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Directors Report of Munjal Showa Ltd.

Mar 31, 2016

Dear Members,

The Directors have great pleasure in presenting the 31st Annual Report together with the Audited Statement of Accounts for the financial year ended March 31, 2016.

FINANCIAL RESULTS AND APPROPRIATIONS

The salient features of the Company’s Financial Results for the year under review are as follows:

(Rs. In Lacs)

Year Ended

Year Ended

31.03.16

31.03.15

Sales and other Income

150,702.88

165,111.23

Profit before Interest, Depreciation & Tax & Exceptional item

11,727.49

13,474.60

Financial Cost

12.19

44.54

Depreciation

2,929.84

2,867.09

Exceptional Item (interest expenses reversed)

-

(67.74)

Profit before Tax

8,785.45

10,630.71

Provision for Taxation

2,670.22

3,067.82

Profit after Tax

6,115.23

7,562.89

Net Profit brought forward

16,364.50

12,905.08

Net value of fixed assets transferred to retained earning whose useful life exceeded the specified useful life

177.99

Profit available for appropriation

22,479.73

20,289.98

Dividend (Recommended)

1,599.80

1,599.80

Dividend Tax (Net)

325.68

325.68

Transfer to General Reserve

2,000.00

2,000.00

Surplus carried to Balance Sheet

18,554.25

16,364.50

OPERATIONS & STATE OF THE COMPANY’S AFFAIRS

The Company has achieved a sales turnover, including other income, of Rs. 150,702.88 lacs vis-a-vis Rs. 165,111.23 lacs in the previous year. The profit before tax in the current year was at Rs. 8,785.45 lacs as compared to Rs. 10,630.71 lacs in the previous year.

CREDIT RATING

The Company’s financial discipline and prudence is reflected in the credit ratings ascribed by rating agency CRISIL as given below:

(In Lacs)

INR 6,850 Long-Term Loans

AA/Stable (Reaffirmed)

INR 3,000 Cash Credit

AA/Stable (Reaffirmed)

INR 4,350 Letter of Credit

CRISIL A1

INR 225 Bank Guarantee

CRISIL A1

INR 600 Commercial Paper Programme

CRISIL A1

TRANSFER TO GENERAL RESERVE

The Board has transferred an amount of Rs. 2000 lacs to General Reserve before declaring the interim dividend. The balance amount of Rs. 18,554.25 lacs (Previous year Rs. 16,364.50 lacs) will be retained as surplus in the statement of Profit and Loss.

DIVIDEND

Your directors declared an interim dividend of 200 per cent (i.e. Rs. 4/- Per equity share of Rs. 2/- each fully paid up) for the financial year ended March 31, 2016 amounting to Rs. 1,599.80 lacs. Dividend was a tax free in the hands of shareholders, as the Company has paid the dividend distribution tax of Rs. 325.68 lacs. The Board fixed March 17, 2016 as the Record Date for the purpose of Payment of Interim Dividend for the financial year 2015-16 and the dividend payout date was March 21, 2016.

The Company considered interim dividend as final dividend for the financial year 2015-16. The Company maintained the dividend in spite of declining in the net profit and wants to retain its surplus for the future growth of the Company.

SHARE CAPITAL & DEBENTURES

The paid up Equity Share Capital as on March 31, 2016 was Rs. 799.93 lacs. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. The Company has not accepted or repaid any Debentures, Preference Share, Bond and Security during the financial year, and none of the Directors of the Company hold any shares or security of the Company. The Company does not has any Debentures, Preferential Shares as on March 31, 2016.

FINANCE

Cash and cash equivalent as at March 31, 2016 was Rs. 242.58 lacs. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The company has neither given any guarantee nor provided any security covered under the provision of Section 186 of the Companies Act, 2013. The Company has made investments in Mutual funds and given loan/advance to its vendors during ordinary course of business. Please refer note numbers 10 and 12 to the financial statements.

CORPORATE GOVERNANCE

Report on Corporate Governance and Management Discussion & Analysis Report along with Certificate of the Auditors of your Company pursuant to SEBI (LODR) Regulations, 2015, have been included in this Report as Annexure-A. Your Company has been practicing the principles of good Corporate Governance over the years.

In terms of regulation 17(8) of SEBI (LODR) Regulations, 2015, Certificate of CEO/CFO is also enclosed as a part of the Report.

The Board of Directors has laid down a Code of Conduct to be followed by all the Directors and members of Senior Management of your Company. The Board of Directors supports the broad principles of Corporate Governance. In addition to the basic governance issues, the Board also lays strong emphasis on transparency, accountability and integrity.

AUDITORS

M/s S.R. Batliboi & Co. LLP Chartered Accountants, Gurgaon, the Auditors of the Company, appointed at 29th Annual General Meeting from the date of 29th Annual General Meeting up to the date of 32nd Annual General Meeting of the Company. Now at the 3131 Annual General Meeting of the Company, their appointment will be the subject to ratification by shareholders of the Company. The Report given by the Auditors on the financial statements of the Company is part of the Annual Report. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report. The Board recommends their ratification of appointment for your approval.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Satyender Kumar & Associates, a proprietorship firm of Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as Annexure B. There has been no qualification, reservation, adverse remark or disclaimer given by the Auditors in their Report.

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

The information pursuant to Section 134(3)(m) of the Companies Act, 2013 and the rules made there under regarding Conservation of Energy, Technology Absorption and Foreign Exchange earnings & outgo are given in Annexure-C which forms part of Board’s Report.

EXTRACT OF ANNUAL RETURN

The extract of annual return in Form MGT 9 as required under Section 92(3) and Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as an Annexure-Dto this Report.

PARTICULARS OF EMPLOYEES

The statement of particulars of employees as per Section 197 of the Companies Act, 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, for the year ended March 31, 2016, is annexed hereto and forms part of this Report as Annexure-E.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

As part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken projects in the areas of Education, Livelihood, Health, Water and Sanitation. These projects are largely in accordance with Schedule VII of the Companies Act, 2013. Please refer Annexure-Fto Board’s Report

The Company was required to spend Rs. 171 lacs (approx) under Corporate Social Responsibility activities (CSR). The Company has spent 173.86 lacs on CSR Activities during the financial year 2015-2016.

MATERIAL CHANGES AND COMMITMENTS

There are 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 the report.

CHANGES IN THE TERMS IF ROYALTY PAYMENT WITH SHOWA CORPRORATION, JAPAN

The Company has entered with Showa Corporation, Japan (Showa) a world leader in shock absorber technology in May 1985 under technical collaboration contract apart from shareholders agreement.

Showa apprised the Company that due to current trend of localization Showa has to concentrate on R&D for global market and use of increasing investment more effectively so as to survive in such a global competition and further sustainable expansion and rate of Munjal Showa (MSL) @ 3 per cent not enough now and Showa bears the shortage of actual R&D expenses. Showa then requested to consider the change in the condition of the royalty ratio. The proposal was discussed at length by the Board of Directors and it was approved that “the royalty to be paid by the Licensee (MSL) to Licensor shall be three (3) per cent of the ex-factory sales price of the Product invoices by Licensee. Provided that Licensor approves the products for which Licensor employs new technologies, the royalty rate of four (4) per cent shall be applied to such Products. All other conditions of this agreement shall remain same. This will be effective from April 01, 2016.

CHANGES IN MEMORANDUM OF ASSOCIATION (MOA) AND ARTICLES OF ASSOCIATION (AOA)

With the enactment of the Companies Act 2013, it is necessary to amend the existing MOA and to adopt new set of the AOA to be in accordance with the requirements of the Act.

The Board recommends changes in MOA and AOA before the shareholder for their approval.

