position of each of the subsidiaries is provided in the Management Discussion and Analysis Report which forms part of this Annual Report.
E. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All Related Party Transactions entered during the year were in the Ordinary Course of Business and at arm''s length basis.
During the year under review, your Company had entered into Material Related Party Transactions, i.e. transactions exceeding ten percent of the annual consolidated turnover as per the last audited financial statements of the Company, with Mahindra & Mahindra Limited. These transactions too were in the Ordinary Course of Business of your Company and were at arm''s length Basis. Details of these transactions, as required to be provided under section 134(3)(h) of the Companies Act, 2013 are disclosed in Form AOC-2 as Annexure I and forms part of this Report.
The Company has formulated a Policy on materiality of and dealing with Related Party Transactions and the same has been uploaded on the website of the Company at http://www. mahindracie.com/imaaes/pdf/resources/Governance/Policv on Related Party Transaction.pdf
F. AUDITORS
Statutory Auditors and Auditorâs report
Pursuant to section 139 of the Companies Act, 2013 read with the Rules framed there under, the term of office of Messrs. B. K. Khare & Co., Chartered Accountants, Mumbai (Firm Registration No. 105102W), as Statutory Auditors of the Company will conclude at the conclusion of forthcoming Annual General Meeting of the Company.
The Board placed on record its appreciation for the services rendered by Messrs. B. K. Khare & Co., as the Statutory Auditors of the Company.
In accordance with the provisions of section 139 of the Companies Act, 2013 read with the Rules framed there under the Board of Directors of the Company on the recommendation of the Audit Committee, proposed the appointment of Price Waterhouse Chartered Accountants LLP (Firm Registration No. 012754N/N500016) as the Statutory Auditors of the Company who shall hold the office as Statutory Auditors of the Company from the conclusion of ensuing 18th Annual General Meeting of the Company (AGM) for a term of consecutive five years till the conclusion of 23rd AGM, subject to ratification by members at every AGM. The appointment of Price Waterhouse Chartered Accountants LLP as the statutory auditors of the Company is placed before the members for approval at the ensuing Annual General Meeting of the Company.
As required under the provisions of section 139(1) of the Companies Act, 2013 the Company has received a written consent from Price Waterhouse Chartered Accountants LLP for their appointment and a certificate, to the effect that their appointment, if made, would be in accordance with the Companies Act, 2013 and the Rules framed there under and that they satisfy the criteria provided in section 141 of the Companies Act, 2013 read with Rule 4(1) of the Companies (Audit and Auditors) Rules, 2014 and that they are not disqualified for appointment.
The members are requested to consider the appointment of statutory auditors as aforesaid and fix their remuneration.
The Auditorsâ Report on the Financial Statement for the year ended 31st December, 2016, is unmodified i.e. it does not contain any qualification, reservation or adverse remark and notes thereto are self explanatory and do not require any explanations.
Secretarial Auditor
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 Mr. Sachin Bhagwat, Practicing Company Secretary (Certificate of Practice No. 6029), Pune as Secretarial Auditor to conduct the Secretarial Audit of the Company for the Financial Year ended 31st December, 2016. The Secretarial Audit Report for the Financial Year ended 31st December, 2016 is appended to this Report as Annexure II.
The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
Cost Auditors
The Board had appointed Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune, (Firm Registration Number 000030) for conducting the audit of Cost Accounting Records maintained by the Company for the Financial year ended 31st December, 2016.
The Board of Directors on recommendation of the Audit Committee, appointed Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune (Firm Registration Number 000030) as the Cost Auditors of the Company to conduct the Audit of the Cost Accounting Records maintained by the Company for the Financial Year commencing from 1st January 2017 under section 148 of the Companies Act, 2013. The Cost Auditors have confirmed that their appointment is within the limits of section 141(3)(g) of the Companies Act, 2013 and have also certified that they are free from any disqualifications specified under section 141(3) and proviso to section 148(3) read with section 141(4) of the Companies Act, 2013.
The Audit Committee has also received a Certificate from the Cost Auditor certifying their independence and armâs length relationship with the Company.
As per the provisions of the Companies Act, 2013, the remuneration payable to the Cost Auditor is required to be placed before the Members in the ensuing Annual General Meeting for their ratification. Accordingly, a Resolution seeking Membersâ ratification for the remuneration payable to Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune is included in the Notice convening the Annual General Meeting.
Reporting of Frauds by Auditors
During the year under review, the Statutory Auditor, Cost Auditor and the Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee under section 143(12) of the Companies Act, 2013, details of which needs to be mentioned in this Report.
G. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security are given is provided in the note no. 9 & 11 of the notes to the Standalone Financial Statements.
The Company has not made any loans and advances in the nature of loans to subsidiaries or to firms/companies in which directors are interested. Hence disclosure pursuant to Regulation 34(3) read with Part A of Schedule V of the Listing Regulations is not required.
H. PUBLIC DEPOSITS AND LOANS/ADVANCES
Your Company has not accepted any deposits from the public or its employees during the year under review.
I TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
The Company has not declared any dividend so far however, pursuant to the Integrated scheme and the Composites scheme Mahindra Ugine Steel Company Limited (MUSCO) and Mahindra Composites Limited (MCL) merged with the Company. Both MUSCO and MCL had unclaimed dividends which are transferred in the Books of the Company.
During the year, pursuant to the provisions of section 205C of the Companies Act, 1956 and Investor Education and Protection Fund (Awareness and Protection of Investors) Rules, 2001, the Company has transferred Rs. 296,970/- to Investor Education and Protection Fund (IEPF) in respect of the dividend declared by MCL (Transferor Company amalgamated with MCIE) for Financial Year ended on 31st March, 2009.
In October 2006 the Company had redeemed the Redeemable Preference Shares issued to the shareholders of Amforge Industries Limited pursuant to the scheme of demerger duly approved by the Hon''ble Bombay High Court. The warrants in respect of redemption proceeds were duly dispatched to all the holders of preference shares, however an amount ofRs.4,120,675/-had remained unclaimed with the Company for more than seven years. During the year, Section 125(2) of the Companies Act, 2013 (the Act) and the Investor Education and Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 became effective from 7th September, 2016. Accordingly pursuant to Section 125(2)(m) of the Act, the Company has transferred the said unclaimed redemption amount of preference shares of Rs. 4,120,675/- to IEPF.
The Company has uploaded the details of said unpaid and unclaimed amounts now lying with the Company on the website of the Company at http://www.mahindracie.com/investors/ downloads/documents.html#unclaimed-amounts
No claim lies against the Company in respect of these dividends or redemption amount of Preference Shares.
J. EMPLOYEES
Key Managerial Personnel (KMP)
Apart from the Managing Director and Executive Directors, Mr. Romesh Kaul, Chief Executive - Stampings and Composites Division, Mr. K. Jayaprakash, Chief Financial Officer, and Mr. Krishnan Shankar, Company Secretary and Head-Legal are the KMPs of the Company.
During the year under review following changes took place in the KMP''s;
a) The Board, on recommendation of Nomination and Remuneration Committee appointed Mr. Ander Arenaza Alvarez, as Chief Executive Officer of the Company w.e.f. 26th July, 2016. Mr. Arenaza was later appointed as Additional Director w.e.f. 13th September, 2016.
b) Mr. Sanjay Joglekar, Chief Financial Officer of the Company retired from the services of the Company with effect from 30th September, 2016.
c) On the recommendation of the Nomination and Remuneration Committee and the Audit Committee, the Board of Directors of the Company at its meeting held on 24th October, 2016 appointed Mr. K. Jayaprakash as Chief Financial Officer of the Company with effect from 24th October, 2016.
Employeesâ Stock Option Scheme
The Company has in force the following Schemes which get covered under the provisions of SEBI (Share Based Employee Benefits) Regulations, 2014 (âSBEB Regulationsâ):
a) Mahindra CIE Automotive Limited - Employeesâ Stock Option Scheme (ESOS-2007)
b) Mahindra CIE Automotive Limited - Employeesâ Stock Options Scheme 2015 (ESOS-2015)
Voting rights on the shares issued to employees under above ESOS are either exercised by the employees directly or through their appointed proxies.
During the year, there have been no material changes to these schemes. No stock options have been granted by the Company under ESOS-2007. Further, the Company has granted 1,591,280 options under ESOS-2015 as on 31st December, 2016.
Both the schemes are in compliance with the SBEB Regulations, 2014. The Certificate issued by the Statutory Auditors of the Company to the effect that the Schemes have been implemented in accordance with the said Regulations and the resolution passed by the members will be placed before the shareholders at the ensuing Annual General Meeting.
The information as required to be disclosed, in relation to ESOS under the Companies Act, 2013, and the details of the ESOS being implemented, as specified by SEBI under Clause 14 of the Securities and Exchange Board of India SBEB Regulations, 2014 is uploaded on the website of the Company at http://www. mahindracie.com/investors/investor-relations/aovernance.html
The said information is also provided in the Note No. 15 of the Notes to Financial Statements.
Particulars of Employees and related disclosures
Disclosures with respect to the remuneration of Directors, KMPs and employees as required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are given in Annexure III to this Report.
Further, as required under provisions of section 197(12) of the Companies Act, 2013 read with Rule 5(2) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement including the names and other details of the top ten employees in terms of remuneration drawn and the name of every employee, who were in receipt of remuneration not less than Rs. 10,200,000/- per annum during the year ended 31st December, 2016 or employee who were employed for a part of the Financial Year and were in receipt of remuneration of not less than Rs. 8,50,000/- per month during any part of the said year is annexed as Annexure IV to this report.
The Company do not have any employee who was employed throughout the Financial Year or part thereof and was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the company.
Industrial Relations
Industrial Relations generally remained cordial and harmonious throughout the year.
The Management Discussion and Analysis Report give an overview of the developments in Human Resources/Industrial Relations during the year.
K. BOARD AND COMMITTEES
Directors
During the year under review, Mr. Pedro Jesus Echegaray Larrea resigned as a Director (Executive Director) of the Company w.e.f. 12th September, 2016.
The Board, at its meeting held on 12th September, 2016, on recommendation of Nomination and Remuneration Committee, appointed Mr. Ander Arenaza Alvarez as Additional Director with effect from 13th September, 2016. Mr. Arenaza holds office as Additional Director upto the date of the next Annual General Meeting pursuant to section 160 of the Companies Act, 2013 and Article 179 of the Articles of Association of the Company. Mr. Arenaza being CEO of the Company was also appointed as whole-time Director (Designated as Executive Director) for a term of 3 years w.e.f. 13th September, 2016.
The shareholders at Extra-ordinary General Meeting held on 13th October, 2016 accorded their approval for appointment of Mr. Ander Arenaza Alvarez (DIN: 07591785) as a Whole-time Director (Executive Director) of the Company for a period of 3 (three) years with effectfrom 13th September, 2016.
Mr. Zhooben Dosabhoy Bhiwandiwala and Mr. Antonio Maria Pradera Jauregui, Directors on the Board, are liable to retire by rotation at the ensuing annual general meeting, pursuant to provisions of section 152 of the Act and the Articles of Association of the Company and offered themselves for re-appointment at the 18th Annual General Meeting of the Company scheduled to be held on 27th April, 2017.
Detailed profile of the Directors seeking re-appointment along-with other details as may be required are provided in the Corporate Governance Report which forms part of this Annual Report.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Directorsâ Responsibility Statement
Pursuant to sub-section (5) of section 134 of the Companies Act, 2013, your Directors, based on the representation received from the Operating Management, and after due enquiry, confirm that:
a) in the preparation of the annual accounts for the Financial Year ended 31st December, 2016, the applicable accounting standards had been followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the Financial Year ended 31st December, 2016 and of the profit and loss of the company for that period;
c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the directors had prepared the annual accounts for the Financial Year ended 31st December, 2016 on a going concern basis
e) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
(f) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Meetings of Board of Directors
A calendar of Meetings is prepared and circulated in advance to the Directors.
The Board of Directors of the Company met nine times during the Financial Year ended 31st December, 2016, viz. 19th January, 2016; 22nd February, 2016, 22nd April, 2016, 17th May, 2016, 26th July, 2016, 12th September, 2016, 24th October, 2016, 11th November, 2016 and 12th December, 2016.
Details of attendance of meetings of the Board, its Committees and the AGM are included in the Report on Corporate Governance, which forms part of this Annual Report.
Meeting of Independent Directors
The Independent Directors met once during the financial year under review. The Meeting was conducted in an informal manner without the presence of the Non-Independent Directors and members of management.
Performance Evaluation of the Board
Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, and that of its Committees as well as performance of the Directors individually.
Your Company has formulated a criteria for performance evaluation of the Board as a Whole, Individual Directors, Committees which also includes feedback to the Chairman.
Feedback was sought by way of a structured questionnaire, based on criteria approved by the Nomination and Remuneration Committee, for evaluation of performance of Board, Committees of Board and Individual Directors. The members were also able to give qualitative feedback apart from the standard questionnaire. The Board on recommendation of the Nomination and Remuneration Committee, approved to obtain the feedback of all the Directors on the said Questionnaire through electronic platform. An Independent Agency was appointed to provide the electronic platform. Web link of the electronic platform along-with username and passwords of respective board members for accessing such platform was forwarded by the Independent Agency.
The Board Members provided their feedback on the standard questionnaire through the electronic platform.
The reports of feedback received from all Directors on performance evaluation of Individual Directors were shared with respective Directors and Chairman of the Nomination and Remuneration Committee. The Committee evaluated the performance of all individual directors based on the feedback so received.
The report of the feedback received from all the Directors on performance evaluation of Board and Committees of Board were shared with the Chairman of the Company. The Board on the basis of feedback so received evaluated performance of its own and Committees of Board. Performance Evaluation of the Chairman of the Company was carried out by the Independent Directors of the Company, taking into account feedback of all the Directors including the Executive and Non-executive Directors.
Familiarization Programme for Independent Directors
The details of 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 given in the Report on Corporate Governance. The familiarization programme and other disclosures as specified under regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is available on the website of the Company at the link: http://www.mahindracie.com/investors/ investor-relations/aovernance.html
Policy on Appointment and Remuneration
In line with the principles of transparency and consistency, your Company has adopted the following Policies which inter alia, includes the criteria for determining qualifications, positive attributes and independence of Directors.
i) A policy for the remuneration of Directors, Key Managerial Personnel and other employees of the Company.
ii) Policy on appointment of Directors and Senior Management and succession planning for orderly succession to the Board and the Senior Management.
The Policies mentioned at (i) and (ii) above are attached as Annexure V & VI respectively and forms part of this Report.
Committees of the Board
Your Company has duly constituted the Committees required under the Companies Act, 2013 read with applicable Rules made there under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The Audit Committee which consists of the Independent Directors namely Mr. Daljit Mirchandani as the Chairman, Mr. Jose Sabino Velasco Ibanez, Mr. Juan Maria Bilbao Ugarriza, Mr. Manoj Maheshwari and Mr. Dhananjay Mungale. During the year, the Board of Directors of the Company had reconstituted the Audit Committee and appointed Mr. Juan Maria Bilbao Ugarriza Independent Director of the Company, as member of Audit Committee, with effect from November 11, 2016.
All the Members of the Committee are Independent Directors and possess strong accounting and financial management knowledge. The Company Secretary of the Company is the Secretary to the Committee. All the recommendations of the Audit Committee were accepted by the Board during the financial year under review.
The other Committees of the Board are:
i) Nomination and Remuneration Committee
ii) Stakeholders Relationship Committee
Hi) Corporate Social Responsibility Committee iv) Allotment Committee
The details with respect to the composition, powers, roles, terms of reference, Meetings held and attendance of the members at such Meetings of the relevant Committees are provided in the Report on Corporate Governance of the Company which forms part of this Annual Report.
L. GOVERNANCE
Corporate Governance
Your Companyâs philosophy on Corporate Governance sets the goal of achieving the highest level of transparency, accountability in all its dealings with the stakeholders, employees and the government. The practice of responsible governance has enabled your Company to achieve sustainable growth, while meeting the aspirations of its stakeholderâs and societal expectations. A report on Corporate Governance along with a Certificate from the Auditors of the Company regarding the compliance with the conditions of Corporate Governance as stipulated under Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms part of this Annual Report.
Vigil Mechanism
The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules prescribed there under and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is implemented through the Companyâs Whistle Blower Policy to enable the Directors, employees and all stakeholders of the Company to report genuine concerns, to provide for adequate safeguards against victimization of persons who use such mechanism and make provision for direct access to the Chairman of the Audit Committee. The detail of such Policy is explained in the Corporate Governance Report and has been uploaded on the website of the Company, http://www.mahindracie.com/ investors/investor-relations/aovernance.html
Disclosure under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) are covered under this Policy. The Policy is gender neutral.
During the year, there were no complaint of discrimination and harassment including sexual harassment received by the committee or by any of the senior executives.
Business Responsibility Report
The âBusiness Responsibility Reportâ (BRR) of your Company for the year 2016 forms part of this Annual Report as required under Regulation 34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Your Company strongly believes that sustainable and inclusive growth is possible by using the levers of environmental and social responsibility while setting inspirational targets and improving economic performance to ensure business continuity and rapid growth.