ENVIRONMENT COMPLIANCE

We believe that “waste is a precious resource kept in a wrong place”. We further believe that “there is no waste as per the law of the nature”. Hence from the solid waste like Iron & Steel from old scrap machines, we are collecting the raw material and we are manufacturing “Lean and Low cost” machines with a philosophy of Easy to run, Easy to maintain, Easy to clean and Zero accident by meeting all the quality and productivity standard. Everything is done in house starting from design up to finishing of the machine. This concept of reuse of metallic waste is highly appreciated by CII, ACMA and international experts of our Japanese Collaborator. By Regular training for workers and staff to prevent accident related to mechanical, electrical, chemical, physiological and psychological safety the Company has made “Zero incidents” as acceptable standard. Hazard Identification and Risk Assessment (HIRa) is our primary focus to mitigate and prevent the abnormalities. Because of our dedicated and committed efforts in continual improvement of Safety, Health and Environment area, we had received two National Awards from Ministry of Labour and Employment, Government of India for safety. The Company is a regular member of Haryana Environment Management Society. The Company has started Green Vendor Development Programme (GVDP) since 2009-10. The aim of the project is to conserve water and energy, Minimize generation of waste, terminate hazardous chemicals with non-hazardous chemicals, minimize carbon foot print and generate pollution prevention awareness throughout the plant and to achieve 100 per cent legal compliance. The Company is rigorously improving to create a better place for our next generation.

TOTAL PRODUCTIVE MAINTENANCE

The Company has taken up the journey of Total Productive Maintenance (TPM) with the help of JIPM (Japan Institute of Plant Maintenance) Japan and CII, TPM Club India. Major objectives of tPm are to increase (PQcDsME) Productivity, to improve Quality, to reduce Costs, to ensure in time Delivery, to increase Safety, to increase profitability, to build Morale and to protect environment by formation of small cross functional work groups and to improve overall Plant efficiency. The other objectives are to procure and install maintenance free plant and machinery; and to achieve zero defects, zero break down, zero losses and zero accidents. In nutshell, TPM is to identify various types of Losses & converts them into Profit. We have achieved TPM Excellency Award “Category A” for Gurgaon and Manesar Plants in the years 2008 and 2010 respectively from Japan Institute of Plant Maintenance. We have been awarded by JIPM TPM Excellence Consistency Award for both Gurgaon & Manesar Plants in the year 2013. Now we have started TPM Journey in our Haridwar Plant also & we had TPM Kick-Off Ceremony in November 2015. We are going ahead to challenge TPM Excellence Special category by end of 2016.

Lean TPM Activities:

We have clubbed TPM with lean manufacturing system. Our Company has conducted Lean Manufacturing System (Value Stream Mapping) Work Shop through JMAC Japan. We have converted huge & complicated machines by using TPM & Lean Concepts. These machines consume very less Electricity, occupy less space, take very less inputs like consumables, manpower, tools, oils, compressed air, less set-up time, less cycle time, etc. These machines are 10S Machines (Safe, Simple, Small, Slim, Speed, Smart, Sturdy, Superb, Sushil & Sunder and help us in reducing Cost of manufacturing.

ISO/TS 16949 ACCREDITATION

Your Company’s manufacturing facilities located at Gurgaon, Haridwar and Manesar continue to maintain and uphold the prestigious ISO/TS 16949:2009, ISO 14001:2004 and OHSAS 18001: 2007 (Occupational Health & Safety Assessment Series) certifications from reputed leading Indian and International Certification Institutions. These certifications help in continuous improvements, besides emphasis being laid on prevention of defects, reduction of wastes and variation in supply chain management.

LISTING AGREEMENT

The Securities and Exchange Board of India (SEBI), on September 2, 2015, issued SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 with the aim to consolidate and streamline the provisions of the Listing Agreement for different segments of capital markets to ensure better enforceability. The said regulations were effective December 1, 2015. Accordingly, all listed entities were required to enter into the Listing Agreement within six months from the effective date. The Company entered into Listing Agreement with BSE Limited and the National Stock Exchange of India Limited.

LISTING

The shares of your Company are listed at The National Stock Exchange of India Limited and BSE Limited, and pursuant to clause C (9) (d) of Schedule V SEBI (LODR) Regulations, 2015, the Annual Listing fees for the year 2016-17 have been paid to them well before the due date i.e. April 30, 2016. Annual Custody/Issuer fee for the year 2016-17 will be paid by the Company to NSDL and CDSL on receipt of the invoices.

HUMAN RESOURCES

Promoting Human Resources management is the strength of our Company and over a period of time, we have changed our vision of employees from “Human Resources Management” to “Human Capital Management”. Your Company believes that employees form the fulcrum of growth and differentiation for the organization. The Company recognizes that people are its principal assets and that its continued growth is dependent upon the Company’s ability to attract and retain quality people. The total headcounts were 3451 at the end of the year as compared to 3401 of the previous year. The Company encourages long-term commitment to the Company by rewarding its people for the opportunities they create and the value generated for customers and shareholders. The Company conducts several employee engagement and training programmes to upgrade the skills of the workforce and generate specialist in quality, maintenance and manufacturing.

Many initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes which have helped the organization achieve higher productivity levels. A significant effort has also been undertaken to develop leadership as well as technical/ functional capabilities in order to meet future talent requirement.

BUSINESS RISK MANAGEMENT

The Company has a Risk Management Policy to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company’s competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting.

The Company regularly conducts a study to develop a comprehensive 360° view on the opportunities, risks and threats to the business. These include areas such as market trends, new competition, changing customer preferences, disruptions in supplies, product development, talent management etc.

The Board has identified following risks:-

Intensifying Competition, Declining margins, Imposition of strict environmental / safety / regulatory regulations, Increase in raw material/component prices , Dependence on Collaborators , Over dependence on limited user segment base, Economic downturn, Risk of natural or manmade disasters, Product liability / recall, Single vendor dependence for critical components , Investment risks in expansion projects, Sales Catering only to Domestic Market, Over Dependence on few customers base, Retention & development of personnel and Inappropriate addressing of customer grievances. We through qualitative products and brand image, import only in case of cost advantage, regular improvement in productivity, controls over overhead and labour cost through a robust control of approvals, internal audit of environmental safety and regulatory compliance, localization of components, insurance, TS 16949 certification, TPM certification, regular development of alternate vendors where only single source, capturing customer complaints and response to them, have effective risk mitigating plans.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism policy to deal with instance of fraud and mismanagement, if any. The details of the Policy is explained in the Corporate Governance Report and also posted on the website of the Company. The website link is given below:

http://www.munjalshowa.net/wp-content/uploads/2015/05/Vigil-Mechanism-Whistle-Blower-Policy2.pdf RECOMMENDATION OF THE AUDIT COMMITTEE

During the year, there was no such recommendation of the Audit Committee which was not accepted by the Board. Hence, there is no need for the disclosure of the same in this Report.

CHANGES IN THE NATURE OF BUSINESS

There is no change in the nature of the business of the Company during the Financial Year 2015-16 DIRECTORS & KEY MANAGERIAL PERSONNEL

The Company appreciates the dedicated and valuable guidance given by Late Sh. Brijmohan Lall Munjal during his tenure as director and chairman of the Company. His sad demise on November 01, 2015 is a big and irreparable loss to the nation as well as to the Company. Late Mr. Brijmohan Lall Munjal was a great leader and he was a guiding force for the Company. He was not only committed to success but also devoted to rising India. He did all that it takes to build an industrial group based on a sustainable business model. His vision allowed Hero Group to become the world’s largest cycle maker, and Hero Motocorp the world’s largest two-wheeler manufacturer by volumes. He positioned his motorcycles and scooter as more fuel efficient, which struck a chord with cost-conscious Indian buyers. The “Fill it, shut it, forget it” campaign remains one of the most effective ones in the country’s corporate history. Worthy Chairman Sir, will always occupy a prominent place in India’s corporate history for his ability to do all this, and lived a life on the principle that if you work hard and be good to people around you, success in business will follow.

Then, Mr. Krishan Chand Sethi was elected as the chairperson of the company on February 05, 2016. But the Company also lost the Guidance of Lt. Sh. Krishan Chand Sethi on March 29, 2016, another ace Director and Chairman of the Company, the Company appreciates the dedicated and valuable services rendered by him during his tenure. His unwavering passion, insatiable ambition and his strong sense of basic ethics and integrity will always be a motivation for the Company. Sethi Sir, will always occupy a prominent place in our hearts.

Mr. Pankaj Munjal is currently our Non executive Director and pursuant to Sub Section 6 of Section 152 of the Companies Act, 2013, his office is liable to determination by retirement of directors by rotation. Being eligible, he offers himself for reappointment and a declaration under Section 149(7) of Companies Act, 2013 has also been duly received by the Company from the said Director

Mrs. Charu Munjal non executive director of the Company is liable to retire by rotation at the ensuing Annual General Meeting. Mrs. Charu Munjal being eligible has offered herself for re-appointment.

Mrs. Charu Munjal aged 44 years has been appointed as the Non Executive Director of the Company w.e.f. May 23, 2014. She holds a Diploma in Textile Designing from Banaras Hindu University and has considerable exposure in creative designing and marketing field. She is the Whole Time Director in Shivam Autotech Limited.

Your directors recommend her re-appointment at the ensuing Annual General Meeting.

Pursuant to the recommendation of the Board, Nomination and Remuneration Committee, Mr. Yogesh Chander Munjal was reappointed by the Board of Directors, subject to the approval of the shareholders, as the Managing Director of the Company on May 20, 2015 for a further period of five years with effect from September 01, 2016 to August 31, 2021.

The shareholders approved the variation in the terms of appointment of Mr. Isao Ito the 30th Annual General Meeting of the Company. The Board of Directors in its meeting held on May 20, 2016 after recommendation of Nomination and Remuneration Committee recommended to the shareholders variation in the Terms of Appointment of Mr. Isao Ito w.e.f. September 1, 2016.

The Board also recommended the terms of Mr. Isao Ito, liable to retire by rotation in pursuance of Section 152 and any other provisions of the Companies Act, 2013, before the members of the company at the 30th AGM for their approval

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015.

The following employees were designated as whole-time key managerial personnel:

a. Mr. Yogesh Chander Munjal- Managing Director

b. Mr. Isao Ito- Joint Managing Director

c. Mr. Pankaj Gupta- Chief Financial Officer.

d. Mr. Saurabh Agrawal- Company Secretary

The information under rule 5(1) of Companies (Appointment & Remuneration) Rules 2014 is given in Annexure D-1

The Board of Directors appointed Mr. Devi Singh, Independent Director, as Chairman of the Company. Board and also appointed Mr. Surinder Kumar Mehta as Chairman of the Nomination and Remuneration Committee and Mr. Yogesh Chander Munjal as Chairman of the CSR Committee.

COMMITTEES OF THE BOARD

Currently, the Board has five committees: the Audit Committee, the Nomination and Remuneration Committee, the Corporate Social Responsibility Committee, the Share Transfer/ Stakeholders Relationship Committee, the Risk Management Committee (non mandatory committee). A detailed note on the composition of the Board and its committees is provided in the Corporate governance report section of this Annual Report.

SUBSIDIARY COMPANIES, JOINT VENTURES OR ASSOCIATE COMPANIES

The Company neither has any Subsidiaries, joint ventures or associate companies nor any company has become or ceased to be its Subsidiaries, joint ventures or associate companies during the year.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the other committees of the Board i.e. Audit Committee, Nomination & Remuneration Committee and Share Transfer/ Stakeholders Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

REMUNERATION POLICY AND REMUNERATION TO THE DIRECTORS

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Nomination and Remuneration Policy has been included in this Report as Annexure-G.

The details of remuneration, sitting fee etc. paid to directors are given in Corporate Governance Report. (Please refer point no. IV of Corporate Governance Report)

BOARD DIVERSITY POLICY

The Company recognizes and embraces the importance of a diverse board in its success. We believe that a truly diverse board will leverage differences in thought, perspective, knowledge, skill, regional and industry experience, cultural and geographical background, age, ethnicity, race and gender, which will help us retain our competitive advantage. The Board has adopted the Board Diversity Policy which sets out the approach to diversity of the Board of Directors. The Board Diversity Policy is available on our website

Web-link: http://www.munjalshowa.net/wp-content/uploads/2016/02/Boards-Diversity-Policy.pdf MEETINGS

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year five Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. (Please refer point no. I & II of Corporate Governance Report)

DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors make the following statement in terms of Section 134(3)(c) & (5) of the Act, which is to the best of their knowledge and belief and according to the information and explanations obtained by them:

a. that in the preparation of the annual accounts for the Financial Year ended March 31, 2016, the applicable accounting standards have been followed along with proper explanation relating to material departures;

b. that appropriate accounting policies have been selected and applied consistently and judgments and estimates that are reasonable and prudent have been made so as to give a true and fair view of the State of Affairs as at March 31, 2016 and of the Profit of your Company for the Financial Year ended March 31, 2016;

c. that proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Act, for safeguarding the assets of your Company and for preventing and detecting fraud and other irregularities;

d. that the annual accounts for the Financial Year ended March 31, 2016 have been prepared on a going concern basis;

e. that the Directors have laid down Internal Financial Controls which were followed by the Company and that such Internal Financial Controls are adequate and were operating effectively; and

f. that the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

RELATED PARTY TRANSACTIONS

All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were on arm’s length basis and were in the ordinary course of business. During the year the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material. Hence, requirement of Form AOC-2 as required under section 188(1) of the Companies Act, 2013 is not applicable to the Company. All transactions with related parties were placed before Audit Committee and Audit committee has given omnibus approval for repetitive and foreseen transactions. The Board also noted these transactions on quarterly basis. The detail with related party transactions is given in note number 28 and 28A of Financial Statements.

The Company has developed a policy on Related Party Transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company’s website. And the link of such policy is given below:

http://www.munjalshowa.net/wp-content/uploads/2016/02/Related-Party-Policy-of-MSL.pdf

None of the Directors has any pecuniary relationships with the Company.

EXPLANATIONS OR COMMENTS BY THE BOARD ON QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE

The observations of the Auditors in their report read with the notes to accounts are self-explanatory and do not require any specific comments. However as pointed out by the Auditors in annexure to their report at point number vii(a), the slight delay in payment of undisputed statutory dues in few cases was on account of finalization of accounts beyond the due date of statutory dues and the same were paid with interest. There is no other qualification, reservation or adverse remark or disclaimer made by the auditor in his report; and the company secretary in practice in his secretarial audit report.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has a comprehensive system of internal control to safeguard the Company’s assets against any loss from unauthorized use and ensure proper authorization of financial transactions.

The Company has internal control systems commensurate with the size and nature of the business and has experienced personnel positioned adequately in the organization to ensure internal control processes and compliances. The Company takes abundant care in designing, reviewing and monitoring regularly the working of internal control systems and their compliances for all important financial internal control processes. The Audit findings are reported on quarterly basis to the Audit Committee of the Board headed by a Non-executive Independent Director.

The Company has robust ERP systems based on SAP platform. This ensures high degree of systems based checks and controls.

The Company maintains a system of internal controls designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the reliability of financial controls and compliance with laws and regulations.

The Companies Act, 2013 has introduced under Section 143(3)(i) of the Act which include the statutory auditors also to state in his audit report whether the company has adequate internal financial controls system in place and the operating effectiveness of such controls in addition to the reporting by Board of Directors in director’s responsibility statement. The concept of reporting on internal financial controls is still new in India this new reporting requirement has thrown up many challenges. The Company has developed the internal financial control processes and that was vetted by the internal auditors during the year. The same has also been verified by the statutory auditors and who have reported that all the material Internal financial controls exist during the financial year 2015-16. The Company, with the help of reputed professionals has developed a compliance tool for the purpose of legal compliance of all the applicable Acts to the Company.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company’s operations in future.

SEXUAL HARASSMENT POLICY

The Company has in place an Anti Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & 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.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation of the co-operation and support extended to the Company by Government of India, State Governments of Haryana and Uttrakhand, other local authorities, bankers, suppliers, customers and other stakeholders whose continued support has been a source of strength to the Company. The continued dedication and sense of commitment shown by the employees at all levels during the year deserve special mention.

The Directors also place on record their appreciation for the valuable assistance and guidance extended to the Company by Showa Corporation, Japan and for the encouragement and assurance, which our collaborator has provided from time to time for the growth and development of the Company.

The Directors also take this opportunity to express their deep gratitude for the continued co-operation and support received from its valued shareholders.