Risk Management Framework
Your Company has a risk management framework in place. The risk management framework works at various levels. The Company has a robust Organizational structure for managing and reporting on risks. In terms of the requirement of the Act, the Company has developed and implemented the Risk Management Framework and the Audit Committee of the Board as well as the Board reviews the same periodically. Your Company has also established procedures to periodically place before the Board, the risk assessment and minimization procedures being followed by the Company and steps taken by it to mitigate the Risks.
Brief of the Risk Management Framework is provided in corporate governance report. Important element of risk, including risk which may threaten the existence of the Company are provided in the Management Discussion and Analysis Report.
M. SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY
Sustainability
Your Companyâs vision on sustainability is to continuously improve our capability by integrating environmental, social, and economic aspects in operations for creating better tomorrow than today. In line with its vision the Company has identified and implemented various projects for reduction in waste, energy and GHG emissions, to achieve the targets set under its Sustainability Roadmap.
Awareness on sustainability
Awareness about the need and the ways to drive sustainable business practices among all stakeholders is key to perpetual growth. The Company continues its initiatives to generate this awareness among employees who are the most important internal stakeholders of the organization. This awareness campaign was taken to the external stakeholders, suppliers, contractors and vendors.
Safety, Health and Environment Performance
Your Company has a Safety, Occupational Health and Environmental (SH&E) policy on occupational health, safety and environmental protection through which every employee is made responsible for the observance of the measures designed to prevent accidents, damage to property, occupational ill-health and avoidable environmental pollutants.
Safety and Health
All our existing plants continued their EHSMS certification status through external assessment by renowned bodies like Bureau Veritas, TUV Nord, TUV SUD and DNV. For further enhancement in the performance, near mis incident reporting system, property damage incident investigations and Behavioral based safety systems are being launched in each site in a phased manner. The new site of Gears-Chakan has completed its system certification for Environmental, Occupational Health and Safety Management in April 2016. The Stamping''s Zaheerabad unit shall complete their EHSMS certification by June, 2017.
The Safety Committee of each plant meets periodically to review the status of safety issues and reporting of accidents, if any. Your Companyâs plant continues to improve their wellbeing of all its personnel by organizing Occupational Health Examination Camps, Periodic Health Check-ups etc.
Environmental Initiatives
Since the last few years, your Company has been focusing external certifications for achieving world class environmental standards.
All plants of the Company except Zaheerabad Plant are certified for EHSMS certification using ISO 14001 and BS OHSAS 18001 standards. The OHSAS system aims to eliminate or minimize risk to employees and other interested parties who may be exposed to Occupational Safety risks in the Company. Sustainable development is promoted through sharing of best practices in the fields of Safety, Occupational Health & Environment.
Your Company considers safety as a value and not just a priority. The Company has taken all possible safety measures to prevent injuries. In most of the plants there were no reportable injuries except for a major unfortunate incident of fatal nature at Stampings-Kanhe Plant. A thorough investigation was carried out to identify root cause(s) and immediate steps have been taken to eliminate the causes to prevent recurrence.
The highlights of different initiatives taken by your Company at its various Plants for environment and sustainability are as under:
1) Water: On the whole, all plants have continued their efforts for water conservation. The major water consuming plants like Foundry, Paint shop in Stampings Rudrapur and Magnetic products division have taken good initiatives. Due to such initiatives your Company has recycled about 79 thousand cubic meters of water in process & also has reused about 60 thousand cubic meters of water for alternative applications like Gardening I Die washing.
Rain water harvesting is done at Foundry Urse, Forging Chakan & Stamping Nashik, which resulted in saving use of 3000 Cubic meters offresh water.
2) Energy: While each plant continued their focused programs for energy conservation like VFD installations, LED lighting, Arresting air leakages, Lighting Energy saver etc. these projects have helped achieving specific energy consumption targets in most of the plants. In absolute terms, we have saved about 10.30 Lakh units of electricity. This has resulted in reduction of GHG emissions equivalent to 844 Tons of Co2. The plants are also exploring possibilities for using solar energy on a large scale in Forging & Gears Pune locations. Heat recovery projects are in progress at Magnetic products division. Forgings division participated in the annual contests organized by state level energy development agency. Fuel change over from Diesel to LPG project is in progress at Composite Pimpri plant.
During the year, your Company used 3.9% of its total energy consumption as renewable energy, mainly wind and solar.
3) Waste Management: Waste reduction efforts have been continued across all the plants. Commendable efforts have been made by Forgings, Foundry and Stampings for waste reduction. One of the projects for hazardous waste reduction at Forging Division has resulted in reduction of about 40% weight. All the plants are now looking at waste management as waste to wealth opportunities .
4) Green Supply Chain Management: Almost all the plants have continued their focused efforts in engaging their suppliers for sustainable supply chain development drive through planned interactions, training, audits, reviews and best practice sharing sessions.
5) EOHS Legal compliances: All the plants have robust systems for ongoing EHS legal compliance monitoring, evaluation and corrective actions. The fire NOC, fire hydrant systems development projects have been undertaken at Composites and Foundry divisions.
6) GRI reporting on Sustainability: The Company is amongst the top 500 listed companies on Stock Exchanges in India, Business responsibility reporting has become applicable from the annual report of calendar year 2016 onwards.
Corporate Social Responsibility (CSR)
Your Company has constituted a CSR Committee in accordance with section 135 of the Companies Act, 2013; it has developed and implemented the policy on Corporate Social Responsibility. The CSR Committee comprises of Mr. Daljit Mirchandani (Chairman), Mr. Dhananjay Mungale and Mr. Hemant Luthra. The Committee, inter alia, monitors the CSR activities. The CSR thrust areas have been identified where the Company wish to create equity and also laid down guiding criteria for selecting projects which includes sustainability, social impact etc.
The Company was required to spend an amount of Rs. 16.20 Million (including Rs. 6.36 Million unspent amount of last year carried forward). The Company could spend an amount of Rs. 3.37 Million during the year. The Company is committed to discharging its social obligation. The CSR thrust areas have been identified where the Company wishes to create equity and also lay down guiding criteria for selecting projects which includes sustainability, Social Impact etc.
During the year your Company has undertaken the following CSR Projects:
a) Pathway to excellence - BM Pawar High School, Biradwadi, Chakan
b) Enhancing Employability Quotient (EmQ) of Babasaheb Ambedkar Technological University (BATU) students in Mangaon.
c) Open Girlsâ Clubs under âNanhi Kali Centersâ
All the above projects are implemented through Naandi Foundation and will require a long term engagement from Companyâs side. The Budgeted Expenditure of these projects was Rs. 12.66 Million for the last financial year and aggregate budget ofRs. 27.15 Million over three years. It was first year of implementation of all these three new projects and given the challenges faced during the implementation the Company could only spent Rs. 1.85 Million. The implementation of the project had already started during the financial year ended 31st December 2016 and additional amount ofRs. 2.22 Million in respect of Open Girlsâ Clubs under âNanhi Kali Centersâ project was spend till the date of this report. The implementation of these approved projects is on track and the Company is confident of achieving its social objective by implementing the projects as planned.
Further, your Company encourages its employees to participate in the Employee Social Options Program (ESOPs), to drive positive change in society, through Health check up camps, tree plantation, vocational guidance to school children in the nearby schools etc. During the year under review, the employees of your Company participated in various education and health related programs in local communities. The total amount spent on these activities during the yearwas Rs. 1.51 Million.
Various other projects are also in the pipeline like a project under Swachcha Bharat Abhiyan for building community toilet blocks, a projects for Road Safety improvement, a projects for skill development and enhancing the employability of students and few project in the area of Health Care. etc. and the Company is reviewing these projects with the help of experts in relevant fields.
We reiterate that while we are taking some time to define and articulate our internally generated CSR Projects better, seeking help from external experts as well and after incorporating the key suggestions of the Committee, we will have a significant number of Projects that will need a prolonged engagement from our side, in order to start seeing results. With this, we have enough opportunities to spend the money carried forward, for the chosen Projects.
The CSR Policy of the Company is hosted on the Companyâs website at http://www.mahindracie.com/imaaes/pdf/resources/ Governance/csr-policv-mcie.pdf and a brief outline of the CSR Policy and the CSR initiatives undertaken by the Company during the year as prescribed under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as âAnnexure VIfâ.
Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and Outgo
The information pertaining to energy conservation, technology absorption and foreign exchange earnings and outgo, as required under section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are provided in Annexure VIII to this Report.
N. SECRETARIAL
Issue of Shares and change in Promoters shareholding
During the year ended 31st December, 2016, your Company has issued and allotted 54,491,563 equity shares on Preferential Allotment basis at the issue price of Rs. 200/- each in the following manner:
- 31,991,563 equity shares were issued and allotted to shareholders of Bill Forge Private Limited; and
- 22,500,000 equity shares were issued and allotted to Participations Internationals Autometal, Dos S.L (âPIA2â) one of the Promoters of the Company.
Further, 2,60,654 equity shares of face value ofRs. 10/- each, were issued and allotted pursuant to exercise of options under the Companyâs Employee Stock Option Scheme- 2007.
As stated in the explanatory statement to the Notice of Extraordinary General Meeting (EGM) of members of the Company held on 13th October, 2016, the object of raising funds by way of issue of aforesaid equity share on preferential basis was to part finance the acquisition of entire share capital of Bill Forge Private Limited. The proceeds of Preferential Issue has been fully utilized and there was no deviation in the utilization of proceeds of preferential issue from the objects as stated in Explanatory Statement to the notice of EGM.
In view of the above, as on 31st December, 2016 PIA2 held 194,267,537 equity shares in the Company representing 51.38% of the paid-up equity capital and Mahindra Vehicle Manufactures Ltd. held 65,271,407 representing 17.26% of the paid-up equity capital and Prudential Management & Services Pvt. Ltd. held 4,784,068 equity shares in the Company representing 1.27% of the paid-up equity capital of the Company.
Pursuant to the above, as on 31st December, 2016 the issued capital of the Company was increased to Rs. 3,780,892,100/and subscribed and paid-up equity capital increased to Rs. 3,780,882,650/-.
Reclassification of Authorized Share Capital
During the year, pursuant to approval of the shareholders at the Extra-ordinary general meeting held on 13th October, 2016 authorised capital of the Company Rs. 4,869,426,365/- was reclassified into 486,942,621 Equity Shares of Rs. 10 each and 5 (Five) 4% Non Cumulative Redeemable Non Convertible Preference Shares ofRs. 31/- each
Extract of Annual Return
Pursuant to sub-section 3 (a) of section 134 and sub-section (3) of section 92 of the Companies Act, 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014, an extract of the Annual Return as at 31st December, 2016 forms part of this report as Annexure IX.
Other Policies under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015
In accordance with the provisions of Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has framed Policy for determination of Materiality for disclosure of events or information. The same has been hosted on the website of the Company at the link: http:// www.mahindracie.com/imaaes/pdf/resources/Governance/ policv-on-criteria-for-determinina-materialitv-of-events.pdf
Dividend Distribution Policy
During the year under review, pursuant to regulation 43A of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has formulated dividend distribution policy which became effective from 1st January, 2017 stipulating factors to be considered in case of Dividend declaration which forms part of this report as Annexure X.
The same has also been hosted on the website of the Company at the link: http://www.mahindracie.com/imaaes/pdf/resources/ Governance/dividend-distribution-policv.pdf
Further the Company has also framed i) Policy for preservation of documents ii) Archival Policy for disclosures hosted on the website beyond period of five years.
0. GENERAL
The Managing Director of the Company did not receive any remuneration or commission from any of the subsidiary of your Company. The Whole-time Director of the Company did not receive any commission from any of its subsidiaries.
Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions/ events relating to these items during the year under review:
1. Issue of equity shares with differential rights as to dividend, voting or otherwise.
2. Issue of Sweat Equity Shares to employees of the Company under any Scheme save and except ESOS referred to in this Report.
3. Significant or material orders passed by the Regulators or Courts or Tribunals which impact the going concern status and the Companyâs operation in future.
4. Voting rights which are not directly exercised by the employees in respect of shares for the subscription/ purchase of which loan was given by the Company (as there is no scheme pursuant to which such persons can beneficially hold shares as envisaged under section 67(3) (c) of the Companies Act, 2013).
Acknowledgement
Your Directors wish to place on record their sincere appreciation to the Bankers of the Company, Companyâs customers, vendors and investors for their continued support during the year.
The Directors also wish to place on record their appreciation for the dedication and contribution made by employees at all levels and look forward to their support in future as well.
For and on behalf of the Board
Hemant Luthra
Chairman & Executive Director
DIN:00231420
Date : 23rd February 2017
Place : Mumbai
Mar 31, 2015
Dear Members,
The Directors present the 16th Annual Report of the Company together
with the audited financial statements of your Company for the Financial
Year ended 31st March, 2015.
A. FINANCIAL HIGHLIGHTS (STANDALONE)#
(Rs. in Million)
PARTICULARS 2014-15 2013-14
Total Income 16,624.8 3,929.9
Profit before Interest, Depreciation, 1,531.8 587.8
Exceptional Items and tax
Less : Depreciation 688.7 282.9
Profit before Interest, Exceptional 843.1 304.9
Items and tax
Less : Interest and Finance cost 140.4 37.3
Profit before Exceptional Items and 702.7 267.6
Tax
Less: Exceptional items - -
Profit before tax 702.7 267.6
Profit for the year 776.7 179.7
Balance of Profit & Loss Account (655.0) (834.7)
brought forward losses from earlier
years
Adjustments related to merger & prior 1,618.8 -
period depreciation
Profit / (Loss) carried to Balance Sheet 1,740.5 (655.0)
Financials
During the year under review your Company registered a total income of
Rs. 16,624.8 Million as against Rs. 3,929.9 Million in the previous
year and Profit before Interest, Depreciation, Exceptional items and
tax of Rs.1,531.8 Million as against Rs. 587.8 Million in the previous
year. The net profit for the year stood at Rs.776.7 Million as against
a net profit of Rs. 179.7 Million over the previous year.
# Consequent to the effectiveness of the Integrated Scheme and
Composites Scheme of Amalgamation results for the Financial Year ended
31st March, 2015 include the results of the amalgamated companies and
hence are not comparable to those of the prior periods/ year which do
not include the results of the amalgamated companies.
Dividend
Your Directors do not recommend any dividend for the year.
Transfer to Reserves
The Company has not transferred any amount of profits to reserves.
B. OPERATIONAL HIGHLIGHTS
MCIE India:
Your Company has focused on increasing Plant efficiency and developing
value added components to mitigate the effect of declining volumes in
its addressable market segments. Majority of MCIE ''s plants are located
in the state of Maharashtra (around Pune and in Nashik) where power
tariffs have increased in FY15.
The forgings and castings verticals have significant power costs and
they have launched projects to improve efficiency in the usage of
power. With the help of CIE, the different verticals of the India
operations are developing new products and exploring entry into
''Western OEMs'' in India.
Mahindra Forgings Europe (MFE):
MFE has followed a two phase strategy to achieve a turnaround in
profitability. In the first phase, your company focused on cost
reduction by improving productivity, reducing headcount and overtime.
Most of this has been achieved and profitability is back on track.
Under the second phase of restructuring, the management has focused on
further improvement in operational efficiencies by optimizing
manufacturing locations and product portfolio wherein it has decided to
close Jeco-Jellinghaus GMBH''s operations in a phased manner over next 6
months by shifting machines & equipment to other manufacturing
locations of MFE and outsourcing most of the machining operations. No
loss of revenue is expected. The management expects that this exercise
will improve overall operational efficiencies at MFE.
CIE Forgings Europe (CIEF):
CIEF''s EBITDA margins are in line with the consolidated margins of the
CIE group worldwide. The strategic focus is to maintain profitability
at these plants while growing with the market.
Metalcastello (MC):
Metalcastello supplies mainly to the off road market which has seen a
steady drop in volumes over the last few years leading to a drop in
EBITDA%. A restructuring program involving headcount reduction and
inventory write off has been implemented, leading to significant
improvement in EBITDA margins.
Gears India:
The focus is on increasing operational efficiencies and developing new
customers and machining facility.
C. SCHEME OF MERGER
The Board of Directors of the Company had, at its meeting held on June
15, 2013, approved (a) the scheme of amalgamation of Mahindra Hinoday
Industries Limited ("MHIL"), Mahindra Ugine Steel Company Limited
("MUSCO"), Mahindra Gears International Limited ("MGIL"), Mahindra
Investments (India) Private Limited ("MIIPL") and Participaciones
Internacionales Autometal Tres, S.L. ("PIA 3") with Mahindra CIE
Automotive Limited (the Company or MCIE) (the Integrated Scheme) AND
(b) the scheme of amalgamation of Mahindra Composites Limited ("MCL")
with the Company ("Composites Scheme") (The Integrated Scheme and the
Composites Scheme are together referred to as the "Schemes" and MUSCO,
MGIL, MIIPL, PIA3 and MCL are together referred to as "Transferor
Companies").
Securities and Exchange Board of India ("SEBI") vide its observation
letters dated 7th March, 2014 had conveyed its comments on the draft
Integrated Scheme and the draft Composites Scheme to the BSE Limited
("BSE"). Pursuant to the SEBI letters, the BSE and the National Stock
Exchange of India limited ("NSE") vide their Observation letters both
dated 7th March 2014 had conveyed their respective no-objections to file
the Integrated Scheme and the Composites Scheme with the Hon''ble High
Court, subject to certain conditions specified therein.
Court Convened Meetings for approval of the Schemes
Approval of the members was sought for each of the Integrated Scheme
and the Composites Scheme, pursuant to the provisions of Sections 391
to 394 of the Companies Act, 1956, at the separate meetings of the
members held on 5th June, 2014, convened as per the directions of the
Hon''ble High Court of Judicature at Bombay, received vide its orders,
both dated 2nd May, 2014.
The Schemes were approved by requisite majority of shareholders
attending and voting at the respective meetings.
Postal Ballot for Approval of the Schemes
In terms of SEBI circular No. CIR/CFD/DIL/5/2013 dated February 4, 2013
read with circular number CIR/CFD/DIL/8/2013 dated May 21, 2013 ("SEBI
Circulars"), the Company has obtained approval of the public
shareholders of the Company to each of the Integrated Scheme and the
Composites Scheme through postal ballot and e-voting process.
Thereafter the Company filed petition seeking sanction of the Hon''ble
High Court of Judicature of Bombay for each of the Integrated Scheme
and the Composites Scheme.
The Hon''ble High Court of Judicature of Bombay approved the Integrated
Scheme and the Composites Scheme on October 31, 2014 and an
authenticated copy of each of the said orders were received by the
Company on November 11,2014.
However, the effectiveness of the Schemes was subject to certain
conditions precedent as provided in the respective Scheme.
The Company and transferor Companies had complied with all such
Conditions Precedents and the certified copies of the respective court
orders approving the Integrated Scheme and Composites Scheme were filed
with the Registrar of Companies on December 10, 2014, the date on which
schemes became effective.
Pursuant thereto the said Transferor Companies stand dissolved without
winding-up with effect from the effective date and entire business of
the Transferor Companies has been transferred to and vested in the
Company with effect from the appointed date which is October 1,2013.
D. CHANGES IN SHARE CAPITAL AND ISSUE OF SHARES
Pursuant to the Integrated Scheme and the Composites Scheme, on 2nd
January, 2015, the Company has issued and allotted 229,330,519 equity
shares of Rs. 10/- each fully paid-up to the Shareholders of Transferor
Companies.
The above allotment also includes 6,536 equity shares, arising out of
the consolidation of fractional entitlements, which were allotted to
KPM Business Solutions Private Limited, being the trustee nominated by
the Company. The Trustee have sold said shares in the open market at
the prevailing market prices and transferred the net proceeds thereof
to the Company, for distributing the same to the Shareholders in
proportion to their respective fractional entitlements. The Company has
paid the fractional entitlements (after deduction of applicable taxes
and other expenses incurred) through NEFT/RTGS to those fraction
holders, whose bank account details were registered and dispatched the
warrants to remaining fractional holders in February, 2015.
Further, in addition to the above, in terms of the Composites Scheme
945 equity shares of Rs. 10/- each were issued and kept in abeyance
against the 1050 equity shares kept in abeyance by MCL, the Transferor
Company under the Composites Scheme.
During the year ended 31st March, 2015, the Company has allotted
1,305,277 equity shares of face value of Rs. 10/- each, pursuant to
exercise of options under the Company''s Employee Stock Option Scheme.
Pursuant to the above, as on 31st March, 2015 the issued capital of the
Company was increased to Rs. 3,229,772,070 and subscribed and paid-up
equity capital increased to Rs. 3,229,762,620/-.
Changes in Promoters Shareholding
Mahindra and Mahindra Limited ("M&M") and Participaciones
Internacionales Autometal, Dos S.L ("PIA2") the promoters the Company
were also shareholders in certain Transferor Companies.
Further, Prudential Management and Services Pvt. Ltd. (Prudential)
which was holding shares in certain Transferor Companies became part of
Promoter Group of the Company.
Pursuant to the Schemes, 98,735,844 equity shares, 64,975,298 equity
shares and 4,784,068 equity shares of Rs. 10 each were issued and
allotted to PIA2, M&M and Prudential respectively.
As on 31st March, 2015 PIA2 held 171,767,537 equity shares in the
Company representing 53.18% of the paid up equity capital and M&M held
65,271,407 representing 20.21% of the paid up equity capital and
Prudential held 4,784,068 equity shares in the Company representing
1.48% of the paid up equity capital of the Company.
Employees'' Stock Option Scheme
Employees'' Stock Option Scheme (ESOS) was formulated by the
Remuneration/Compensation committee of directors of the Company and was
approved by the shareholders at the Annual General Meeting of the
Company held on 25th July, 2007. The Scheme has been effective from
26th October, 2007 and shall continue to be effective till terminated
by Remuneration / Compensation Committee (now Nomination and
Remuneration Committee).
The ESOS was amended vide special resolutions passed by the
Shareholders in the 9th Annual General Meeting held on 29th July, 2008
and further amended by special resolutions passed by the Shareholders
in the 12th Annual General Meeting held on 2nd August, 2011.
During the year, pursuant to the Integrated Scheme and the Composites
Scheme of Amalgamation, the Board of Directors of the Company amended
the ESOS on 12th December, 2014, incorporating suitable clauses to
grant the Options to the Eligible employees of MUSCO and MCL who were
holding Stock Options under the respective Schemes of MUSCO and MCL
(now amalgamated and merged with the Company).
The exercise price payable for options granted by the Company to the
Eligible Employees of MUSCO and MCL were adjusted so that the total
exercise price payable by such Eligible Employees under the respective
Stock Option Scheme of Transferor Companies is equivalent to the
exercise payable for the options granted by the Company.
Total number of equity shares that can be issued under ESOS, pursuant
to exercise of options was increased to 4,620,796. The increase of
227,307 was pertaining to the equivalent number of options granted to
eligible employees of MUSCO and MCL, based on the respective share swap
ratio provided under schemes in lieu of the outstanding stock options
held by such employees under their respective employee stock option
schemes, where each option conferring on the employee a right to get
one equity share of Rs.10/- each of the Company.
Voting rights on the shares issued to employees under the ESOS are
either exercised by them directly or through their appointed proxy.
No employee has been issued stock options during the year, equal to or
exceeding 1% of the issued capital of the Company at the time of grant.
The ESOS is in compliance with the SEBI (Share Based Employee Benefits)
Regulations, 2014. The certificate issued by the Statutory Auditors of
the Company to the effect that the Scheme has been implemented in
accordance with the said Regulations and the resolution passed by the
members will be placed before the shareholders at the ensuing Annual
General Meeting.
The information that a company is required to disclose, in relation to
ESOS under the Companies Act, 2013, and the details of the ESOS being
implemented, as specified by SEBI under Clause 14 of the Securities and
Exchange Board of India (Share Based Employee Benefits) Regulations,
2014 is uploaded on the website of the Company at
http://mahindraforgings.com/ investor-zone/investor-relation.html.
The information is also provided in the Note No. XXVI (3) of the Notes
to Financial Statements.
E. SUBSIDIARY COMPANIES
At the beginning of the Financial Year the Company has subsidiaries
namely Mahindra Forgings International Limited, Mauritius, Mahindra
Forgings Global Limited, Mauritius, Stokes Group Limited, U.K.,
Mahindra Forgings Europe AG, Jeco Jellinghaus Gmbh, Stokes Forgings
Ltd., Stokes Forgings Dudley Ltd., Gesenkschmiede Schneider, Germany,
Falkenroth Umformtechnik GmbH, Germany , Schoneweiss & Co. GmbH,
Germany
During the year, consequent to the merger, Mahindra Gear &
Transmissions Private Limited (MGTPL), India , Mahindra Gears Global
Limited(MGGL) , Mauritius and CIE Galfor S.A. (Galfor), Spain became
subsidiaries of the Company and Metalcastello SpA, Italy (MC)
(subsidiary of MGGL), CIE Legazpi S.A., Spain (subsidiary of Galfor)
and UAB CIE LT Forge, Lithuania (subsidiary of Galfor) and Crest
Geartech Private Limited, India (subsidiary of MC) became step
subsidiaries of the Company.
None of the subsidiaries have been liquidated or sold during the year.
No operating subsidiary of the Company is yet to commence operations as
at end of the year.
The performance and financial position of each of the subsidiaries
included in the consolidated financial statement is given in the
Management Discussion and Analysis Report attached to the Board''s
Report.
Further, as required under Section 129(3) of the Companies Act, 2013
read with the Rules, a statement containing the salient features of the
financial statement of the subsidiaries in prescribed form AOC-1 is
attached to the Financial Statements.
The Consolidated Financial Statements of the Company and its
subsidiaries, as required under Section 134(1) of the Act, prepared in
accordance with Accounting Standard AS 21 forms a part of the Annual
Report
In accordance with Section 136 of the Act, the separate accounts in
respect of each of the Subsidiaries are uploaded on the website of the
Company and copies of the same shall be provided to shareholders of the
Company on receipt of request for such copies.
F. MANAGEMENT DISCUSSION AND ANALYSIS
Management discussion and analysis of financial condition and results
of operations along-with performance and financial position of each of
the subsidiaries is provided in the Management Discussion and Analysis
Report which forms part of the Annual Report.
G. BOARD OF DIRECTORS AND COMMITTEES Directors
During the year under review, the Board, on recommendation of
Nomination and Remuneration Committee, appointed Mr. Zhooben
Bhiwandiwala as an Additional Director on 29th July, 2014 who was
confirmed as Director at the Annual General Meeting held on 29th
September, 2014.
The Board, on recommendation of Nomination and Remuneration Committee,
proposed to members the appointments of Mr. Daljit Mirchandani, (DIN:
00022951), Mr. Manoj Maheshwari (DIN: 00012341), Mr. Dhananjay Mungale
(DIN: 00007563), Mr. Jose Ramon Berecibar Mutiozabal (DIN: 06704914),
Mr. Jose Sabino Velasco Ibanez (DIN: 06704932), Mr. Juan Maria Bilbao
(DIN: 06963805) and Ms. Neelam Deo (DIN: 02817083) as Independent
Directors of the Company. The members at the Annual General Meeting
held on 29th September, 2014 approved their appointment as Independent
Directors for a term of five years with effect from that date.
The Board, on recommendation of Nomination and Remuneration Committee
approved re-appointment of Mr. K. Ramaswami as Managing Director of the
Company for a further period of three years with effect from 4th
October, 2014 and approved his remuneration.
Mr. Jose Ramon Berecibar Mutiozabal (DIN: 06704914) resigned as
Independent Director on 15th October, 2014. Thereafter Mr. Jose Ramon
Berecibar Mutiozabal (DIN: 06704914) was appointed as an Additonal
Director (Non-executive non-Independent) who resigned as Director with
effect from 31st March, 2015.
The Board, on recommendation of Nomination and Remuneration Committee,
appointed Mr. Pedro Echegaray as an Additional Director on 21st
October, 2014 and also approved his appointment and remuneration as
Executive Director for a period of three years.
Further on recommendation of Nomination and Remuneration Committee, Mr.
Suhail Nathani (DIN: 01089938) was appointed as Independent Director,
at the meeting of Board held on 12th December, 2014, to fill-up the
casual vacancy caused by the resignation of Mr. Jose Ramon Berecibar
Mutiozabal. In the same meeting Mr. Jose Ramon Berecibar Mutiozabal
(DIN: 06704914) was also appointed as an Additional Director
(non-independent) of the Company w.e.f. 12th December, 2014.
The Board at its Meeting held on 11th February, 2015, on recommendation
of Nomination and Remuneration Committee, approved appointment of Mr.
Hemant Luthra as Executive Chairman and his remuneration for a period
of three years with effect from 1st April, 2015.
Mr. Shriprakash Shukla (DIN: 00007418) was appointed as Additional
Director of the Company in the Board Meeting on 27th March, 2014 w.e.f.
1st April, 2015. Pursuant to Section 160 of the Companies Act, 2013 the
Company has received notice in writing from a member signifying the
intention of the member to propose his candidature for the office of
Director of the Company along with the deposit of one lakh rupees.
Mr. Jose Ramon Berecibar Mutiozabal ceased as director w.e.f. 31st
March, 2015 consequent to his resignation from the Board.
On 27th March, 2015, the Shareholders of the Company through postal
ballot, inter-alia, approved -
* The Appointment of Mr. Suhail Nathani (DIN: 01089938) as an
Independent Director of the Company for five consecutive years
commencing from 12th December, 2014;
* Regularised the appointment of Mr. Pedro Jesus Echegaray Larrea as
Director of the Company
* The Appointment and Remuneration of Mr. Pedro Jesus Echegaray Larrea
(DIN: 06713892) as Whole-time Director (Executive Director) of the
Company for a period of three years w.e.f. 21st October, 2014; and
* The Appointment and Remuneration of Mr. Hemant Luthra (DIN: 00231420)
as a Whole-time Director (Executive Chairman) of the Company for a
period of 3 (three) years w.e.f. 1st April, 2015.
* The Appointment and Remuneration of Mr. K. Ramaswami as Managing
Director of the Company for a period of 3 (three) years w.e.f. 4th
October, 2014.
Further Mr. Antonio Maria Pradera Jauregui and Mr. Zhooben
Bhiwandiwala, Directors on the Board, are liable to retire by rotation
at the ensuing general meeting, pursuant provisions of Section 152 of
the Act, and Articles of Association of the Company and offered
themselves for re-appointment.
Detailed profile of the Directors seeking re-appointment alongwith
other details as may be required are provided in the Corporate
Governance Report which forms part of the Annual Report.
The Company has received declarations from each of the Independent
Directors confirming that they meet the criteria of Independence as
provided in sub-section (6) of Section 149 of the Companies Act, 2013
and also in the Clause 49(II)(B) of the Listing Agreement.
Meetings of Board of Directors
The calendar of the Board/ Committee Meetings and the Annual General
Meeting are circulated to the Directors in advance to enable them to
plan their schedule for effective participation at the respective
meetings. Additional Board Meetings are convened by giving appropriate
notice to address business exigencies. At times certain decisions are
taken by the Board/ Committee through circular resolutions.
The Board of Directors of the Company met eight times during the
Financial Year ended 31st March, 2015, viz. 29th April, 2014, two
meetings held on 29th July, 2014, 29th September, 2014, 21st October,
2014, 12th December, 2014, 11th February, 2015 and 27th March, 2015. The
intervening gap between the Meetings was within the period prescribed
under the Companies Act, 2013.
Details of attendance of meetings of the Board, its Committees and the
AGM are included in the Report on Corporate Governance, which forms
part of this Annual Report.
Meeting of Independent Directors
The Independent Directors met once during the year under review. The
Meeting was conducted in an informal manner without the presence of the
Non-Independent Directors and members of management
Performance Evaluation of the Board
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 individual directors as well as
the evaluation of the working of its Committees.
The Company has formulated a Policy for performance evaluation of the
Board as a whole, Individual Directors, Committees which also includes
feedback to the Chairman.
A questionnaire, based on criteria approved by the Committee, for
evaluation of performance of Board, Committees of Board and Individual
director was prepared. The Board on recommendation of the Nomination
and Remuneration Committee, approved to obtain the feedback of all the
Directors on the said Questionnaire through electronic platform. An
Independent Agency was appointed to provide the electronic platform.
Web link of the electronic platform along-with username and passwords
of respective board members for accessing such platform was forwarded
by the Independent Agency.
The Board Members provided their feedback on the standard questionnaire
through the electronic platform. The members were also able to give
qualitative feedback apart from the standard questionnaire.
The reports of feedback received from all Directors on performance
evaluation of individual directors were shared with respective
Directors and Chairman of the Nomination Committee. Nomination and
Remuneration Committee evaluated the performance of all individual
directors based on the feedback so received.
The report of the feedback received from all the Directors on
performance evaluation of Board and Committees of Board were shared
with the Chairman of the Company. The Board on the basis of feedback so
received evaluated performance of its own and Committees of Board.
Performance Evaluation of the Chairman of the Company was also carried
out by the Independent Directors of the Company, taking into account
feedback of all the Directors including the Executive and Non-
executive Directors.
Familiarisation Programme for Independent Directors
The details of programmes for familiarisation 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 given in the Report on Corporate
Governance and the same are also available on the website of the
Company at the link:
http://mahindraforgings.com/investor-zone/investor-relation/
governance.html
Policy on Appointment and Remuneration
In accordance with the provisions of Section 134(3)(e) of the Companies
Act, 2013 ("the Act") read with Section 178(2) of the Act and Clause 49
of the Listing Agreement, the Company has formulated following policies
which inter alia, includes the criteria for determining qualifications,
positive attributes and independence of Directors.
i. A policy on Appointment of Directors and Senior Management and
succession planning for orderly succession to the Board and the Senior
Management,
ii. A policy on remuneration of Directors, Key Managerial Personnel
and other employees of the Company
The extract of the above policies are annexed as Annexure VII & VIII
respectively and forms part of this Report.
Committees of the Board
Your Company has duly constituted the Committees required under the
Companies Act, 2013 read with applicable Rules made thereunder and the
Listing Agreement.