POLICIES

We seek to promote and follow the highest level of ethical standards in all our business transactions guided by our value system. The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 mandated the formulation of certain policies for all listed companies. All our corporate governance policies are available on our website i.e. http://www.munjalshowa.net/

Policy

Web-link

Policy for Determination of Materiality of Information or Events

http://www.munjalshowa.net/wp-

content/uploads/2016/02/Policy-for-

Determination-of-Materiality-of-

Information-or-Events.pdf

Boards Diversity Policy

http://www.munjalshowa.net/wp-

content/uploads/2016/02/Boards-Diversity

Plicy.pdf

Corporate Social Responsibility Policy

http://www.munjalshowa.net/wp-

content/uploads/2015/05/Corporate-Social-

Responsibility-Policy1.pdf

Vigil Mechanism / Whistle Blower Policy

http://www.munjalshowa.net/wp-

content/uploads/2015/05/Vigil-Mechanism-

Whistle-Blower-Policy2.pdf

Nomination And Remuneration Policy

http://www.munjalshowa.net/wp-

content/uploads/2015/05/Nomination-And-

Remuneration-Policy1.pdf

Records and Archives Management Policy

http://www.munjalshowa.net/wp-

content/uploads/2016/02/Records-and-

Archives-Management-Policy.pdf

Related Party Policy

http://www.munjalshowa.net/wp-

content/uploads/2016/02/Related-Party-

Policy-of-MSL.pdf

CODE OF INTERNAL PROCEDURES AND CONDUCT FOR REGULATING, MONITORING AND REPORTING OF TRADING BY INSIDERS

http://www.munjalshowa.net/wp-

content/uploads/2015/05/CODE-OF-

INTERNAL-PROCEDURES-AND-

CONDUCT-FOR-REGULATING-

MONITORING-AND-REPORTING-OF-

TRADING-BY-INSIDERS.pdf

CODE OF CONDUCT FOR DIRECTORS AND SENIOR MANAGEMENT PERSONNEL

http://www.munjalshowa.net/wp-

content/uploads/2016/02/Code-of-

conduct.pdf

For and on behalf of the Board

Place: Gurgaon Yogesh Chander Munjal Vinod Kumar Agrawal

Date: May 20, 2016 (Managing Director) (Director)

(DIN 00003491) (DIN 00004463)

B-175, Greater Kailash, Part I, A-224 Ist Floor, Defence Colony

New Delhi, 110048 New Delhi, 110024


Mar 31, 2015

Dear Members,

The Directors have great pleasure in presenting the 30th Annual Report together with the Audited Statement of Accounts for the financial year ended March 31,2015.

FINANCIAL RESULTS AND APPROPRIATIONS

The salient features of the Company''s Financial Results for the year under review are as follows:

(Rs. In Lacs)

Year Ended Year Ended 31.03.15 31.03.14

Sales and other Income 179,197.05 174,074.41

Profit before Interest, Depreciation, Tax & Exceptional item 13,474.60 11,129.85

Financial Cost 44.54 270.32

Depreciation 2,867.09 2,840.99

Exceptional Item (interest expenses reversed) (67.74) -

Profit before Tax 10,630.71 8,018.54

Provision for Taxation 3,067.82 1,048.46

Profit after Tax 7,562.89 6,970.08

Net Profit brought forward 12,905.08 9,572.73

Net value of fixed assets transferred to retained earning whose

useful life exceeded the specified useful life 177.99 -

Profit available for appropriation 20,289.98 16,542.81

Dividend (Recommended) 1,599.80 1,399.83

Dividend Tax (Net) 325.68 237.90

Transfer to General Reserve 2,000.00 2,000.00

Surplus carried to Balance Sheet 16,364.50 12,905.08

OPERATIONS & STATE OF THE COMPANY''S AFFAIRS

The Company has achieved a sales turnover, including other income, of Rs. 179,197.05 lacs registering a growth of 2.94 per cent vis-a-vis Rs. 174,074.41 lacs in the previous year. The profit before tax in the current year was at Rs. 10,630.71 lacs as compared to Rs. 8,018.54 lacs in the previous year registering a growth of 32.58 per cent.

CREDIT RATING

The Company''s financial discipline and prudence is reflected in the credit ratings ascribed by rating agency CRISIL as given below:

INR 4,500 Long-Term Loans AA/Stable (Reaffirmed)

INR 2,000 Cash Credit AA/Stable (Reaffirmed)

INR 7,700 Letter of Credit CRISIL A1

INR 225 Bank Guarantee CRISIL A1

INR 600 Commercial Paper Programme CRISIL A1

TRANSFER TO GENERAL RESERVE

The Board proposes to transfer an amount of Rs. 2,000 lacs to General Reserve. The balance amount of Rs. 16,364.50 lacs (Previous year Rs. 12,905.08 lacs) will be retained as surplus in the statement of Profit and Loss.

DIVIDEND

Your directors are pleased to recommend a dividend of 200 per cent (i.e. Rs. 4/- Per equity share of Rs. 2/- each fully paid up) for the financial year ended March 31, 2015 amounting to Rs. 1,599.8 lacs in aggregate as compared to 175 per cent i.e. Rs. 3.50/- per share in the corresponding last year. Dividend will be tax free in the hands of shareholders, as the Company will bear the dividend distribution tax of Rs. 325.68 lacs (Previous year Rs. 237.90 lacs). The dividend, if approved, at the Annual General Meeting shall be payable to the shareholders registered in the books of the Company and the beneficial owners whose names are furnished by the depositories, determined with reference to the book closure from August 08, 2015 to August 26, 2015 (both days inclusive).

SHARE CAPITAL & DEBENTURES

The paid up Equity Share Capital as on March 31,2015 was Rs. 7.99 Crore. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options or sweat equity. And also the Company has not accepted or repaid any Debentures, Preference Share Capital and any Bond & Security during the financial year, and none of the Directors of the Company hold any shares or security of the Company. The Company does not has any Debentures, Preferential Shares as on March 31,2015.

FINANCE

Cash and cash equivalent as at March 31,2015 was Rs. 156.41 lacs. The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters were kept under strict check through continuous monitoring.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

The company has neither given any guarantee nor provided any security covered under the provision of Section 186 of the Companies Act, 2013. The Company has made investments in Mutual funds and given loan/advance to its vendors during ordinary course of business. Please refer note numbers 10 and 12 to the financial statements.

CORPORATE GOVERNANCE

Report on Corporate Governance and Management Discussion & Analysis Report along with Certificate of the Auditors of your Company pursuant to clause 49 of the Listing Agreement with the Stock Exchanges, have been included in this Report as Annexure-A. Your Company has been practicing the principles of good Corporate Governance over the years.

In terms of part IX of Clause 49 of the Listing Agreement, Certificate of CEO/CFO is also enclosed as a part of the Report.

The Board of Directors has laid down a Code of Conduct to be followed by all the Directors and members of Senior Management of your Company. The Board of Directors support the broad principles of Corporate Governance. In addition to the basic governance issues, the Board also lays strong emphasis on transparency, accountability and integrity.

AUDITORS

M/s S.R. Batliboi & Co.LLP, Chartered Accountants, Gurgaon, the Auditors of the Company, appointed at 29th Annual General Meeting from the date of 29th Annual General Meeting up to the date of 32nd Annual General Meeting of the Company. Now at the 30th Annual General Meeting of the Company, their appointment will be the subject to ratification by shareholders of the Company. The Company has also received certificate from the auditors to the effect that their ratification of appointment, would be in accordance with Section 139 & 141 of the Companies Act, 2013 and the rules framed thereunder.

The Board recommends their ratification of appointment for your approval.

SECRETARIAL AUDITORS

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Satyender Kumar & Associates, a proprietorship firm of Company Secretaries to undertake the Secretarial Audit of the Company. The Report of the Secretarial Audit Report is annexed herewith as Annexure -B.

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

The information pursuant to Section 134(3)(m) of the Companies Act, 2013 and the rules made thereunder regarding Conservation of Energy, Technology Absorption and Foreign Exchange earnings & outgo are given in Annexure-C which forms part of Board''s Report.

EXTRACT OF ANNUAL RETURN

The extract of annual return in Form MGT 9 as required under Section 92(3) and Rule 12 of the Companies (Management and Administration) Rules, 2014 is appended as an Annexure-D to this Report.