The Board of Directors of the Company has formed an Audit Committee
which consist of the Independent Directors namely Mr. Daljit
Mirchandani as the Chairman, Mr. Jose Sabino Velasco Ibanez, Mr. Manoj
Maheshwari and Mr. Dhananjay Mungale. All the recommendations of the
Audit Committee were accepted by the Board during the year under
review.
The other Committees of the Board are:
i) Nomination and Remuneration Committee
ii) Stakeholders'' Relationship Committee
iii) Corporate Social Responsibility Committee
iv) Allotment Committee
The details with respect to the composition, powers, roles, terms of
reference, Meetings held and attendance of the members at such Meetings
of the relevant Committees are provided in the Report on Corporate
Governance of the Company which forms part of this Annual Report.
Directors'' Responsibility Statement
Pursuant to Sub-Section (5) of Section 134 of the Companies Act, 2013,
your Directors, based on the representation received from the Operating
Management, and after due enquiry, confirm that :
(a) in the preparation of the annual accounts for the Financial Year
ended 31st March 2015, the applicable accounting standards had been
followed along with proper explanation relating to material departures;
(b) the directors had selected such accounting policies and applied
them consistently and made judgments and estimates that are reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the Financial Year 2014-15 and of the
profit and loss of the company for that period;
(c) the directors had taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 2013 for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(d) the directors had prepared the annual accounts for the Financial
Year ended 31st March 2015 on a going concern basis;
(e) the directors had laid down internal financial controls to be
followed by the company and that such internal financial controls are
adequate and were operating effectively.
(f) the directors had devised proper systems to ensure compliance with
the provisions of all applicable laws and that such systems were
adequate and operating effectively.
H. GOVERNANCE
Report on Corporate Governance
Your Company''s philosophy on Corporate Governance sets the goal of
achieving the highest level of transparency, accountability in all its
dealings with the stakeholders, employees and the government. The
practice of responsible governance has enabled your Company to achieve
sustainable growth, while meeting the aspirations of its stakeholder''s
and societal expectations. A report on Corporate Governance along with
a Certificate from the Auditors of the Company regarding the compliance
of conditions of Corporate Governance as stipulated under Clause 49 of
the Listing Agreement forms part of the Annual Report.
Vigil Mechanism / Whistle Blower Policy
The Company promotes ethical behaviour in all its business activities
and has established a vigil mechanism for Directors and Employees to
report their genuine concerns.
Your Company has formulated a policy known as "Whistle Blower Policy/
(Vigil) Mechanism" pursuant to Section 177 of the Companies Act, 2014
read with Clause 49 of the Listing Agreement which provides a mechanism
for employees and directors of the Company to report concerns about
unethical behaviour, actual or suspected fraud or violation of the
company''s code of conduct or ethics policy. This mechanism also provide
for adequate safeguards against victimisation of director(s) /
employee(s) who avail of the mechanism and also provide for direct
access to the Chairman of the Audit Committee in exceptional cases. The
details of such Policy is explained in the Corporate Governance Report
and has been uploaded on the website of the Company;
http://mahindraforgings.com/investor-
zone/investor-relation/governance.html
Risk Management Policy
In terms of the requirement of the Act, the Company has developed and
implemented the Risk Management Policy and the Audit Committee of the
Board reviews the same periodically. Your Company has also established
procedures to periodically place before the Board, the risk assessment
and minimisation procedures being followed by the Company and steps
taken by it to mitigate the Risks.
Brief of the Policy and important element of risk which may threaten
the existence of the Company are provided in the Management Discussion
and Analysis Report.
Internal financial controls
Your Company has in place adequate internal financial controls
commensurate with the size, scale and complexity of its operations.
Review of the internal financial controls environment of the Company was
undertaken during the year which covered verification of entity level
control, process level control and IT controls, identification,
assessment and definition of key business processes and analysis of risk
control matrices, etc. Reasonable Financial Controls are operative for
all the business activities of the Company and no material weakness in
the design or operation of any control was observed. The internal
financial controls with reference to the Financial Statements are
commensurate with the size and nature of business of the Company.
Disclosure under the Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013
Your Company has always believed in providing a safe and harassment
free workplace for every individual working and endeavors to create and
provide an environment that is free from discrimination and harassment
including sexual harassment.
The Company has put in place a ''policy on Sexual Harassment" with aim
to redress sexual harassment instances, to create mechanism on
redressal of such issues at workplace and sensitises employees on how
to report such offences to the committee or to a senior executive.
During the year 1 complaint was reported and the same was resolved as
per the provisions of Prevention of Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013. No
Complaints were pending as at the end of the Financial Year under
review.
I. EMPLOYEES
Key Managerial Personnel
The Board of Directors of the Company, on recommendation of Nomination
and Remuneration Committee at its meeting held on 29th April, 2014,
appointed Mr. K. Jayaprakash as Chief Financial Officer of the Company.
Post the Schemes of amalgamation became effective he ceased to be Key
Managerial Personnel of the Company with effect from 12th December,
2014 and on the recommendation of Nomination and Remuneration Committee
re-designated him as Chief Financial Officer of the Forgings, Castings
and Magnetics Products Divisions of the Company.
Thereafter, the Board of Directors of the Company, on recommendation of
Nomination and Remuneration Committee and the Audit Committee appointed
Mr. Sanjay Joglekar as Chief Financial Officer of the Company with
effect from 12th December, 2014.
Further the Board appointed Mr. Romesh Kaul as Chief Executive -
Composites Division and Mr. Ajit Lele as Chief Executive - Stamping
Division with effect from 12th December, 2014
Mr. Ajit Lele retired at the end of Financial Year and ceased to be Key
Managerial Personnel.
Mr. Krishnan Shankar continues to be Company Secretary and Head - Legal
of the Company.
Particulars of Employees
As required under Section 197(12) of the Act and Rule 5 of Companies
(Appointment and Remuneration of Managerial Remuneration) Rules, 2014
the ratio of the remuneration of each director to the median
remuneration of employees of the Company and other details as
prescribed therein are provided as Annexure V to this Report.
The Company has employees who were in receipt of remuneration not less
than Rs. 60,00,000/- per annum during the year ended 31st March, 2015 or
employee who were employed for a part of the Financial Year and were in
receipt of remuneration of not less than Rs. 5,00,000/- per month during
any part of the said year or employees who were employed throughout the
Financial Year or part thereof. Statement of Particulars of such
employees is provided as Annexure VI to this report
The Companies do not have employees who were employed throughout the
Financial Year or part thereof, was in receipt of remuneration in that
year which, in the aggregate, or as the case may be, at a rate which,
in the aggregate, is in excess of that drawn by the managing director
or whole-time director or manager and holds by himself or along with
his spouse and dependent children, not less than two percent of the
equity shares of the company.
Industrial Relations
Industrial Relations generally remained cordial and harmonious
throughout the year.
The Management Discussion and Analysis Report give an overview of the
developments in Human Resources/Industrial Relations during the year.
J. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186
Particulars of loans given, investments made, guarantees given and
securities provided along with the purpose for which the loan or
guarantee or security are given is provided in the note no. X & XIII of
the notes to the Financial Statements.
K. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions that were entered into during the
Financial Year were on an arm''s length basis and were in the ordinary
course of business, accordingly, the disclosures pursuant to Section
134(3)(h) read with Rule 8(2) of the Companies (Accounts) Rules, 2014,
in Form AOC-2 is not applicable.
L. PUBLIC DEPOSITS AND LOANS/ADVANCES
Your Company has not accepted any deposits from the public or its
employees during the year under review.
Mahindra Ugine Steel Company Limited (MUSCO), merged with the Company
with effect from 10th December, 2014. During the year an amount of Rs.
87,725 in the aggregate, consisting of matured fixed deposits and
interest pertaining to MUSCO which remained unpaid or unclaimed for a
period of seven years has been duly transferred to Investor Education
and Protection Fund. As on 31st March 2015 there were no unpaid or
unclaimed matured deposits and interest thereon.
The Company has not made any loans and advances in the nature of loans
to subsidiaries and associates and no loans and advances in the nature
of loans were given where there is no repayment schedule or repayment
beyond seven years or no interest or interest below Section 186 of the
Companies Act, 2013, hence disclosure pursuant to Clause 32 of the
Listing Agreement not required.
M. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
Pursuant to the integrated Scheme and the Composites scheme Mahindra
Ugine Steel Company Limited (MUSCO) and Mahindra Composites Limited
(MCL) merged with the Company during the year under review. Both MUSCO
and MCL had unclaimed dividends which are now transferred in the Books
of the Company. Pursuant to the provisions of the Investor Education
Protection Fund (Uploading of information regarding unpaid and unclaimed
amounts lying with companies) Rules, 2012, the Company has uploaded the
details of said unpaid and unclaimed amounts now lying with the Company
on the website of the Company at http://
mahindraforgings.com/investor-zone/others/documents.html
Under the Companies Act, 1956, dividends that are unclaimed for a
period of seven years are required to be transferred to the Investor
Education and Protection Fund (IEPF) administered by the Central
Government. Pursuant to the provisions of Section 205C of the Companies
Act, 1956 and Investor Education and Protection Fund (Awareness and
Protection of Investors) Rules, 2001, MUSCO, which is now merged with
the Company, had transferred an amount of Rs. 5,52,413 being unclaimed
dividend for Financial Year ended on 31st March 2007 to the IEPF, no
claim lies against the Company in respect of these dividends.
N. SUSTAINABILITY
Your Company''s vision on sustainability is "Continuously improve our
capability by integrating environmental, social, and economic aspects
in operations for creating better tomorrow than today". In line with
its vision the Company has identified and implemented various projects
for reduction in waste, energy and GHG emissions, to achieve the
targets set under its Sustainability Road map.
Awareness on sustainability
Awareness about the need and the ways to drive sustainable business
practices among all stakeholders is key to perpetual growth. The
Company continues its initiatives to generate this awareness among
employees who are the most important internal stakeholders of the
organisation. This awareness campaign was taken to the external
stakeholders, suppliers and vendors.
Safety, Health and Environment Performance
Your Company has a Safety, Occupational Health and Environmental (SH&E)
policy on occupational health, safety and environmental protection
through which every employee is made responsible for the observance of
the measures designed to prevent accidents, damage to occupational
health and avoidable environmental pollutants.
Safety and Health
The Safety Committee of the Company meets periodically to review the
status of safety issues and reporting of accidents, if any. Various
initiatives such as emergency mock drills and advanced fire protection
system for improving the Safety have been taken. Common Guarantee
Safety Scheme (CGSP) has been initiated as a step forward to focus on
safety.
Safety week and Fire Service day are being celebrated. Safety
Audits/Inspection along with Safety awareness training on safety is
conducted.
Your Company''s plant continues to improve their well being of all its
personnel by organising Occupational Health Examination Camps, Periodic
Health Check-ups etc.
Environmental Initiatives
Since the last few years, your Company has been focusing external
certifications for achieving world class environmental standards.
All plants of the Company except Zaheerabad Plant are certified for
EHSMS certification using ISO 14001 and BS OHSAS 18001 standards. The
OHSAS system aims to eliminate or minimise risk to employees and other
interested parties who may be exposed to Occupational Safety risks in
the Company. Sustainable development is promoted through sharing of best
practices in the fields of Safety, Occupational Health & Environment.
The highlights of different initiatives taken by the Company at its
various Plants for health, safety, environment and sustainability are
as under:
* Safety - Incident status, safe workplace, awareness and stakeholder
engagement were areas of focus this year at our plants. Noteworthy, is
that in most of our plants no incidents were reported. Plants have made
significant improvement in reducing non reportable and first aid
injuries, by focusing on specific areas of operations to remove the
occurrence of such incidents in the future. Your company is expanding
the activities related to safety training and is including the other
stakeholders as a responsible organization.
* Resource Consumption - Specific energy and water consumption at your
company has reduced variably across our plants. The Plants have made
consistent progress in waste to wealth, water conservation, rain water
harvesting, energy saving and social development projects.
* Standards and Certifications - All our plants are certified
individually for OHSMS and EMS by agencies of international repute.
* Green Infrastructure - Noteworthy for your Company is that, we have
developed a state of the art new facility at Zaheerabad for Stampings,
which is now commercially operational, wherein, green building
principles have been incorporated right from the design stage.
Corporate Social Responsibility (CSR)
Your Company has constituted a CSR Committee in accordance with Section
135 of the Companies Act, 2013, it has developed and implemented the
policy on Corporate Social Responsibility.
Further, your Company encourages its employees to participate in the
Employee Social Options (ESOPs) program, to drive positive change in
society, through Health checkup camps, tree plantation, vocational
guidance to school children in the nearby schools etc.
During the year under review, the employees of your Company
participated in various education and health related programs in local
communities.
As part of its initiatives under CSR the Company has further undertaken
projects in the areas of Rural Development, Infrastructure, Education,
Health and Water. These projects are in accordance with Schedule VII of
the Companies Act, 2013.
The Company was required to spent an amount of Rs. 4.94million towards
CSR during the Financial Year. Accordingly Company has undertaken
various CSR projects in and around the villages where plants of the
Company are located. Total expenditure planned on these projects was
above Rs. 5 Million. Few of the projects like Developing garden on Gram
Panchayat land, Lake Cleaning & Tree Plantation and Tar Road Project are
under progress and will be completed during the Financial Year
commencing from 1st April 2015. Pursuant to the provisions of the
Companies Act, 2013 the Company shall ensure that it spends, in every
Financial Year, at least 2% of its average net profits calculated as per
the provisions of the Act, made during the 3 immediately preceding
financial years, in pursuance of its Corporate Social Responsibility
Policy.
The CSR Policy of the Company is hosted on the Company''s website at
http://mahindraforgings.com/investor-zone/investor-
relation/governance.html and a brief outline of the CSR Policy and the
CSR initiatives undertaken by the Company during the year as prescribed
under the Companies (Corporate Social Responsibility Policy) Rules,
2014 is annexed herewith as "Annexure I".
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The particulars relating to energy conservation, technology absorption
and foreign exchange earnings and outgo, as required under Section
134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies
(Accounts) Rule, 2014 are provided in Annexure IV to this Report.
O. EXTRACT OF ANNUAL RETURN
Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of
Section 92 of the Companies Act, 2013, read with Rule 12 of the
Companies (Management and Administration) Rules, 2014, an extract of
the Annual Return as at 31st March, 2015 forms part of this report as
Annexure II.
P. AUDITORS
Statutory Auditors
Messrs. B. K. Khare & Co., Chartered Accountants, Mumbai (Firm
Registration No. 105102W) the Statutory Auditors of the Company hold
office till the conclusion of the forthcoming Annual General Meeting
(AGM) and are eligible for re-appointment. Pursuant to the provisions
of Section 139 of the Companies Act, 2013 and the Rules framed
thereunder.
Pursuant to the provisions of Section 139 of the Companies Act, 2013
and the Rules framed thereunder, it is proposed to appoint Messrs. B.
K. Khare & Co., as the Statutory Auditors of the Company from the
conclusion of the forthcoming AGM till the conclusion of the next AGM.
As required under the provisions of Section 139(1) of the Companies
Act, 2013 the Company has received a written consent from Messrs. B. K.
Khare & Co., Chartered Accountants to their re-appointment and a
certificate, to the effect that their re-appointment, if made, would be
in accordance with the Companies Act, 2013 and the Rules framed
thereunder and that they satisfy the criteria provided in Section 141
of the Companies Act, 2013 read with Rule 4(1) of the Companies (Audit
and Auditors) Rules, 2014 and that they are not disqualified for re-
appointment. .
The Auditors'' Report does not contain any qualification, reservation or
adverse remark and notes thereto are self explanatory and does not
require any explanations.
Secretarial Audit Report
The Board has appointed Mr. Sachin Bhagwat, Practising Company
Secretary, Pune as Secretarial Auditor to conduct the Secretarial Audit
of the Company for the Financial Year 2014-15. Pursuant to the
provisions of Section 204 of the Companies Act, 2013 and the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014. In
accordance with the provisions of Sub-section (1) of Section 204, the
Secretarial Audit Report for the Financial Year 2014-15 is appended to
this Report as Annexure III.
The report does not contain any qualification, reservation or adverse
remark and notes thereto are self explanatory and does not require any
explanations.
Cost Audit Report
Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune, (Firm
Registration Number 000030) conducted the audit of Cost Accounting
Records maintained by the Company for the Financial Year 2013-14 and
submitted their report to the Central Government, Ministry of Corporate
Affairs, New Delhi.
The Board of Directors upon recommendation of the Audit Committee,
appointed Messrs. Dhananjay V. Joshi & Associates, Cost Accountants,
Pune as the Cost Auditors of the Company to conduct the Audit of the
Cost Accounting Records maintained by the Company for the Financial
Year commencing from 1st April, 2015. The Cost Auditors shall forward
their report to the Central Government, Ministry of Corporate Affairs,
New Delhi for the Financial Year 2014-15 within the prescribed time.
It is proposed to re-appoint Messrs. Dhananjay V. Joshi & Associates,
Cost Accountants, Pune as the Cost Auditors of the Company to conduct
the Audit of the Cost Accounting Records maintained by for Company for
the Financial Year commencing from 1st April, 2015. As required under
the provisions of Section 148 of the Act read with rules made
thereunder, the Company has obtained a written confirmation from M/s.
Dhananjay V. Joshi & Associates to the effect that they are eligible
for reappointment as Cost Auditors under the said Sections. The Audit
Committee has also received a certificate from the Cost Auditor
certifying their independence and arm''s length relationship with the
Company.
As per the provisions of the Companies Act, 2013, the remuneration
payable to the Cost Auditor is placed before the Members in the ensuing
Annual General Meeting for their ratification.
Q. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
During the Financial Year 2014-15, there are no significant and
material orders passed by the regulators or courts or tribunals that
would impact the going concern status of the Company and its future
operations.
Acknowledgement
Your Directors wish to place on record their sincere appreciation to
the Bankers of the Company, Company''s customers, vendors and investors
for their continued support during the year.
The Directors also wish to place on record their appreciation for the
dedication and contribution made by employees at all levels and look
forward to their support in future as well.
For and on behalf of the Board
Hemant Luthra
Chairman
DIN:00231420
Date: 27th July 2015
Place: Mumbai
Mar 31, 2014
The Members,
Mahindra CIE Automotive Limited
The Directors present the 15th Annual Report of the Company together
with the audited statement of accounts of your Company for the year
ended 31st March, 2014.
Financial Highlights (Rs. in Lakhs)
Particulars 2013-14 2012-13
Total Operating Income 38,654 44,036
Profit before Interest, Depreciation,
Exceptional Items and tax 5,233 6,646
Add: Other Income 645 420
Less : Depreciation 2,829 2,744
Profit before Interest, Exceptional Items
and tax 3,049 4,322
Less : Interest and Finance cost 373 568
Profit before Exceptional Items and Tax 2,676 3,754
Less: Exceptional
items
Profit before tax 2,676 3,754
Profit for the year 1,797 4,087
Balance of Profit & Loss Account brought
forward losses from earlier years (8,347) (12,434)
Loss carried to Balance Sheet (6,550) (8,347)
Financials
During the year under review your Company registered a total operating
income of Rs. 38,654 Lakhs as against Rs. 44,036 Lakhs in the previous year
and Profit before Interest, Depreciation, Exceptional items and tax of
Rs. 5,233 Lakhs as against Rs. 6,646 Lakhs in the previous year. The net
profit for the year stood at Rs. 1,797 Lakhs as against a net profit of Rs.
4,087 Lakhs over the previous year.
Operations
During the year under review, with the help of CIE your company is
working towards improving the operations in Europe. The plan for
improvement is specified as below:
. Price negotiation to reduce "y-o-y reductions" with
selectcustomers.
. Availing of electricity subsidy from the government to reduce
power cost.
. Improve operational efficiency by reducing cycle times, increasing
die life and improving process flow and layout.
. Outsourcing of some services which are low-value-added.
All this will eventually result in reducing fixed costs, including
personnel cost.
Your company''s operations in India continued to be affected by a
decline in sales. Thus the approach has been to increase/maintain
profitability by focussing on improving plant operations and gaining an
enhanced customer focus. The strategy to achieving these goals is as
explained below:
. Enhance the number of products offered to customers by building
upon our excellence in crankshafts and steering knuckles.
. Develop new products with new and existing customers using
VA/VE.
. Build upon the internal capabilities to provide value added
products.
. Focus on the tractor segments to enhance volumes.
Your Company will strive to maintain this performance in the coming
year.
Changes in Share Capital and Issue of Shares
During the year ended 31st March, 2014, the Company has allotted
167,160 equity shares of face value of Rs. 10/- each, pursuant to
exercise of options under the Company''s Employee Stock Option Scheme,
out of which 89,887 shares were allotted at an exercise price of Rs. 57/-
per equity share and 77,273 shares were allotted at an exercise price
of Rs. 44/- per equity share. The aforesaid exercise of options has
resulted in issued, subscribed and paid-up equity capital increasing
from Rs. 921,733,060/- to Rs. 923,404,660/-.
After the close of financial year the Company allotted 634,208 equity
shares of face value of Rs. 10/- each, pursuant to exercise of options
under the Company''s Employees'' Stock Option Scheme. The aforesaid
exercise of options has resulted in issued, subscribed and paid-up
equity capital increasing from Rs. 923,404,660/- to Rs. 929,746,740/-.
Changes in Promoters Shareholding
The Company along with Mahindra & Mahindra Limited ("M&M") (including
its subsidiaries/ associate entities Mahindra Hinoday Industries
Limited, Mahindra Ugine Steel Company Limited, Mahindra Gears
International Limited, Mahindra Investment (India) Private Limited,
Mahindra Overseas Investment Company (Mauritius) Limited and Mahindra
Composites Limited) ("Mahindra group") have entered into an alliance
with CIE Automotive S. A. ("CIE") (including its subsidiaries
Participaciones Internacionales Autometal Dos, S. L. ("PIA 2") and
Autometal S. A. ("Autometal"), for consolidating their automotive
components business globally ("Transaction").
Pursuant to the shareholders'' agreement dated 15th June, 2013,
including subsequent modification, between the Company, M&M, CIE,
Autometal and PIA2 ("Shareholders Agreement") 48,529,500
equity shares of Rs. 10/- each ("Sale Shares"), of the Company, were
transferred from M&M to PIA 2 in October, 2013. Consequently PIA2 has
become a Promoter of the Company. PIA2 and M&M are separately
considered as Promoters of the Company.
Further, PIA 2 (Acquirer) along with Autometal and CIE, in their
capacity as persons acting in concert with the Acquirer, made an open
offer, as required under Securities and Exchange Board of India
(Substantial Acquisition of Shares and Takeovers) Regulations, 2011,
for acquisition of 24,502,193 equity shares of Rs. 10 each representing
26% of the then Fully Diluted Equity Capital from the public
shareholders of the Company at a price of Rs. 81 per share as described
in Detailed Public Statement dated June 21st, 2013 and Letter of Offer
dated September 13th, 2013. Consequent to the Open Offer the Acquirer
acquired 24,502,193 equity shares representing 26% of the then Fully
Diluted Equity paid up capital of the company.
As on 31st March, 2014 PIA2 holds 73,031,693 equity shares in the
Company representing 79.09% of the paid up equity capital and M&M holds
296,109 equity shares representing 0.32% of the paid up equity capital.
Scheme of Merger
The Board of Directors of the Company had, at its meeting held on June
15, 2013, approved the proposed merger of Mahindra Hinoday Industries
Limited, Mahindra Ugine Steel Company Limited, Mahindra Gears
International Limited, Mahindra Investments (India) Private Limited,
Participaciones Internacionales Autometal Tres, S.L. with the Company
and also approved the related scheme of merger under Sections 391-394
of the Companies Act, 1956 ("Integrated Scheme"). In the same meeting,
the Board of Directors of the Company also approved the proposed merger
of Mahindra Composites Limited ("MCL") with the Company and approved
the related scheme of merger under Sections 391-394 of the Companies
Act, 1956 ("Composites Scheme") (The Integrated Scheme and the
Composites Scheme are together referred to as the "Schemes").
Securities and Exchange Board of India ("SEBI") vide its observation
letters dated 7th March, 2014 has conveyed its comments on the draft
Integrated Scheme and the draft Composites Scheme to the BSE Limited
("BSE").
Pursuant to the above SEBI letters, the BSE and the National Stock
Exchange of India limited ("NSE") vide their observation letters both
dated 7th March 2014 have conveyed their respective no-objections to
file the Integrated Scheme and the Composites Scheme with the Hon''ble
High Court, subject to certain conditions specified therein.
Court Convened Meetings for approval of the Schemes
Approval of the members was sought for each of the Integrated Scheme
and the Composites Scheme, pursuant to the provisions of sections 391
to 394 of the Companies Act, 1956, at the separate meetings of the
members held on 5th June, 2014, convened as per the directions of the
Hon''ble High Court of Mumbai, received vide its orders, both dated 2nd
May, 2014.
The Schemes were approved by requisite majority of shareholders
attending and voting at the respective meetings.
Further the Company has also filed petition seeking sanction of the
Hon''ble High Court of Mumbai for each of the Integrated Scheme and the
Composites Scheme.
Postal Ballot for Approval of the Schemes
In terms of SEBI circular No. CIR/CFD/DIL/5/2013 dated February
4, 2013 read with circular number CIR/CFD/DIL/8/2013 dated May 21, 2013
("SEBI Circulars"), the Company has obtained approval of the public
shareholders of the Company to each of the Integrated Scheme and the
Composites Scheme through postal ballot and e-voting process.
The effectiveness of the Integrated Scheme and Composites Scheme is
conditional upon and subject to the approvals and/ or sanctions laid
down in the respective Schemes.
Management Discussion and Analysis
A detailed analysis of the Company''s performance is contained in the
Management Discussion and Analysis Report which forms part of the
Annual Report.
Corporate Governance
Your Company is committed to transparency in all its dealings and
places high emphasis on business ethics. Your Company has been
following good Corporate Governance practices. A report on Corporate
Governance along with a Certificate from the Auditors of the Company
regarding the compliance of conditions of Corporate Governance as
stipulated under Clause 49 of the Listing Agreement forms part of the
Annual Report.
Dividend
In view of past losses, your Directors do not recommend any dividend
for the year.
Stock Options
No Stock Options have been granted during the year under review.
Details required to be provided under the Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 are set out in Annexure I to this Report.
Industrial Relations
Industrial Relations generally remained cordial and harmonious
throughout the year.
The Management Discussion and Analysis Report give an overview of the
developments in Human Resources/Industrial Relations during the year.
Safety, Health and Environment Performance
Your Company has a Safety, Occupational Health and Environmental (SH&E)
policy on occupational health, safety and environmental protection
through which every employee is made responsible for the observance of
the measures designed to prevent accidents, damage to occupational
health and avoidable environmental pollutants.
Safety and Health
The Safety Committee of the Company meets periodically to review the
status of safety issues and reporting of accidents, if any. Various
initiatives such as emergency mock drills and advanced fire protection
system for improving the Safety have been taken. Common Guarantee
Safety Scheme (CGSP) has been initiated as a step forward to focus on
safety.
Safety week and Fire Service day are being celebrated. Safety Audits/
Inspection along with Safety awareness training is conducted.
Your Company continues to improve well being of all its personnel by
organising Occupational Health Examination Camps, Periodic Health
Check-ups etc.
Environmental Initiatives
Since the last few years, your Company has been focusing external
certifications for achieving world class environmental and safety
standards.
Certification
Your Company is certified for TS 16949. Your Company''s Plants have also
been certified with ISO 14001:2004 & OHSAS 18001. The OHSAS system aims
to eliminate or minimise risk to employees and other interested parties
who may be exposed to Occupational Safety risks in the Company.
Sustainable development is promoted through sharing of best practices
in the fields of Safety, Occupational Health & Environment.
Sustainability
Sustainability Initiatives
Your Company''s vision on sustainability is "Continuously improve our
capability by integrating environmental, social, and economic aspects
in operations for creating better tomorrow than today". In line with
its vision the Company has identified and implimented on various
projects for reduction in waste, energy and GHG emissions, to achieve
the targets set under its Sustainability Road map. During the year,
certain new projects were undertaken for example Improved Export
Packing with cost optimization, Yield Improvement Projects to reduce
Steel requirement for Forgings etc.
Awareness on sustainability
Awareness about the need and the ways to drive sustainable business
practices among all stakeholders is key to perpetual growth. The
Company continues its initiatives to generate this awareness among
employees who are the most important internal stakeholders of the
organisation. This awareness campaign was taken to the external
stakeholders, suppliers and vendors.
During the year under review, the Triple Bottom-line performance was
published as a part of the Mahindra Group''s sustainability report for
the year 2013-14 in accordance with the latest guideline of the
internationally accepted Global Reporting Initiatives or the GRI
standards (G3.1). This report was externally assured by KPMG and GRI
Checked with ''A ''.
Corporate Social Responsibility
Your Company encourages its employees to participate in the Employee
Social Options (ESOPs) program, to drive positive change in society,
through Health checkup camps, tree plantation, vocational guidance to
school children in the nearby schools etc.
During the year under review, the employees of your Company
participated in various education and health related programs in local
communities, such as blood donation camp, drinking water for Pilgrims,
distribution of clothes and other articles to needy villagers and
health related programs.
Directors
The Board at its meeting held on 4th October, 2013 appointed Mr.
Antonio MarÃa Pradera Jáuregui and Mr. Jesus Maria Herrera Barandiaran
as additional directors (non-independent) and Mr. Jose Sabino Velasco
Ibanez, Mr. Jose Ramon Berecibar Mutiozabal, Mr. Manoj Maheshwari and
Mr. Dhananjay Mungale as additional directors (independent).
At the same meeting Mr. Ignacio Artazcoz Barrena was appointed as
additional director who has resigned from the Directorship with effect
from 10th February, 2014.
Further Mr. Zhooben Bhiwandiwala, Mr. V. K. Chanana, Mr. Nikhilesh
Panchal, Mr. Fali P. Mama, Mr. Mohit Burman, Mr. Oliver Scholz and Mr.
Harald Korte resigned from the Directorship of the Company with effect
from 4th October, 2013.
Further, the Board appointed Mr. Zhooben Bhiwandiwala as an Additional
Director on 29th July, 2014.
Pursuant to Section 161 of the Companies Act, 2013 the additional
directors will hold office up to the date of ensuing Annual General
Meeting (AGM) of the Company and have offered themselves for
re-appointment.
Further Pursuant to Section 149 of the Companies Act, 2013, the Board,
at its meeting held on 29th July, 2014, recommended appointment of Ms.
Neelam Deo and Mr. Juan Maria Bilbao as Independent Directors of the
Company. Mr. Daljit Mirchandani, Independent Director on the Board
pursuant to Clause 49 of the Listing Agreement, shall be appointed for
a period of five consecutive years at the ensuing AGM.
Pursuant to Section 160 of the Companies Act, 2013 the Company has
received notices in writing from members signifying the intention of
the members to propose Mr. Antonio MarÃa Pradera Jáuregui, Mr. Jesus
Maria Herrera Barandiaran, Mr. Jose Sabino Velasco Ibanez, Mr. Jose
Ramon Berecibar Mutiozabal, Mr. Manoj Maheshwari, Mr. Dhananjay Mungale
Mr. Daljit Mirchandani, Mr. Zhooben Bhiwandiwala, Mr. Juan Maria Bilbao
and Ms. Neelam Deo for the office of Directors of the Company along
with the deposit of one lakh rupees each.
Further Mr. Hemant Luthra, Director of the Company, is liable to retire
by rotation at the ensuing AGM pursuant to his terms of appointment and
offers himself for re-appointment.
Mr. Jose Sabino Velasco Ibanez, Mr. Jose Ramon Berecibar Mutiozabal,
Mr. Manoj Maheshwari, Mr. Dhananjay Mungale, Mr. Daljit Mirchandani,
Ms. Neelam Deo and Mr. Juan Maria Bilbao are proposed to be appointed
as Independent Directors on the Board pursuant to section 149 of the
Companies Act, 2013 and in the opinion of the Board they are persons of
integrity, have expertise and experience in their area of work which
shall be beneficial for the Company. Pursuant to provisions of the
Companies Act, 2013, these Directors shall be appointed for a fixed
term of upto 5 consecutive years and shall not be liable to retire by
rotation.
Mr. Antonio MarÃa Pradera Jáuregui Mr. Jesus Maria Herrera Barandiaran
and Mr. Zhooben Bhiwandiwala being non-independent directors shall be
liable to retire by rotation.
Detailed profile of the Directors seeking appointment / re- appointment
alongwith other details as may be required forms part of the Annual
Report.
Directors'' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, your
Directors, based on the representation received from the Operating
Management, and after due enquiry, confirm that :
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed;
(ii) they have, in the selection of the accounting policies, consulted
the Statutory Auditors and these have been applied consistently and
reasonable and prudent judgments and estimates have been made so as to
give a true and fair view of the state of affairs
of the Company as at 31st March, 2014 and of the profit of the Company
for the year ended on that date;
(iii) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(iv) the annual accounts have been prepared on a going concern basis.
Subsidiary Companies
The Statement pursuant to Section 212 of the Companies Act, 1956
containing details of Company''s subsidiaries is attached to the Balance
Sheet.
The Consolidated Financial Statements of the Company and its
subsidiaries prepared in accordance with Accounting Standard AS 21
forms a part of the Annual Report.
In acc ordance with the general circular number 2/2011 dated 8th
February, 2011 issued by the Ministry of Corporate Affairs, Government
of India, the Balance Sheet, Profit and Loss Account and other
documents of the subsidiary companies are not being attached to the
Balance Sheet of the Company. The Company will make available the
Annual Accounts of the subsidiary companies and the related detailed
information to any member of the Company and the subsidiary companies
who may be interested in obtaining the same. Further, the Annual
Accounts of the subsidiaries would also be available for inspection by
any Member at the Registered Office of the Company and at the Office of
the respective subsidiary companies, during working hours upto the date
of the Annual General Meeting.