PARTICULARS OF EMPLOYEES

The statement of particulars of employees as per Section 197 of the Companies Act, 2013 read with Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, for the year ended March 31,2015, is annexed hereto and forms part of this Report. Annexure-E

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

As part of its initiatives under Corporate Social Responsibility (CSR), the Company has undertaken projects in the areas of Education, Livelihood, Health, Water and Sanitation. These projects are largely in accordance with Schedule VII of the Companies Act, 2013. Please refer Annexure-F to Board''s Report

The Company was required to spend Rs. 156 lacs under Corporate Social Responsibility activities (CSR Activities) but Company could spend only Rs. 28.33 Lacs under CSR Activities. As the CSR is a new concept for the Company so Company is trying to develop its CSR activities. Your Company will try to spend whole amount to be spent on CSR activities during the financial year 2015-2016.

MATERIAL CHANGES AND COMMITMENTS

There are 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 the report.

ENVIRONMENT COMPLIANCE

We believe that "waste is a precious resource kept in a wrong place". We further believe that "there is no waste as per the law of the nature". Hence from the solid waste like Iron & Steel from old scrap machines, we are collecting the raw material and we are manufacturing "Lean and Low cost" machines with a philosophy of Easy to run, Easy to maintain, Easy to clean and Zero accident by meeting all the quality and productivity standard. Everything is done in house starting from design up to finishing of the machine. This concept of reuse of metallic waste is highly appreciated by CII, ACMA and international experts of our Japanese Collaborator. By Regular training for workers and staff to prevent accident related to mechanical, electrical, chemical, physiological and psychological safety the Company has made "Zero incidents" as acceptable standard. Hazard Identification and Risk Assessment (HIRA) is our primary focus to mitigate and prevent the abnormalities. Because of our dedicated and committed efforts in continual improvement of Safety, Health and Environment area, we had received two National Awards from Ministry of Labour and Employment, Government of India for safety. The Company is a regular member of Haryana Environment Management Society.

The Company has started Green Vendor Development Programme (GVDP) since 2009-10. The aim of the project is to conserve water and Energy, Minimize generation of waste, terminate hazardous chemicals with non-hazardous chemicals, minimize carbon foot print, generate pollution prevention awareness throughout the plant and to achieve 100 percent legal compliance. The Company is rigorously improving to create a better place for our next generation.

TPM

The Company has taken up the journey of Total Productive Maintenance (TPM) with the help of JIPM (Japan Institute of Plant Maintenance) Japan and CII, TPM Club India. Major objectives of TPM are to increase (PQCDSME) Productivity, to improve Quality, to reduce Costs, to ensure in time Delivery, to increase Safety, to increase profitability, to build Morale and to protect environment by formation of small cross functional work groups and to improve overall Plant efficiency. The other objectives are to procure and install maintenance free plant and machinery; and to achieve zero defects, zero break down, zero losses and zero accidents. In nutshell, TPM is to identify 16 types of Losses & converts them into Profit.

We have achieved TPM Excellency Award "category A" for Gurgaon and Manesar Plant in the years 2008 and 2010 respectively from Japan Institute of Plant Maintenance. We have been awarded by JIPM TPM Excellence Consistency Award for both Gurgaon & Manesar Plants in the year 2013. Now we have started TPM Journey to our Haridwar Plant.

Lean TPM Activities:

We have clubbed TPM with lean manufacturing system. Our Company has conducted Lean Manufacturing System (Value Stream Mapping) Work Shop. We have converted huge & complicated machines to Lean Machines. These machines consumes very less Electricity, occupies less space, takes very less inputs like consumables, manpower, tools, oils, compressed air, less set-up time etc. These machines are 5S Machines. Simple, Small, Slim, Speed & Safe and helps us in reducing Cost of manufacturing.

ISO/TS 16949 ACCREDITATION

Your Company''s manufacturing facilities located at Gurgaon, Haridwar and Manesar continue to maintain and uphold the prestigious ISO/TS 16949:2009, ISO 14001:2004 and OHSAS 18001: 2007 (Occupational Health & Safety Assessment Series) certifications from reputed leading Indian and International Certification Institutions. These certifications help in continuous improvements, besides emphasis being laid on prevention of defects, reduction of wastes and variation in supply chain management.

LISTING

The shares of your Company are listed at The National Stock Exchange of India Limited and BSE Limited, and pursuant to Clause 38 of the Listing Agreement, the Annual Listing fees for the year 2015-16 have been paid to them well before the due date i.e. April 30, 2015. Annual Custody/Issuer fee for the year 2015-16 will be paid by the Company to NSDL and CDSL on receipt of the invoices.

HUMAN RESOURCES

Preventive Human Resources management is the strength of our Company and over a period of time, we have changed our vision of employees from "Human Resources Management" to "Human Capital Management".

Your Company believes that employees form the fulcrum of growth and differentiation for the organization. The Company recognizes that people are its principal assets and that to continued growth is dependent upon the Company''s ability to attract and retain quality people. The total headcounts were 3,401 at the end of the year as compared to 3,525 of the previous year. The Company encourages long-term commitment to the Company by rewarding its people for the opportunities they create and the value generated for customers and shareholders. The Company conducts several training programmes to upgrade the skills of the workforce.

Many initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes which has helped the organization achieve higher productivity levels. A significant effort has also been undertaken to develop leadership as well as technical/ functional capabilities in order to meet future talent requirement.

BUSINESS RISK MANAGEMENT

The Company has a Risk Management Policy to identify, evaluate business risks and opportunities. This framework seeks to create transparency, minimize adverse impact on the business objectives and enhance the Company''s competitive advantage. The business risk framework defines the risk management approach across the enterprise at various levels including documentation and reporting.

The Company regularly conducts a study to develop a comprehensive 360° view on the opportunities, risks and threats to the business. These include areas such as market trends, new competition, changing customer preferences, disruptions in supplies, product development, talent management etc.

The Board has identified following risks:-

Intensifying Competition, Declining margins, Imposition of strict environmental / safety / regulatory regulations, Increase in raw material/component prices , Dependence on Collaborators , Over dependence on limited user segment base, Economic downturn, Risk of natural or manmade disasters, Product liability / recall, Single vendor dependence for critical components , Investment risks in expansion projects, Sales Catering only to Domestic Market, Over Dependence on few customers base, Retention & development of personnel and Inappropriate addressing of customer grievances. We through qualitative products and brand image, import only in case of cost advantage, regular improvement in productivity, controls over overhead and labour cost through a robust control of approvals, internal audit of environmental safety and regulatory compliance, localization of components, insurance, TS 16949 certification, TPM certification, regular development of alternate vendors where only single source, capturing customer complaints and response to them, have effective risk mitigating plans.

VIGIL MECHANISM / WHISTLE BLOWER POLICY

The Company has a vigil mechanism policy to deal with instance of fraud and mismanagement, if any. The details of the Policy is explained in the Corporate Governance Report and also posted on the website of the Company. The website link is given below-

http://www.munialshowa.net/pdf/Vigil%20Mechanism%20%20Whistle%20 Blower%20Policv.pdf

RECOMMENDATION OF THE AUDIT COMMITTEE

During the year, there was no such recommendation of the Audit Committee which was not accepted by the Board. Hence, there is no need for the disclosure of the same in this Report.

CHANGES IN THE NATURE OF BUSINESS

There is no change in the nature of the business of the Company during the Financial Year 2014-15 DIRECTORS & KEY MANAGERIAL PERSONNEL

Mr. Matsui Masanao (DIN 00340218) has been appointed as an additional director under Section 161(1) and any other applicable provisions of the Companies Act, 2013 and the rules made thereunder (including any statutory modification(s) or re-enactment thereof for the time being in force) read with Article 89 of the Articles of Association of the Company w.e.f May 22, 2015.

Mr. Ashok Kumar Munjal (DIN 00003843) non executive director of the Company is liable to retire by rotation at the ensuing Annual General Meeting. Mr. Ashok Kumar Munjal being eligible has offered himself for re-appointment.

Mr. Ashok Kumar Munjal aged about 64 years old, serves as the Managing Director of Sunbeam Auto Private Limited. Mr. Munjal has 33 years of experience in the field of engineering industry, investment, finance and auto component. He serves as a Director in Ledpra Infracon Private Limited, Radha Kishan Buildwell Private Limited And Privilege Estates Private Limited w.e.f. October 13, 2014. He is also a Director in Orient Craft Limited, SKH Education Private Limited., Chandernagar Chemicals And Minerals Private Limited, Hero Auto Components Private Limited, H & H Industries Private Limited and Sunglow Industries Private Limited. Mr. Munjal is a Commerce and Law Graduate from Punjab University, Chandigarh. He does not hold any share in the Company. He is the Member of Audit Committee and Share Transfer/Stakeholder Relationship Committee of the Company. He is also the member of the Audit Committee of Orient Kraft Limited. He is holding the position of directorship in twelve Companies including Munjal Showa Limited.