Auditors
Messrs. B. K. Khare & Co., Chartered Accountants, Mumbai (Firm
Registration No. 105102W) retires as Auditors of the Company and have
given their consent for re-appointment. The shareholders will be
required to elect Auditors for the current year and fix their
remuneration.
As required under the provisions of Section 224(1B) of the Companies
Act, 1956 and Section 139 (1) read with Section 141 of the Companies
Act, 2013, the Company has obtained a written certificate from the
above Auditors proposed to be re-appointed to the effect that their
re-appointment, if made, would be in conformity with the limits
specified in the said section.
Cost Audit Report
Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune, (Firm
Registration Number 000030) conducted the audit of Cost Accounting
Records maintained by the Company for the Financial Year 2012-13 and
submitted their report to the Central Government, Ministry of Corporate
Affairs, New Delhi. They were reappointed to conduct the Audit of the
Cost Accounting Records maintained by for Company for the Financial
Year 2013-14. The Cost Auditors shall forward their report to the
Central Government, Ministry of
Corporate Affairs, New Delhi for the Financial Year 2013-14 within the
prescribed time.
As required under the provisions of Section 224(1B) read with Section
233B(2) of the Companies Act, 1956, the Company has obtained a written
confirmation from M/s. Dhananjay V. Joshi & Associates to the effect
that they are eligible for reappointment as Cost Auditors under the
said sections. The Audit Committee has also received a certificate from
the Cost Auditor certifying their independence and arm''s length
relationship with the Company.
Public Deposits and Loans/Advances
Your Company has not accepted any deposits from the public or its
employees during the year under review.
The particulars of loans/advances in the nature of loan and investment
in its own shares by listed companies, their subsidiaries, associates,
etc., required to be disclosed in the Annual Accounts of the Company
pursuant to Clause 32 of the Listing Agreement are furnished
separately.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The particulars relating to energy conservation, technology absorption
and foreign exchange earnings and outgo, as required under Section
217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosures of Particulars in the Report of Board of Directors) Rules,
1988 are provided in Annexure II to this Report.
Particulars of Employees
The Company has employees who were in receipt of remuneration not less
than Rs. 60,00,000/- per annum during the year ended 31st March, 2014 or
employee who were employed for a part of the financial year and were in
receipt of remuneration of not less than Rs. 5,00,000/- per month during
any part of the said year. However as per the provisions of Section
219(1)(b)(iv) of the Companies Act, 1956, the Directors report and
Accounts are being sent to all members of the Company excluding the
statement of particulars of employees. Any member interested in
obtaining a copy of the Statement may write to the Company Secretary of
the Company.
Acknowledgement
Your Directors wish to place on record their sincere appreciation of
the consortium of banks comprising of State Bank of India (Lead Bank)
and Axis Bank Limited, Company''s customers, vendors and investors for
their continued support during the year.
The Directors also wish to place on record their appreciation for the
dedication and contribution made by employees at all levels and look
forward to their support in future as well.
For and on behalf of the Board
Hemant Luthra
Mumbai, 29th July, 2014 Chairman
Mar 31, 2013
To, The Members of Mahindra Forgings Limited
The Directors present the 14th Annual Report of the Company together
with the audited statement of accounts of your Company for the year
ended 31st March, 2013.
Financial Highlights (Rs. in Lakhs)
Particulars 2012-13 2011-12
Total Income 44,455 43,468
Profit before Interest, Depreciation,
Exceptional Items and tax 7,066 4,360
Less : Depreciation 2,744 2,392
Profit before Interest, Exceptional Items and tax 4,322 1,968
Less : Interest and Finance cost 568 1,134
Profit before Exceptional Items and Tax 3,754 834
Less: Exceptional items - 156
Profit before tax 3,754 678
Profit for the year 4,087 678
Balance of Profit & Loss Account brought
forward losses from earlier years (12,434) (13,112)
Loss carried to Balance Sheet (8,347) (12,434)
Financials
During the year under review your Company registered a Total income of
Rs. 44,455 Lakhs as against Rs. 43,468 Lakhs in the previous year and
Profit before Interest, Depreciation, Exceptional items and tax of Rs.
7,066 Lakhs as against Rs. 4,360 Lakhs in the previous year. The net
profit for the year stood at Rs. 4,087 Lakhs as against a net profit of
Rs. 678 Lakhs over the previous year. The Total Income of the Company
has grown by 2.2% over the previous year.
Operations
During the year under review, your Company''s operations in Europe were
affected by a decline in sales compounded by significant operational
problems at Schoeneweiss & Co. GmbH, Mahindra Forgings Europe AG''s
(MFE) second largest plant. These problems have been identified and
are being addressed. The mixture of market decline and operational
problems has resulted in MFE ending the year with negative EBITDA.
In India, your Company has focused on increasing profitability by
improving plant operations in the areas of Quality, Service, Cost and
Technology with specific bias to enhancing Machining capabilities.
Productivity has increased due to increased utilization of press shop
and increasing output/day. Input costs like power and oil costs have
been reduced while internal rejections have been significantly
controlled. The steps taken above have translated into continuously
improving profitability quarter-wise in the last financial year. Your
Company will strive to maintain this performance in the coming year.
Changes in Share Capital and Issue of Shares
Pursuant to exercise of options under the Company''s Employee Stock
Option Scheme, your Company has allotted 4,250 equity shares of face
value of Rs. 10/- each at an exercise price of Rs. 57/- per equity
share. The aforesaid exercise of options has resulted in issued and
subscribed equity capital increasing from Rs. 92,16,90,560 to Rs.
92,17,33,060.
However, the shareholding of Promoters in the Company as at 31st March,
2013 remains at 52.97%.
Management Discussion and Analysis
A detailed analysis of the Company''s performance is contained in the
Management Discussion and Analysis Report which forms part of the
Annual Report.
Corporate Governance
Your Company is committed to transparency in all its dealings and
places high emphasis on business ethics. Your Company has been
following good Corporate Governance procedures. A report on Corporate
Governance along with a Certificate from the Auditors of the Company
regarding the compliance of conditions of Corporate Governance as
stipulated under Clause 49 of the Listing Agreement forms part of the
Annual Report.
Dividend
In view of past losses, your Directors do not recommend any dividend
for the year.
Stock Options
No Stock Options have been granted during the year under review.
Details required to be provided under the Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 are set out in Annexure I to this Report.
Industrial Relations
Industrial Relations generally remained cordial and harmonious
throughout the year.
The Management Discussion and Analysis Report gives an overview of the
developments in Human Resources/Industrial Relations during the year.
Safety, Health and Environment Performance
Your Company has a Safety, Occupational Health and Environmental (SH&E)
policy on occupational health, safety and environmental protection
through which every employee is made responsible for the observance of
the measures designed to prevent accidents, damage to occupational
health and avoidable environmental pollutants.
Safety and Health
The Safety Committee of the Company meets periodically to review the
status of safety issues and reporting of accidents, if any. Various
initiatives such as emergency mock drills and advanced fire protection
system for improving the Safety have been taken. Common Guarantee
Safety Scheme (CGSP) has been initiated as a step forward to focus on
safety.
Safety week and Fire Service day are being celebrated. Safety
Audits/Inspection along with Safety awareness training on safety is
conducted.
Your Company''s plant continues to improve their well being of all its
personnel by organising Occupational Health Examination Camps, Periodic
Health Check-ups etc.
Environmental Initiatives
With a clear focus on the need for clean environment, the Company is
now in the process of calculating its carbon foot print and take
adequate measures to mitigate the causes. Your Company is also
reporting its performance on Sustainable Development as a part of
Global Reporting Initiative (GRI).
Since the last few years, your Company has been focusing external
certifications for achieving world class environmental and safety
standards.
Certification
Your Company is certified for TS 16949. Your Company''s Plants have also
been certified with the amended standards of ISO 14001:2004 & OHSAS
18001. Your Company has completed a three year cycle of continual
improvement in Environment, Health & Safety Management certification.
The OHSAS system aims to eliminate or minimise risk to employees and
other interested parties who may be exposed to Occupational Safety
risks in the Company. Sustainable development is promoted through
sharing of best practices in the fields of Safety, Occupational Health
& Environment.
''Sustainability'' Initiatives
Your Company continues to be aligned with Mahindra Group''s approach
towards sustainable development by making conscious efforts to reduce
the environmental impact of business as well as enhancing its
responsibility towards society. This was achieved by way of continued
identification and implementation of various projects for reduction in
waste, energy and GHG emissions, to achieve the targets set under its
Sustainability Road map. During the year, certain new projects were
undertaken for example energy efficiency in lighting solution,
engineering processes, waste water treatment and water conservation and
recycling initiatives were put in place. These initiatives were backed
by third party audits for energy and internal audits for water
management.
Awareness on sustainability
Awareness about the need to drive and the ways to drive sustainable
business practices among all stakeholders is key to perpetual growth.
In the last few years various initiatives were taken to generate this
awareness among employees who are the most important internal
stakeholders of the organisation. This was further enhanced during the
year through various programs conducted by the Company. During the
year, this awareness campaign was taken to the external stakeholders,
suppliers and vendors.
During the year under review, the Triple Bottom-line performance was
published as a part of the Mahindra Group''s sustainability report in
accordance with the latest guideline of the internationally accepted
Global Reporting Initiatives or the GRI standards (G3.1). This report
was externally assured by KPMG and got GRI Checked A rating.
Corporate Social Responsibility
Your Company encourages its employees to participate in the Employee
Social Options (ESOPs) program, to drive positive change in society,
through Health checkup camps, tree plantation, vocational guidance to
school children in the nearby schools etc.
During the year under review, the employees of your Company
participated in various education and health related programs in local
communities, such as upgrading the skills of local community, through
education, environmental and health related programs. Blood Donation
drives and participation in Nanhi Kali activities.
Directors
Mr. Mohit Burman, Mr.Harald Korte and Mr. Oliver Scholz retire by
rotation and, being eligible, offer themselves, for re-appointment as
Directors.
Detailed profile of the Directors alongwith other details as may be
required forms part of Corporate Governance Report attached to the
Directors Report.
Directors'' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, your
Directors, based on the representation received from the Operating
Management, and after due enquiry, confirm that :
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed;
(ii) they have, in the selection of the accounting policies, consulted
the Statutory Auditors and these have been applied consistently and
reasonable and prudent judgments and estimates have been made so as to
give a true and fair view of the state of affairs of the Company as at
31st March, 2013 and of the profit of the Company for the year ended on
that date;
(iii) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(iv) the annual accounts have been prepared on a going concern basis.
Subsidiary Companies
The Statement pursuant to Section 212 of the Companies Act, 1956
containing details of Company''s subsidiaries is attached to the Balance
Sheet.
The Consolidated Financial Statements of the Company and its
subsidiaries prepared in accordance with Accounting Standard AS 21
forms a part of the Annual Report.
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Profit and
Loss Account and other documents of the subsidiary companies are not
being attached to the Balance Sheet of the Company. The Company will
make available the Annual Accounts of the subsidiary companies and the
related detailed information to any member of the Company and the
subsidiary companies who may be interested in obtaining the same.
Further, the Annual Accounts of the subsidiaries would also be
available for inspection by any Member at the Registered Office of the
Company and at the Office of the respective subsidiary companies,
during working hours upto the date of the Annual General Meeting.
Auditors
Messrs. B. K. Khare & Co., Chartered Accountants, Mumbai (Firm
Registration No. 105102W) retire as Auditors of the Company and have
given their consent for re-appointment. The shareholders will be
required to elect Auditors for the current year and fix their
remuneration.
As required under the provisions of Section 224(1 B) of the Companies
Act, 1956, the Company has obtained a written certificate from the
above Auditors proposed to be re-appointed to the effect that their
re-appointment, if made, would be in conformity with the limits
specified in the said section.
Cost Audit Report
Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune, (Firm
Registration Number 000030) conducted the audit of Cost Accounting
Records maintained by the Company for the Financial Year 2011-12 and
submitted their report to the Central Government, Ministry of Corporate
Affairs, New Delhi. They were reappointed to conduct the Audit of the
Cost Accounting Records maintained by for Company for the Financial
Year 2012- 13. The Cost Auditors shall forward their report to the
Central Government, Ministry of Corporate Affairs, New Delhi for the
Financial Year 2012-13 within the prescribed time.
As required under the provisions of Section 224(1B) read with Section
233B(2) of the Companies Act, 1956, the Company has obtained a written
confirmation from Messrs. Dhananjay V. Joshi & Associates to the effect
that they are eligible for re-appointment as Cost Auditors under the
above-mentioned sections. The Audit Committee has also received a
certificate from the Cost Auditor certifying their independence and
arm''s length relationship with the Company.
Public Deposits and Loans/Advances
Your Company has not accepted any deposits from the public or its
employees during the year under review.
The particulars of loans/advances in the nature of loan and investment
in its own shares by listed companies, their subsidiaries, associates,
etc., required to be disclosed in the Annual Accounts of the Company
pursuant to Clause 32 of the Listing Agreement are furnished
separately.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The particulars relating to energy conservation, technology absorption
and foreign exchange earnings and outgo, as required under Section
217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosures of Particulars in the Report of Board of Directors) Rules,
1988 are provided in Annexure II to this Report.
Particulars of Employees
The Company has employees who were in receipt of remuneration not less
than Rs. 60,00,000/- per annum during the year ended 31st March, 2013
or employee who were employed for a part of the financial year and were
in receipt of remuneration of not less than Rs. 5,00,000/- per month
during any part of the said year. However, as per the provisions of
Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors report
and Accounts are being sent to all members of the Company excluding the
statement of particulars of employees. Any member interested in
obtaining a copy of the Statement may write to the Company Secretary of
the Company.
Acknowledgement
Your Directors wish to place on record their sincere appreciation of
the consortium of banks comprising of State Bank of India (Lead Bank)
and Axis Bank Limited, Company''s customers, vendors and investors for
their continued support during the year.
The Directors also wish to place on record their appreciation for the
dedication and contribution made by employees at all levels and look
forward to their support in future as well.
For and on behalf of the Board
Hemant Luthra
Mumbai, 6th June, 2013 Chairman
Mar 31, 2012
To,The Members of Mahindra Forgings Limited
The Directors present the 13th Annual Report of the Company together
with the audited statement of accounts of your Company for the year
ended 31st March, 2012.
Financial Highlights
Rs in Lakhs
2011-12 2010-11
Total Income 43,468 36,002
Profit before Interest, Depreciation,
Exceptional Items and tax 4,360 3,336
Less: Depreciation 2,392 2,210
Profit/(Loss) before Interest,
Exceptional Items and tax 1,968 1,126
Less: Interest and Finance cost 1,134 1,444
Profit/(Loss) before
Exceptional Items and tax 834 (318)
Less: Exceptional items 156 -
Profit/(Loss) before tax 678 (318)
Profit/(Loss) for the year 678 (318)
Balance of Profit & Loss Account
brought forward losses from earlier years (13,112) (12,794)
(Loss) carried to Balance Sheet (12,434) (13,112)
Financials
During the year under review, your Company registered a Total income of
Rs 43,468 Lakhs as against Rs 36,002 Lakhs in the previous year and
Profit before Interest, Depreciation, Exceptional items and tax of Rs
4,360 Lakhs as against Rs 3,336 Lakhs in the previous year. The net
profit for the year stood at Rs678 Lakhs as against a net loss of Rs 318
Lakhs over the previous year. The Total Income of the Company has grown
by 21% over the previous year.
Operations
During the year under review, your Company's operations in Europe
were hit by press breakdowns in the last two quarters of the Financial
Year 2011-12, increasing maintenance costs and lowering margins. These
breakdowns have been corrected.
In India, your Company continues to stabilize operations reflected in
consistent and higher quarterly EBITDA margins. Machining capacity was
enhanced leading to increase in value added sales. Several projects are
under implementation to reduce machine downtime and improve die
management with a view to continuously improve Forging capacity
utilization.
Changes in Share Capital and Issue of Shares On 3rd March, 2010, your
Company allotted 72,99,270 warrants on a Preferential basis to the
Promoters of the Company, Mahindra & Mahindra Limited, with an option
to convert the same within 18 months into equal number of equity shares
at a price of Rs 137/- per share. On 4th March, 2011, the Promoters
exercised their option to convert 30,00,000 warrants into equal number
of equity shares at the said price. Subsequently on 2nd September,
2011, the Promoters have exercised their option to convert the balance
42,99,270 warrants into an equal number of equity shares and have paid
the balance amount.
The aforesaid exercise of options has resulted in the issued,
subscribed and paid up equity share capital increasing from Rs
87,86,97,860/- to Rs 92,16,90,560/-.
As a result of the above, the shareholding of Promoters in the Company
as at 31st March, 2012, stands at 52.97%.
Management Discussion and Analysis
A detailed analysis of the Company's performance is contained in the
Management Discussion and Analysis Report which forms part of the
Annual Report.
Corporate Governance
Your Company is committed to transparency in all its dealings and
places high emphasis on business ethics. Your Company has been
following good Corporate Governance procedures. A report on Corporate
Governance along with a Certificate from the Auditors of the Company
regarding the compliance of conditions of Corporate Governance as
stipulated under Clause 49 of the Listing Agreement forms part of the
Annual Report.
Dividend
In view of past losses, your Directors do not recommend any dividend
for the year.
Stock Options
The Remuneration/Compensation Committee of your Company has granted
25,89,883 Stock Options to eligible employees of the Company during the
year under review.
Details required to be provided under the Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 are set out in Annexure I to this Report.
Industrial Relations
Industrial Relations generally remained cordial and harmonious
throughout the year.
The Management Discussion and Analysis Report gives an overview of the
developments in Human Resources/Industrial Relations during the year.
Safety, Health and Environment Performance Your Company has a Safety,
Occupational Health and Environmental (SH&E) policy on occupational
health, safety and environmental protection through which every
employee is made responsible for the observance of the measures
designed to prevent accidents, damage to occupational health and
avoidable environmental pollutants.
Safety and Health
The Safety Committee of your Company meets periodically to review the
status of safety training and reporting of accidents to resolve the
safety issues. Various initiatives such as emergency mock drills and
advanced fire protection system for improving the Safety Performance
have been taken.
Your Company has achieved significant reduction in accidents/ injuries
by ensuring a safety culture throughout all levels of organization.
Safety week and Fire Service day are being celebrated. Safety
Audits/Inspection along with Safety awareness training on safety are
conducted regularly.
Your Company's plant continue to focus on improving the well being of
the employees and contract workmen by organizing Occupational Health
Examination Camps, Medical Check-ups etc. Certification
Your Company's Plant have been certified with the amended standards of
ISO 14001:2004 & OHSAS 18001. Implementation of Occupational Health &
Safety Management Standard has re-enforced the Company's commitment to
Safety and Occupational Health. In 2010-11, your plant have been
certified under OHSAS 18001:2007 which is the best existing safety
standard. Your Company has completed a two year cycle of continual
improvement in Environment, Health & Safety (EHS) Management
certification. The OHSAS system aims to eliminate or minimize risk to
employees and other interested parties who may be exposed to
Occupational Safety risks in the Company. Sustainable development is
promoted through sharing of best practices in the fields of Safety,
Occupational Health & Environment.
Environmental Initiatives
With a clear focus on the need for clean environment, your Company is
now in the process of calculating its carbon foot print and take
adequate measures to mitigate the causes. Your Company is also
reporting its performance on Sustainable Development as a part of
Global Reporting Initiative (GRI).
Waste and Waste Water Management
Your Company has taken various initiatives to dispose its waste in an
environmentally sound manner and achieve waste reduction. Awarenees of
water conservation programmers' is enhanced through events like observing
the World Water Day. Environment monitoring is done by implementing
initiatives such as effluent treatment, increased Green Zones etc. The
plan is to comply and go beyond applicable environment legislations and
regulations in a phased manner.
Corporate Social Responsibility
As part of Corporate Social Responsibility (CSR) initiatives, the
employees of your Company participated in upgrading the skills of local
community by involving them in education, environmental and health
related programs. Your Company had also organized Blood Donation drives
and participated in Nanhi Kali activities of Mahindra Group.
Your Company encourages its employees in participating in local
community schemes such as Health checkup camps, tree plantation etc.
The Company is planning a sustainable tree plantation and nurturing
programmer under Mahindra Hariyali. Employee Social Options
Your Company is tapping the hidden potential in each one of its
employees to make a sustainable society; one which is healthier,
cleaner, greener and more literate. Through your Company's Employee
Social Options (ESOPs) program many employees are contributing towards
making a difference to Society.
Your Company's ESOPs program encourages employees in supporting
volunteering projects based on the needs of underprivileged communities
in and around their places of work. 'Sustainability' Initiatives
In line with the philosophy of the Mahindra group, your Company
recognises the importance of sustainability in business, and is
committed to reduce its environmental foot print and enhance its
commitment towards society. For instance, for the past 3 years, your
Company has continued to voluntarily disclose its performance on the
Triple Bottom lines of 'People, Planet & Profit' based on the
framework designed by the Global Reporting Initiative (GRI). During the
year, the report for the year 2010-11 was published which was
externally assured by Ernst & Young with an A rating and GRI checked.
The report for the year 2011-12 will be released shortly.
During the year under review, your Company continued with its efforts
to conserve natural resources and reduce waste. Specific projects in
this regard were identified and implemented. Directors
Mr. Hemant Luthra, Mr. Fali P. Mama and Mr. Daljit Mirchandani retire
by rotation and, being eligible, offer themselves, for re-appointment.
During the year, Mr. Deepak Dheer retired as Managing Director and
Director of the Company with effect from 31st August, 2011. The Board
has placed on record its appreciation of the services rendered by Mr.
Dheer during his tenure as the Managing Director of the Company.
The Board of Directors of the Company had, by a resolution dated 4th
October, 2011 appointed Mr. K Ramaswami as an Additional Director of
the Company with effect from 4th October, 2011. He holds office up to
the date of ensuing Annual General Meeting. The Company has received
Notice from a Member under Section 257(1) of the Companies Act, 1956
along with requisite amount of deposit, signifying his intention to
propose the candidature of Mr. Ramaswami for the office of Director of
the Company at the ensuing Annual General Meeting.
Mr. Ramaswami was also appointed as Managing Director of the Company
with effect from 4th October, 2011 for a period of 3 years subject to
approval of the members of the Company.
During the year under review, Mr. Piyush Mankad retired as a Director
of the Company with effect from 2nd August, 2011. The Board has placed
on record its appreciation of the services rendered by Mr. Mankad
during his tenure as Director of the Company.
Directors' Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, your
Directors, based on the representation received from the Operating
Management, and after due enquiry, confirm that:
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed;
(ii) they have, in the selection of the accounting policies, consulted
the Statutory Auditors and these have been applied consistently and
reasonable and prudent judgments and estimates have been made so as to
give a true and fair view of the state of affairs of the Company as at
31st March, 2012 and of the profit of the Company for the year ended on
that date;
(iii) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(iv) the annual accounts have been prepared on a going concern basis.
Subsidiary Companies
The Statement pursuant to Section 212 of the Companies Act, 1956
containing details of Company's subsidiaries is attached to the
Balance Sheet.
The Consolidated Financial Statements of the Company and its
subsidiaries prepared in accordance with Accounting Standard AS 21
forms a part of the Annual Report.
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Statement of
Profit and Loss and other documents of the subsidiary companies are not
being attached with the Balance Sheet of the Company. The Company will
make available the Annual Accounts of the subsidiary companies and the
related detailed information to any member of the Company and the
subsidiary companies who may be interested in obtaining the same.
Further, the Annual Accounts of the subsidiaries would also be
available for inspection by any Member at the Registered Office of the
Company and at the Office of the respective subsidiary companies,
during working hours up to the date of the Annual General Meeting,
Auditors
Messrs. B. K. Khare & Co., Chartered Accountants retire as Auditors of
the Company and have given their consent for re- appointment. The
shareholders will be required to elect Auditors for the current year
and fix their remuneration.
As required under the provisions of Section 224(1 B) of the Companies
Act, 1956, the Company has obtained a written certificate from the
above Auditors proposed to be re-appointed to the effect that their
re-appointment, if made, would be in conformity with the limits
specified in the said section.
Cost Audit Report
The Company has come under the purview of Cost Audit for the first time
in Financial Year 2011-12. Accordingly, the Board of Directors of your
Company has, upon recommendations of the Audit Committee, appointed
M/s. Dhananjay V. Joshi& Associates, Cost Accountants as Cost Auditors
for conducting an audit of Cost Accounting Records maintained by the
Company for the Financial Year 2011-12 with the approval of Central
Government. As required under the provisions of Section 224(1 B) read
with Section 233B(2) of the Companies Act, 1956, the Company has
obtained a written confirmation from M/s. Dhananjay V. Joshi &
Associates to the effect that they are eligible for appointment as Cost
Auditors under Section 233B of the Companies Act, 1956. The Audit
Committee has also received a certificate from the Cost Auditor
certifying their independence and arm's length relationship with the
Company. The Cost Auditors shall forward their report to the Central
Government, Ministry of Corporate Affairs, New Delhi for the Financial
Year 2011-12, within the prescribed time limit. Public Deposits and
Loans/Advances Your Company has not accepted any deposits from the
public or its employees during the year under review.
The particulars of loans/advances and investment in its own shares by
listed companies, their subsidiaries, associates, etc., required to be
disclosed in the Annual Accounts of the Company pursuant to Clause 32
of the Listing Agreement are furnished separately.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The particulars relating to energy conservation, technology absorption
and foreign exchange earnings and outgo, as required under Section
217(1 )(e) of the Companies Act, 1956 read with the Companies
(Disclosures of Particulars in the Report of Board of Directors) Rules,
1988 are provided in Annexure II to this Report. Particulars of
Employees
As required under Section 217(2A) of the Companies Act, 1956 and Rules
There under a statement containing particulars of Company's employees
who were employed throughout the financial year and who were in receipt
of remuneration of not less than Rs 60,00,000/- per annum during the
year ended 31st March, 2012 or employees who were employed for a part
of the financial year and were in receipt of remuneration of not less
than Rs 5,00,000/- per month during any part of the said year is given
in Annexure III to this report.
Acknowledgement
Your Directors wish to place on record their sincere appreciation of
the financial institutions and consortium of banks led by State Bank of
India, Company's customers, vendors and investors for their continued
support during the year.
The Directors also wish to place on record their appreciation for the
dedication and contribution made by the employees at all levels and
look forward to their support in future as well.
For and on behalf of the Board
Hemant Luthra
Chairman
Mumbai, 25th May, 2012
Mar 31, 2011
The Directors present the 12th Annual Report of the Company together
with the audited statement of accounts of your Company for the year
ended 31st March, 2011.
Financial Highlights
Rs. in Lakhs
2010-11 2009-10
Total Income 35,844 30,206
profit before Interest, Depreciation,
Exceptional Items and tax 3,314 4,757
Less : Depreciation 2,210 2,151
profit/(Loss) before Interest, Exceptional
Items and tax 1,104 2,606
Less : Interest and Finance cost 1,422 2,987
profit/(Loss) before Exceptional Items and
tax and prior period expenses (318) (382)
Less: Exceptional items - 9,019
(Loss) before tax & before prior period expenses (318) (9,401)
Less: Prior period expenses - 71
profit /(Loss) before tax (318) (9,472)
Less : Provision for tax
Current Tax - -
Deferred Tax - -
Fringe benefit Tax(including prior period) - 1
(Loss) for the year (318) (9,473)
Balance of profit & Loss Account brought
forward losses from earlier years (12,794) (3,321)
(Loss) carried to Balance Sheet (13,112) (12,794)
Financials
During the year under review, your Company registered a Total income of
Rs.35,844 Lakhs as against Rs.30,206 Lakhs in the previous year and profit
before Interest, Depreciation, Exceptional Items and tax of Rs.3,314
Lakhs as against Rs.4,757 Lakhs in the previous year. The net Loss before
Exceptional Items, Taxes and prior period expenses stood at Rs.318 Lakhs.
The Total Income of the Company has grown by 19 % over the previous
year.
Operations
During the year under review, your Company focused on enhancing
operational effciencies - improving yields, lowering rejections and
enhancing capacity utilisation and are implementing projects to reduce
machine downtime and improve die management. In implementing some of
the above projects, there was an initial increase in costs which was
compounded by operational problems in heat treatment during Financial
Year 2010-11. This has led to inconsistencies in operational
performance refected in quarterly margins for the Indian operations. In
order to give a fllip to these efforts, the mentorship program, which
endeavours to improve the Indian operations to European operational
standards, has been strengthened. Joint teams across India and Europe
have been formed to improve specifc operational areas in India under
the guidance of the global Chief Technology Offcer (CTO) based out of
Europe.
Your Companys European operations have substantially optimised costs
and considerable success has been achieved in reducing the breakeven.
Changes in Share Capital and Issue of Shares
Pursuant to exercise of options under the Companys Employees Stock
Option Scheme your Company has allotted 14,750 equity shares of face
value of Rs.10 each at an exercise price of Rs.102 per equity share. The
aforesaid exercise of option has resulted in the issued and subscribed
equity share capital increasing from Rs.87,85,50,360/- to
Rs.87,86,97,860/-.
As a result of the above the shareholding of Promoters stands at
50.67%.
Management Discussion and Analysis
A detailed analysis of the Companys performance is contained in the
Management Discussion and Analysis Report which forms part of the
Annual Report.
Corporate Governance
Your Company is committed to transparency in all its dealings and
places high emphasis on business ethics. Your Company has been
following good Corporate Governance procedures. A report on Corporate
Governance along with a Certifcate from the
Auditors of the Company regarding the compliance of conditions of
Corporate Governance as stipulated under Clause 49 of the Listing
Agreement forms part of the Annual Report.
Dividend
In view of the losses, your Directors do not recommend any dividend for
the year.
Stock Options
The Remuneration/Compensation Committee of your Company has granted
93,000 Stock Options to eligible employees of the Company during the
year under review.
Details required to be provided under the Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 are set out in Annexure I to this Report.
Industrial Relations
Industrial Relations generally remained cordial and harmonious
throughout the year.
Safety, Health and Environment Performance
The Company has a Safety, Occupational Health and Environmental (SH&E)
policy on occupational health, safety and environmental protection
through which every employee is made responsible for the observance of
the measures designed to prevent accidents, damage to occupational
health and avoidable environmental pollutants.
Health and Safety
The Safety Committee of the Company has members comprising
representatives from workers and executives from various departments
who meet periodically to review the situation. Safety training and
reporting of accidents are reviewed to resolve the safety issues and
various initiatives such as emergency mock drills and advanced fre
protection system for improving the Safety Performance have been taken.
The Company has been imparting training to employees besides carrying
out safety audits of various facilities of the Company.
The Company has achieved significant reduction in accidents/ injuries by
ensuring a safety culture throughout all levels of organization.
The Company continues its commitment to improve the well being of the
employees and medical checkups are regularly conducted for its
employees.
New Certifcation
Your Companys Plants have been certifed with amended standard for ISO
14001:2004 & OHSAS 18001. Implementation of Occupational Health &
Safety Management Standard has re-enforced the Companys commitment of
Safety and Occupational Health to high levels. OHSAS 18001:2007 is the
best existing safety practice which is implemented through the amended
management system and your plants have been certifed during the year
2010-11. Your Company has completed one year cycle of continual
improvement in EHS Management certifcation and now consolidated its
system robustness.
Environmental Initiatives
With a clear focus on the need for clean environment, the Company is
now in the process of calculating carbon foot print and take adequate
measures to mitigate the causes. Your Company is also reporting its
performance on Sustainable Development as a part of Global Reporting
Initiative (GRI).
Waste and Waste Water Management
The Company has taken various initiatives to dispose its waste in
environmentally sound manner and to achieve waste reduction. The water
conservation awareness programmes are planned through observing World
Water Day. The Company is committed towards resource conservation
through water management methods such as recycling or re-use of treated
waste water for gardening etc.
The Company attaches greater importance to environment monitoring by
implementing various initiatives such as effuent treatment, increased
Green Zones thereby complying and going beyond applicable environment
legislations and regulations in a phased manner.
Corporate Social Responsibility
As part of Corporate Social Responsibility (CSR) initiatives, the
employees of your Company participated in upgrading the skills by
involving them in education, environmental and health related programs.
The Company had also organized Blood Donation drives and participated
in Nanhi Kali activities of Mahindra Group. Your Company encourages
its employees in participating in local community development schemes
such as Health checkup camp, AIDS awareness and tree plantation etc.
The Company is planning a sustainable tree plantation and nurturing
programme under Mahindra Hariyali by involving employees and local
stake holders in large numbers. The overall focus of CSR would continue
to be in the areas of health, education, environment and improving
employability of youth.
Sustainability Initiatives
Your Company embarked on the sustainability journey in November 2007 as
a part of Mahindra Groups Sustainability Reporting, and over the last
four years has laid a foundation for developing a sustainable
enterprise. Conscious efforts have been made to understand the
challenges of business growth from a multi dimensional perspective i.e.
consider the impact of business on the environment, responsibility
towards the communities in which we operate besides looking at economic
progress. During the year the triple bottom line performance for
2009-10 was published as a part of the Mahindra Groups Sustainability
Report, in accordance with the latest guidelines of the internationally
accepted Global Reporting Initiative or the GRI standards and like the
previous 2 reports, this report was externally assured by E&Y with an
A+ rating and GRI checked.
In order to ensure that the progress on your triple bottom line
performance is focused, various sustainability project were identifed,
planned & executed for reducing energy consumption, resource
consumption and GHG emissions, and commitments for making business
processes more conducive to sustainable development were taken.
During the year 2009-10, a Carbon foot-printing exercise was undertaken
to inventorize GHG emissions from your business operations, under scope
I, II & III emissions as per internationally accepted standards. This
has enabled development of baseline data on emissions and undertake
initiatives towards improving carbon intensive processes that offer
reduction potential. This will be an ongoing exercise and reducing GHG
intensity of our products on an ongoing basis.
Directors
Mr. Nikhilesh Panchal and Mr. Zhooben Bhiwandiwala retire by rotation
and, being eligible, offer themselves, for re-appointment as Directors.