Your directors recommend his re-appointment at the ensuing Annual General Meeting.

Mr. Matsuura Katsuhiko (DIN 05276954) has resigned as Director of the Company w.e.f May 22, 2015. The Board placed its appreciation for the valuable services rendered by Mr. Matsuura Katsuhiko during his tenure as Director of the Company.

The shareholders approved the variation in the terms of appointment of Mr. Yogesh Chander Munjal (DIN 00003491) & Mr. Isao Ito (DIN 05134031) at the 29th Annual General Meeting of the Company. The Board of Directors in its meeting held on May 22, 2015 after recommendation of Nomination and Remuneration Committee recommended to the shareholders variation in the Terms of Appointment of Mr. Yogesh Chander Munjal & Mr. Isao Ito w.e.f. September 1,2015.

Mr. Pankaj Gupta was looking after dual responsibility of Chief Financial Officer and Company Secretary of the Company after the resignation of Mr. Mahesh Taneja from the post of Chief Financial Officer and the company was searching for a Company Secretary who will take care of all secretarial functions. After completion of search Mr. Pankaj Gupta resigned from the post of Company Secretary & Compliance Officer and retained the post of Chief Financial Officer of the Company w.e.f. February 06, 2015.

Mr. Saurabh Agrawal was appointed as Company Secretary & Compliance Officer of the Company w.e.f. February 06, 2015.

The following employees were designated as whole-time key managerial personnel:

a. Mr. Yogesh Chander Munjal- Managing Director

b. Mr. Isao Ito- Joint Managing director

c. Mr. Pankaj Gupta- Chief Financial Officer

d. Mr. Saurabh Agrawal- Company Secretary

Pursuant to the section 149, 150, 152 of the Company Act 2013, the rules framed thereunder and the Listing Agreement, All the Independent Directors have been appointed for five years w.e.f. April 01,2014 to March 31,2019.

All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement.

The members of the Company at 29th Annual General Meeting held on August 28, 2014 approved the appointments of Mrs. Charu Munjal (DIN 03094545) as a non-executive Non-Independent Director who is liable to retire by rotation and of Mr. Krishan Chand Sethi, Mr. Vinod Kumar Agrawal, Mr. Devi Singh, Mr. Surinder Kumar Mehta and Mr. Nand Dhameja as Independent Directors who are not liable to retire by rotation.

The information under rule 5(1) of Companies (Appointment & Remuneration) Rules 2014 is given in Annexure D-1

SUBSIDIARY COMPANIES, JOINT VENTURES OR ASSOCIATE COMPANIES

The Company neither has any Subsidiaries, joint ventures or associate companies nor any company have become or ceased to be its Subsidiaries, joint ventures or associate companies during the year.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the other committees of the Board i.e. Audit Committee, Nomination & Remuneration Committee, Risk Management Committee and Share Transfer/ Stakeholders Relationship Committee. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

REMUNERATION POLICY AND REMUNERATION TO THE DIRECTORS

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Nomination and Remuneration Policy has been included in this Report as Annexure-G.

The details of remuneration, sitting fee etc. paid to directors are given in Corporate Governance Report. (Please refer point no. IV of Corporate Governance Report)

MEETINGS

A calendar of Meetings is prepared and circulated in advance to the Directors.

During the year four Board Meetings and four Audit Committee Meetings were convened and held. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Listing Agreement. (Please refer point no. I & II of Corporate Governance Report)

DIRECTORS'' RESPONSIBILITY STATEMENT

Your Director''s state that:

a. in the preparation of the annual accounts for the year ended March 31,2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b. the Directors have selected such accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31,2015 and of the profit of the Company for the year ended on that date;

c. the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d. the Directors have prepared the annual accounts on a ''going concern'' basis;

e. the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and

f. the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

RELATED PARTY TRANSACTIONS

All contracts/ arrangements/ transactions entered by the Company during the financial year with related parties were on arm''s length basis and were in the ordinary course of business. During the year the Company had not entered into any contract/ arrangement/ transaction with related parties which could be considered material. Hence, requirement of Form AOC-2 as required under section 188(1) of the Companies Act, 2013 is not applicable to the Company.

All transactions with related parties were placed before Audit Committee and Audit committee has given omnibus approval for repetitive and foreseen transactions. The Board also noted these transactions on quarterly basis. The detail with related party transactions is given in note number 28 and 28A of financial statement.

The Company has developed a policy on Related Party Transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company''s website. And the link of such policy is given below: http://www.munialshowa.net/pdf/Related%20Partv%20Transaction%20 Policv.pdf None of the Directors has any pecuniary relationships with the Company.

EXPLANATIONS OR COMMENTS BY THE BOARD ON QUALIFICATION, RESERVATION OR ADVERSE REMARK OR DISCLAIMER MADE

The observations of the Auditors in their report read with the notes to accounts are self-explanatory and do not require any specific comments. However as pointed out by the Auditors in annexure to their report at point number vii(a), the slight delay in payment of undisputed statutory dues in few cases was on account of finalization of accounts beyond the due date of statutory dues and the same were paid with interest.

There is no other qualification, reservation or adverse remark or disclaimer made by the auditor in his report; and the company secretary in practice in his secretarial audit report.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has a comprehensive system of internal control to safeguard the Company''s assets against any loss from unauthorized use and ensure proper authorization of financial transactions.

The Company has internal control systems commensurate with the size and nature of the business and has experienced personnel positioned adequately in the organization to ensure internal control processes and compliances. The Company takes abundant care in designing, reviewing and monitoring regularly the working of internal control systems and their compliances for all important financial internal control processes. The Audit findings are reported on quarterly basis to the Audit Committee of the Board headed by a Non-executive Independent Director.

The Company has robust ERP systems based on SAP platform. This ensures high degree of systems based checks and controls.

The Company maintains a system of internal controls designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the reliability of financial controls and compliance with laws and regulations.

GENERAL

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company''s operations in future.

Your Directors further state that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation of the co-operation and support extended to the Company by Government of India, State Governments of Haryana and Uttrakhand, other local authorities, bankers, suppliers, customers and other stakeholders whose continued support has been a source of strength to the Company. The continued dedication and sense of commitment shown by the employees at all levels during the year deserve special mention.

The Directors also place on record their appreciation for the valuable assistance and guidance extended to the Company by Showa Corporation, Japan and for the encouragement and assurance, which our collaborator has provided from time to time for the growth and development of the Company.

The Directors also take this opportunity to express their deep gratitude for the continued co-operation and support received from its valued shareholders.

For and on behalf of the Board

Place: New Delhi Yogesh Chander Munjal Date: May 22, 2015 (Managing Director) (DIN 00003491) B-175, Greater Kailash, Part I, New Delhi, 110048

Krishan Chand Sethi (Director) (DIN 00004471) 9/304 East End Apartments, Mayur Vihar Extn. Phase I, New Delhi, 110096


Mar 31, 2013

Dear Members,

The Directors have great pleasure in presenting the 28th Annual Report together with the Audited Statement of Accounts for the financial year ended March 31, 2013.

FINANCIAL RESULTS AND APPROPRIATIONS

The salient features of the Company''s Financial Results for the year under review are as follows:

(Rs. In Lacs)

Year Ended Year Ended 31.03.13 31.03.12

Sales and other Income 172743.67 167568.49

Profit before Interest, Depreciation, Tax & Exceptional item 10886.81 12414.66

Exceptional Item (Interest expenses) 614.34

Financial Cost 716.57 1101.90

Depreciation 2764.20 2722.88

Profit before Tax 6791.70 8589.88

Provision for Taxation 723.64 1876.99

Profit after Tax 6068.06 6712.89

Net Profit brought forward 6908.43 3590.03

Profit available for appropriation 12976.49 10302.92

Dividend (Recommended) 1199.85 1199.85

Dividend Tax (Net) 203.91 194.64

Transfer to General Reserve 2000.00 2000.00

Surplus carried to Balance Sheet 9572.73 6908.43

OPERATIONS

The Company has achieved a sales turnover of Rs. 172743.67 lacs registering a growth of 3.09 per cent vis- à-vis Rs. 167568.49 lacs in the previous year. The profit before tax in the current year was at Rs. 6791.69 lacs as compared to Rs. 8,589.88 lacs in the previous year and the decrease was mainly on account of wage settlement at Manesar Plant, reducing the useful life of certain assets and provision of interest of Rs.697.33 lacs (including Rs.614.34 lacs shown as exceptional item as above) on Manesar Land Enhancement Demand made by HSIIDC during the year under review.