Mr. Piyush Mankad, Director retires by rotation at the ensuing Annual
General Meeting of the Company, and has expressed his desire not to
seek re-appointment. The Company does not intend to fll the vacancy
caused by the retirement of Mr. Mankad.
During the year under review, Mr. Anand G. Mahindra resigned as
Chairman and Director of the Company and Mr. Hemant Luthra was
appointed as the Chairman of the Company. The Board has placed on
record its appreciation of the service rendered by Mr. Mahindra during
his tenure as the Chairman and Director of the Company.
Directors Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, your
Directors, based on the representation received from the Operating
Management, and after due enquiry, confrm that :
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed;
(ii) they have, in the selection of the accounting policies, consulted
the Statutory Auditors and these have been applied consistently and
reasonable and prudent judgments and estimates have been made so as to
give a true and fair view of the state of affairs of the Company as at
31st March, 2011 and of the loss of the Company for the year ended on
that date;
(iii) proper and suffcient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(iv) the annual accounts have been prepared on a going concern basis.
Subsidiary Companies
The Statement pursuant to Section 212 of the Companies Act, 1956
containing details of Companys subsidiaries is attached to the Balance
Sheet.
The Consolidated Financial Statements of the Company and its
subsidiaries prepared in accordance with Accounting Standard AS 21
forms a part of the Annual Report.
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, profit and
Loss Account and other documents of the subsidiary companies are not
being attached with the Balance Sheet of the Company. The Company will
make available the Annual
Accounts of the subsidiary companies and the related detailed
information to any member of the Company and the subsidiary companies
who may be interested in obtaining the same. Further, the Annual
Accounts of the subsidiaries would also be available for inspection by
any member at the Head Offce of the Company and at the Offce of the
respective subsidiary companies, during working hours upto the date of
the Annual General Meeting.
Auditors
Messrs. B. K. Khare & Co., Chartered Accountants retire as Auditors of
the Company and have given their consent for re- appointment. The
shareholders will be required to elect Auditors for the current year
and fx their remuneration.
As required under the provisions of Section 224(1B) of the Companies
Act, 1956, the Company has obtained a written certifcate from the above
Auditors proposed to be re-appointed to the effect that their
re-appointment, if made, would be in conformity with the limits
specifed in the said section.
Public Deposits and Loans/Advances
The Company has not accepted any deposits from the public or its
employees during the year under review.
The particulars of loans/advances and investment in its own shares by
listed companies, their subsidiaries, associates, etc., required to be
disclosed in the Annual Accounts of the Company pursuant to Clause 32
of the Listing Agreement are furnished separately.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The particulars relating to energy conservation, technology absorption
and foreign exchange earnings and outgo, as required under Section
217(1)(e) of the Companies Act, 1956 read with the Companies
(Disclosures of Particulars in the Report of Board of Directors) Rules,
1988 are provided in Annexure II to this Report.
Particulars of Employees
As required under Section 217 (2A) of the Companies Act, 1956 and Rules
thereunder a statement containing particulars of Companys employees
who were employed throughout the financial year and who were in receipt
of remuneration of not less than Rs. 60,00,000/- per annum during the
year ended 31st March, 2011 or employee who were employed for a part of
financial year and were in receipt of remuneration not less than Rs.
5,00,000/- per month during any part of the said year is given in
Annexure III to this report.
Acknowledgement
Your Directors wish to place on record their sincere appreciation to
the financial institutions and consortium of banks led by State Bank of
India, Companys customers, vendors and investors for their continued
support during the year.
The Directors also wish to place on record their appreciation for the
dedication and contribution made by employees at all levels and look
forward to their support in future as well.
For and on behalf of the Board
Hemant Luthra
Mumbai, 20th May, 2011. Chairman
Mar 31, 2010
The Directors present the 11th Annual Report of the Company together
with the audited statement of accounts of your Company for the year
ended 31st March, 2010.
Financial Highlights
Rs. in Lakhs
2009-10 2008-09
Gross Income 30,206 24,246
Profit before Interest, Depreciation, Exceptional
Items and tax 4,757 1,149
Less : Depreciation 2,151 1,954
Profit/(Loss) before Interest, Exceptional Items
and tax 2,606 (805)
Less : Interest and Finance cost 2,987 2,539
Profit/(Loss) before Exceptional Items and taxes
and prior period expenses (381) (3,344)
Less: Exceptional items 9,019 -
(Loss) before tax & before prior period expenses (9,400) (3,344)
Less: Prior period expenses 71 133
Profit/(Loss) before tax (9,471) (3,477)
Less : Provision for tax - -
Current Tax
Deferred Tax - 650
Fringe Benefit Tax (including prior period) 2 13
(Loss) for the year (9,473) (4,140)
Balance of Profit & Loss Account brought forward
losses from earlier years (3,321) (3,882)
Add: Transfer from Securities Premium Account as
approved in the Extraordinary General Meeting &
confirmed by Honourable High Court of Bombay. - 4,701
(Loss) carried to Balance Sheet (12,794) (3,321)
Financials
During the year under review, your Company registered a Gross income of
Rs.30,206 Lakhs as against Rs. 24,246 Lakhs in the previous year and
Profit before Interest, Depreciation, Exceptional Items and tax of
Rs.4,757 Lakhs as against Rs. 1,149 Lakhs in the previous year. The net
loss before Exceptional ltems,taxes and prior period expenses stood at
Rs.381 Lakhs. The Gross Income of the Company has grown by 25 % over
the previous year.
Operations
In Europe, there was a sharp decline in the auto industry in FY09 and
FY10, and it was only in the last three months of FY1 0 that the
European automotive markets showed signs of revival. Your Company
expects that this growth will sustain in FY1 1. Whereas in India, the
prospects of automotive markets remain positive, with the support of
expanding domestic automotive manufacturing business and global OEMs
entering into lower operating cost countries like India.
In light of the difficult conditions being faced by your Companys
operations especially in Europe as a result of the global economic
downturn, Company had to go through the process of restructuring which
resulted in reduction in personnel costs and other operating costs by
33% and 27% respectively at a consolidated level and
predominantly in the European Operations. A structured cost reduction
program was put in place to achieve the above.
The European operations continuously partner their customers especially
for new engine programs. The Company focuses on innovation to meet the
demands of OEMs and to differentiate the Company from the competition.
The Indian operations continue to focus on improving rejection levels,
yield and productivity. Another focus area of improvement has been die
engineering. Indian operations are in the process of adopting new die
welding technology in collaboration with European subsidiaries which
will help in die cost reduction, die life increase, die block sinking
improvement and die block machining improvement. Your Company is also
adopting hard dies as against soft dies to reduce rejections and
increase die life.
Changes in Share Capital and Issue of Shares
On 18th February, 2010 the authorised capital of your Company was
increased from Rs. 11 7,94,26,386/- to Rs. 167,94,26,386/- .
On 24th February, 2010 your Company successfully completed the
Qualified Institutional Placement (QIP) issue consisting of 1,62,41,300
equity shares of face value of Rs. 10/- at a price of Rs. 107.75 per
equity share aggregating Rs. 1 75 Crores.
On 3rd March, 2010 the Company allotted 72,99,270 Warrants on a
Preferential basis to Mahindra & Mahindra Limited (Promoters),
convertible at the option of the Promoters within 18 months into equal
number of equity shares at a price of Rs. 137/- per share. The
Promoters have made an upfront payment of 25% of the aggregate price
amounting to Rs. 25 Crores. Subsequently on 4th March, 201 0 the
Promoters exercised their option to convert 30,00,000 Warrants into
equity shares out of 72,99,270 Warrants and have paid the balance of
Rs. 30.82 Crores. The Promoters still have an option to convert balance
42,99,270 Warrants into equity shares by 3rd September, 201 1.
There has been an increase of Rs. 225.96 Crores (net of issue expenses)
in the networth of your Company. A part of these proceeds from this
issue were inter alia for repayment of borrowings of the Company,
investment in subsidiaries and QIP issue expenses. The Company has
temporarily invested the balance funds in liquid fund schemes of the
Mutual Fund.
Pursuant to exercise of options by certain applicants under the
Companys Employees Stock Option Scheme, your Company has allotted
46,000 equity shares of face value of Rs. 10/- each at an exercise
price of Rs. 83/- per equity share. The aforesaid issue of QIP
Preferential issue of shares and exercise of option has resulted in the
issued and subscribed equity share capital increasing from Rs.
68,56,77,360/- to Rs. 87,85,50,360/-.
As a result of the above the shareholding of Promoters stands at
50.68%.
Management Discussion and Anal/sis
A detailed analysis of the Companys performance is contained in the
Management Discussion and Analysis Report which forms part of the
Annual Report.
Corporate Governance
Your Company is committed to transparency in all its dealings and
places high emphasis on business ethics. Your Company has been
following good Corporate Governance procedures. A report on Corporate
Governance along with a Certificate from the Auditors of the Company
regarding the compliance of conditions of Corporate Governance as
stipulated under Clause 49 of the Listing Agreement forms part of the
Annual Report.
Dividend
In view of the losses, your Directors do not recommend any dividend for
the year.
Stock Options
The Remuneration/Compensation Committee of your Company has not granted
any Stock Options to the employees during the year under review.
Details required to be provided under the Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 are set out in Annexure I to this Report.
Industrial Relations
Industrial Relations generally remained cordial and harmonious
throughout the year.
Safety, Health and Environment Performance
The Company has a Safety, Occupational Health and Environmental (SH&E)
policy on occupational health, safety and environmental protection
through which every employee is made responsible for the observance of
the measures designed to prevent accidents, damage to occupational
health and avoidable environmental pollutants.
Health and Safety
The Safety Committee of the Company has members comprising
representatives from workers and executives from various departments
who meet periodically to review the situation. Safety training and
reporting of accidents are reviewed to resolve the safety issues and
various initiatives such as emergency mock drills and advanced fire
protection system for improving the Safety Performance have been taken.
The Company has been imparting training to employees besides carrying
out safety audits of various facilities of the Company.
The Company has achieved significant reduction in accidents/injuries by
ensuring a safety culture throughout all levels of organization.
The Company continues its commitment to improve the well being of the
employees and medical checkups are regularly conducted for its
employees.
Environmental Initiatives
With a clear focus on the need for clean environment, the Company is
now in the process of calculating carbon foot print and taking adequate
measures to mitigate the causes. Your Company is also reporting its
performance on Sustainable Development as a part of Global Reporting
Initiative (GRI).
Waste and Waste Water Management
The Company has taken various initiatives to dispose its waste in
environmentally sound manner and to achieve waste reduction. The water
conservation awareness programmes are planned through observing World
Water Day. The Company is committed towards resource conservation
through water management methods such as recycling or re-use of treated
waste water for gardening etc.
The Company attaches greater importance to environment monitoring by
implementing various initiatives such as effluent treatment, increased
Green Zones thereby complying and going beyond applicable environment
legislations and regulations in a phased manner.
Corporate Social Responsibility
As part of Corporate Social Responsibility (CSR) initiatives, the
employees of your Company participated in upgrading the skills by
involving them in education, painting, tree plantation activities etc.
of the local schools. The Company had also organized Blood Donation
drives and participated in Nanhi Kali activities of Mahindra Group.
Your Company encourages its employees in participating in local
community development schemes such as Health checkup camp, AIDS
awareness and global warming etc. The Company is planning a sustainable
tree plantation and nurturing programme under Mahindra Hariyali by
involving employees and local stake holders in large numbers. The
overall focus of CSR would continue to be in the areas of health,
education, environment and improving employability of youth.
Sustainability Initiatives
In the Directors Report for 2008-09, the Shareholders were informed of
your Companys participation the Mahindra Groups Sustainability
initiatives. These initiatives have been taken forward during the year
under review.
In October 2009, the 2nd Mahindra Sustainability Review for the year
2008-09 was published, wherein your Companys performance on the three
bottom lines i.e. People, Planet and Profit, was also included. Again
this year, this report was externally assured by Ernst & Young and
rated with the highest level of A+ and GRI checked. This 2nd report
reflects your Companys progression in this journey and its commitment
to taking a more responsible and holistic approach to business.
During the year under review i.e 2009-10 a further progress was made in
this journey and a Carbon foot-printing exercise was undertaken to
inventorize GHG emissions from all business operations, as per
internationally accepted standards. This will enable us to baseline
data on Companys emissions and undertake initiatives towards improving
performance in this area. This will be reported in the 3rd
Sustainability Report, which will be released shortly.
In keeping with the Mahindra philosophy of ALTERNATIVE THINKING your
Company has been actively seeking and implementing alternative
solutions that are inclusive and responsible.
Directors
Mr. Mohit Burman, Mr. Harald Korte, Mr. Oliver Scholz and Mr. V. K.
Chanana, retire by rotation and, being eligible, offer themselves, for
re-appointment as Directors.
Directors Responsibility Statement
Pursuant to Section 217(2AA) of the Companies Act, 1956, your
Directors, based on the representation received from the Operating
Management, and after due enquiry, confirm that :
(i) in the preparation of the annual accounts, the applicable
accounting standards have been followed;
(ii) they have, in the selection of the accounting policies, consulted
the Statutory Auditors and these have been applied consistently and
reasonable and prudent judgments and estimates have been made so as to
give a true and fair view of the state of affairs of the Company as at
31st March, 2010 and of the loss of the Company for the year ended on
that date;
(iii) proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956 for safeguarding the assets of the Company and for
preventing and detecting fraud and other irregularities;
(iv) the annual accounts have been prepared on a going concern basis.
Subsidiary Companies
The Statement pursuant to Section 21 2 of the Companies Act, 1 956
containing details of Companys subsidiaries is attached.
The Consolidated Financial Statements of the Company and its
subsidiaries prepared in accordance with Accounting Standard AS 21
forms a part of the Annual Report.
The Company has made an application to the Ministry of Corporate
Affairs seeking exemption from attaching the copy of Balance Sheet,
Profit and Loss Account, Reports of the Board of Directors and Auditors
of the subsidiaries with the Balance Sheet of the Company. If, in terms
of approval granted by the Ministry of Corporate Affairs under Section
212(8) of the Companies Act, 1956, the copy of the Balance
Sheet, etc. of the subsidiaries are not required to be attached with
the Balance Sheet of the Company, the Company Secretary will make these
documents available upon receipt of request from any member of the
Company interested in obtaining the same. These documents will be
available at Registered office of the Company and the office of the
respective subsidiary companies, during working hours up to the date of
the Annual General Meeting. The Company shall also put the details of
accounts of individual subsidiary companies on its website.
Auditors
Messrs. B. K. Khare & Co., Chartered Accountants retire as Auditors of
the Company and have given their consent for re-appointment. The
shareholders will be required to elect Auditors for the current year
and fix their remuneration.
As required under the provisions of Section 224(1 B) of the Companies
Act, 1956, the Company has obtained a written certificate from the
above Auditors proposed to be re-appointed to the effect that their
re-appointment, if made, would be in conformity with the limits
specified in the said section.
Public Deposits and Loans/Ad varices
The Company has not accepted any deposits from the public or its
employees during the year under review.
The particulars of loans/advances and investment in its own shares by
listed companies, their subsidiaries, associates, etc., required to be
disclosed in the Annual Accounts of the Company pursuant to Clause 32
of the Listing Agreement are furnished separately.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The particulars relating to energy conservation, technology absorption
and foreign exchange earnings and outgo, as required under Section
217(l)(e) of the Companies Act, 1956 read with the Companies
(Disclosures of Particulars in the Report of Board of Directors) Rules,
1988 are provided in Annexure II to this Report.
Particulars of Employees
As required under Section 217 (2A) of the Companies Act, 1956 and Rules
thereunder a statement containing particulars of Companys employees
who are in receipt of remuneration of not less than Rs.24,00,000/-
during the year ended 31st March, 2010 or not less than Rs.2,00,000/-
per month during any part of the said year is given in Annexure III to
this report.
Acknowledgement
Your Directors wish to place on record their sincere appreciation of
the financial institutions and consortium of banks led by State Bank of
India, Companys customers, vendors and investors for their continued
support during the year.
The Directors also wish to place on record their appreciation for the
dedication and contribution made by employees at all levels and look
forward to their support in future as well.
For and on behalf of the Board
Anand G. Mahindra
Mumbai, 12th May, 2010. Chairman
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More Information on CIE Automotive India Ltd.
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CIE Automotive India Ltd. Tools
- Bulk Deals
- Block Deals
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CIE Automotive India Ltd. Company Details
- Company Profile
- Company History
- Management Team
- Capital Structure
- Product Mix
- Banker/Auditor/Registrar
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Company History
- BSE Price History
- NSE Price History
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CIE Automotive India Ltd. Key Financial Ratios
- Ratios
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CIE Automotive India Ltd. Results
- Quarterly Results
- Half Yearly Results
- Nine Months Results
- Annual Results
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CIE Automotive India Ltd. Financial Data
- Audited Results
- Cash Flow
- Balance Sheet
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CIE Automotive India Ltd. Reports
- Accounting Policies
- Auditors Report
- Directors Report
- Notes To Account
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CIE Automotive India Ltd. Corporate Announcements
- Book Closure
- Dividend
- Board Meetings
- Change of Name