FUTURE PROSPECTS

As per RBI''s Indian Economy survey there is an anticipation of a modest recovery with growth in 2013-14 at 5.7 per cent from 5.0 per cent in the year 2012-13 while Average WPI & CPI inflation moderate to 5.5 per cent from 7.4 per cent & 7.5 per cent from 10.2 per cent in year 2012-13 respectively which shows that inflation expectations have moderated slightly, while business expectations remain subdued.

As per Consumer Confidence Survey March 2013 conducted by Reserve Bank of India the negative sentiments with respect to the current and future economic conditions have been rising over the last four quarters.

The outlook has been comparatively better than the perception on current economic conditions due to positive forecast for the monsoon from normal to excess based on the El Nino and sea temperature patterns, increase in rural demand due to rising agricultural incomes to the economy. About one third of the respondents reported no change in the employment scenario. However, the overall perception on future employment scenario remains optimistic.

Our existing customers have assured to meet predetermined sales targets with around 10 per cent growth, with the support of new models likely to be launched both in 2 Wheeler and 4 Wheeler segment and export in the coming year i.e.2013-14. They have planned major initiative to boost the industry sentiments and accelerate growth in the year 2013-14 mainly through new launches, campaigns, capacity addition and network expansion and a significant step working toward their global vision. In nutshell, all customers of the Company are on growth path and Company is confident to meet their increased demand.

TRANSFER TO GENERAL RESERVE

The Board proposes to transfer an amount of Rs. 2000.00 lacs to General Reserve, having regard to the requirements of Section 205 (2A) of the Companies Act, 1956. The balance amount of Rs. 9572.73 lacs (Previous year Rs. 6908.43 lacs) will be retained in the Profit and Loss Account.

DIVIDEND

Your directors are pleased to recommend a dividend of 150 per cent (i.e. Rs. 3/- Per equity share of Rs. 2/- each) for the year ended March 31, 2013 amounting to Rs. 1199.85 lacs in aggregate as compared to 150 per cent i.e. Rs. 3.00 per share in the corresponding last year. Dividend will be tax free in the hands of shareholders, as the Company will bear the dividend distribution tax of Rs. 203.91 lacs (Previous year Rs.194.64 lacs). The dividend, if approved, at the Annual General Meeting shall be payable to the shareholders registered in the books of the Company and the beneficial owners whose names are furnished by the depositories, determined with reference to the book closure from July 20, 2013 to August 09, 2013 (both days inclusive).

DIRECTORS

Mr. Pankaj Munjal, Mr. Surinder Kumar Mehta and Mr. Anil Kumar Vadehra, the directors of the Company are liable to retire by rotation from the Board at the ensuing Annual General Meeting. Mr. Pankaj Munjal, Mr. Surinder Kumar Mehta and Mr. Anil Kumar Vadehra being eligible have offered themselves for re-appointment.

Mr. Tetsuo Terada- executive director has resigned from the post of director w.e.f. April 24, 2013. The Board places on record their appreciation for the valuable services rendered by Mr. Tetsuo Terada during his tenure as Director of the Company.

Mr. Isao Ito has been appointed as an additional director under Section 260 of the Companies Act, 1956 read with Article 89 of the Articles of Association of the Company w.e.f May 24, 2013. He shall hold office of director up to the date of ensuing Annual General Meeting. A notice under Section 257 of the Companies Act, 1956, proposing his candidature as Director at the ensuing Annual General Meeting of the Company, has been received.

Brief resumes of Mr. Pankaj Munjal, Mr. Surinder Kumar Mehta, Mr. Anil Kumar Vadehra and Mr. Isao Ito have been appended to the Notice of the Annual General Meeting.

Your directors recommend their appointment/ re-appointment at the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Report on Corporate Governance and Management Discussion & Analysis Report along with Certificate of the Auditors of your Company pursuant to clause 49 of the Listing Agreement with the Stock Exchanges, have been included in this Report as Annexure-A. Your Company has been practicing the principles of good Corporate Governance over the years.

In terms of sub-clause (v) of Clause 49 of the Listing Agreement, Certificate of CEO/CFO, inter alia, confirming the correctness of the financial statements, adequacy of internal control measures and reporting of matters to the Audit Committee in terms of the said Clause, is also enclosed as a part of the Report.

The Board of Directors has laid down a Code of Conduct to be followed by all the Directors and members of Senior Management of your Company. The Board of Directors support the broad principles of Corporate Governance. In addition to the basic governance issues, the Board also lays strong emphasis on transparency, accountability and integrity.

AUDITORS

M/s S.R. Batliboi & Co.LLP, Chartered Accountants, Gurgaon, the Auditors of the Company (M/s S. R. Batliboi & Co. constitution changed to M/s. S. R. Batliboi & Co. LLP) retire at the conclusion of the forthcoming Annual General Meeting, and being eligible, offer themselves for re-appointment. The Company has also received certificate from the auditors to the effect that their re-appointment, if made, would be in accordance with Section 224(1B) of the Companies Act, 1956.

The Board recommends their re-appointment.

AUDITORS REPORT

The observations of the Auditors in their report read with the notes to accounts are self-explanatory and do not require any specific comments. However as pointed out by the Auditors in annexure to their report at point number (ix) (a), the slight delay in payment of undisputed statutory dues in few cases was on account of finalization of accounts beyond the due date of statutory dues.

COST AUDITORS

M/s. Ramanath Iyer & Co., Cost Accountants, New Delhi, the Cost Auditors of the Company retire at the conclusion of the forthcoming Annual General Meeting, and being eligible, offer themselves for re-appointment. The Company has also received certificate from the auditors to the effect that their re-appointment, if made, would be in accordance with Section 233(B) of the Companies Act, 1956.

The Board recommends their re-appointment.

DIRECTORS'' RESPONSIBILITY STATEMENT

In compliance with Section 217(2AA) of the Companies Act, 1956, the Directors confirm:

a) that the applicable accounting standards have been followed in the preparation of annual accounts and that there are no material departures;

b) that such accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent 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;

c) that 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; and

d) that the annual accounts have been prepared on a going concern basis;

AUDIT COMMITTEE RECOMMENDATION

During the year there was no such recommendation of the Audit Committee which was not accepted by the Board. Hence, there is no need for the disclosure of the same in this Report.

FIXED DEPOSIT

The Company has not accepted any Fixed Deposits during the year under Section 58A or 58AA of the Companies Act, 1956 and the rules made there-under, and as such no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND RESEARCH & DEVELOPMENT AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pursuant to Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 regarding Conservation of Energy, Technology Absorption and R & D and Foreign Exchange earnings & outgo are given in Annexure-B which forms part of Directors'' Report.

ENVIRONMENT COMPLIANCE

As India''s economy continues to accelerate, the performance of both the environmental regulations and the regulator has come under increased national and international scrutiny and pressure. The increasing public demand for better performance by the environmental regulatory agencies is matched by adequate support to these agencies, conditioned on institutional reforms to increase efficiency, transparency and accountability; it would be unfair to expect substantial progress from the corporate and also unfair to solely blame the regulator for the lack of it. We must induct some concern and commitment in our profiting from Clean and Green Development Mechanism to ensure compliance of pollution standards.

We have started believing "waste is a precious resource kept in a wrong place". We further believe that "there is no waste as per the law of the nature". Hence from the solid waste like Iron & Steel from old scrap machines, we are collecting the raw material and we are manufacturing "Lean and Low cost" machines with a philosophy of "Easy to run, Easy to maintain, Easy to clean and Zero accident by meeting all the quality and productivity standard. Everything is done in house starting from design up to finishing of the machine. This concept of reuse of metallic waste is highly appreciated by CII, ACMA and international experts of our Japanese Collaborator.

By Regular training for workers and staff to prevent accident related to mechanical, electrical, chemical, physiological and psychological safety the Company has made "Zero incidents" as acceptable standard. Hazard Identification and Risk Assessment (HIRA) is our primary focus to mitigate and prevent the abnormalities. Because of our dedicated and committed efforts in continual improvement of Safety, Health and Environment area, this year we have received two national awards from Ministry Of Labour and Employment for safety. The Company is a regular member of Haryana Environment Management Society.

The Company has started Green Vendor Development Programme (GVDP) in 2009-10. The aim of the project is to conserve water and Energy, Minimize generation of waste, terminate hazardous chemicals with non- hazardous chemicals, minimize carbon foot print, generate pollution prevention awareness throughout the plant and to achieve 100 per cent legal compliance. The Company is rigorously improving to create a better place for our next generation.

ISO/TS 16949 ACCREDITATION

Your Company''s manufacturing facilities plants located at Gurgaon and Manesar continue to maintain and uphold the prestigious ISO/TS 16949:2009, ISO 14001:2004 and OHSAS 18001: 2007 (Occupational Health & Safety Assessment Series) certifications from reputed leading Indian and International Certification Institutions. Company''s third plant located at Haridwar has also got TS 16945. These certifications help in continuous improvements, besides emphasis being laid on prevention of defects, reduction of wastes and variation in supply chain management.

TPM

The Company has taken up the journey of Total Productive Maintenance (TPM) with the help of JIPM (Japan Institute of Plant Maintenance) Japan and CII, TPM Club India. Major objectives of TPM are to increase Productivity, to improve Quality, to reduce Costs, to ensure in time Delivery, to increase Safety, to increase profitability, to build Morale and to protect environment by formation of small cross functional work groups (PQCDSME) and to improve overall Plant efficiency. The other objectives are to procure and install maintenance free plant and machinery; and to achieve zero defects, zero break down, zero losses and zero accidents. In nutshell, TPM converts all the losses into Profit.

We have achieved Japan Institute of Plant Maintenance TPM Excellency Award "category A" for Gurgaon as well as our Manesar Plants in the year 2008 & 2010 respectively. We are working towards challenging the next level which is consistency level by the end of 2013. The Company had made the TPM declaration for our Haridwar Plant on 23rd March 2011. Munjal Showa is helping some of our Vendors in doing TPM in their Organizations.

To share the TPM & Lean achievements we receive many delegations not only from India rather from all over the World, Countries like USA, Germany, UK, Japan, Thailand, Brazil, Indonesia, Vietnam, China, etc. Besides that we receive lots of Delegations from CII, (all the regions) ACMA, Honda cluster club, IMTMA, etc.)

Lean Activities:

We have clubbed TPM with lean manufacturing system. Our Company has conducted Lean Manufacturing System (Value Stream Mapping) Work Shop. We have converted lots of huge & complicated machines to Lean Machines & manufactured Lean machines in house. We receive many visitors not only from India but also from all over the World to see our TPM & Lean machine manufacturing activity. Munjal Showa is taking a lead role in spreading this concept of Lean Machines across the Country thru CII, ACMA, IMTMA, MSIL, HMCL, Honda Siel Club, etc.

In the recent past, we were able to re-build many very big & very complicated machines into very simple & Lean machines, which have many advantages besides the space saving. We have manufactured many new machines by using the TPM, Lean & Low cost Automation concepts. And the Journey is still on.

LISTING

The shares of your Company are listed at National Stock Exchange of India Limited and Bombay Stock Exchange Limited, and pursuant to Clause 38 of the Listing Agreement, the Annual Listing fees for the year 2012-2013 have been paid to them well before the due date i.e. April 30, 2013. The Company has also paid the annual custodian fees for the year 2013-14 in respect of Shares held in dematerialized mode to NSDL & CDSL.

PARTICULARS OF EMPLOYEES

A statement under sub-section (2A) of Section 217 of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended, forming part of this Directors'' Report is given in Annexure-C.

HUMAN RESOURCES

Your Company believes that employees form the fulcrum of growth and differentiation for the organization. The Company recognizes that people are its principal assets and that to continued growth is dependent upon the Company''s ability to attract and retain quality people. The total headcounts were 3292 at the end of the year as compared to 3494 of the previous year. The Company encourages long-term commitment to the Company by rewarding its people for the opportunities they create and the value generated for customers and shareholders. The Company conducts several training programmes to upgrade the skills of the workforce.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation of the co-operation and support extended to the Company by Government of India, State Governments of Haryana and Uttrakhand, other local authorities, bankers, suppliers, customers and other stakeholders whose continued support has been a source of strength to the Company. The continued dedication and sense of commitment shown by the employees at all levels during the year deserve special mention.

The Directors also place on record their appreciation for the valuable assistance and guidance extended to the Company by Showa Corporation, Japan and for the encouragement and assurance, which our collaborator has provided from time to time for the growth and development of the Company.

The Directors also take this opportunity to express their deep gratitude for the continued co-operation and support received from its valued shareholders.

For and on behalf of the Board

Place: New Delhi BRIJMOHAN LALL MUNJAL

Dated: May 24, 2013 Chairman


Mar 31, 2012

The Directors have great pleasure in presenting the 27th Annual Report together with the Audited Statement of Accounts for the financial year ended March 31, 2012.

FINANCIAL RESULTS AND APPROPRIATIONS

The salient features of the Company's Financial Results for the year under review are as follows:

(Rs. In Lacs)

Year Ended Year Ended

31.03.12 31.03.11

Sales and other Income 167568.49 139075.53

Profit before Interest, Depreciation & Tax 12428.68 8332.17

Financial Cost 1115.92 914.01

Depreciation 2722.88 2624.67

Profit before Tax 8589.88 4793.49

Provision for Taxation 1876.99 1391.58

Profit after Tax 6712.89 3401.91

Net Profit brought forward 3590.03 2347.12

Profit available for appropriation 10302.92 5749.03

Dividend (Recommended) 1199.85 999.88

Dividend Tax (Net) 194.64 159.12

Transfer to General Reserve 2000.00 1000.00

Surplus carried to Balance Sheet 6908.43 3590.03

OPERATIONS

The Company has achieved a record sales turnover of Rs. 167568.49 lacs registering a growth of 20.49 per cent vis-a-vis Rs. 139,075.53 lacs in the previous year. The profit before tax in the current year was at Rs. 8,589.88 lacs as compared to Rs. 4,793.49 lacs in the previous year registering a growth of 79.20 per cent.

FUTURE PROSPECTS

It has become clearer that Indian economy will not be able to achieve its GDP growth forecast of 8% or thereabouts, it might have the possibility to settle for a figure as estimated by IMF around 6.9 per cent in 2012 and 7.3 per cent next year, as a result of weak demand and higher interest rates, another flare-up of the euro- zone sovereign debt crisis or sharp escalation in oil prices on geopolitical uncertainty could easily undermine confidence and disrupt the improving growth path for world economy. With the passing of the crisis and some good news about the US economy, some optimism has returned.

As per Consumer Confidence Survey March 2012 conducted by Reserve Bank of India households' perception about current economic conditions and expectation for next one year has decreased in terms of net response; however, more than half of the respondents continue to feel that the current economic conditions and future prospects are favourable. Majority of respondents perceive that household circumstances have become better, though the proportion of respondents reporting worsening of current household circumstances has increased as compared with the previous round.

While the growth prospects of the Indian auto components industry remain promising, there are new challenges as we evolve into a critical part of the global auto ecosystem. For Indian suppliers, on one hand there is the need to maintain competitiveness in an inflationary environment and on the other they need to compete with the best in an increasingly uncertain global market. The increase in petrol prices may impact the sales of 4 Wheeler sales but subsequent proposal for increase in duties of diesel vehicles & increase in diesel prices in order to balance the fiscal deficit will neutralize the shift towards diesel run vehicles. Further, OEMs internationally are reducing the number of suppliers that they wish to work with. Thus, it calls for Tier-1 suppliers to facilitate up-gradation and scaling up capacity, quality, technology, people and even hand hold the Tier-II and Tier-III suppliers, without which it will be really difficult to sustain the industry's competitiveness in the long term.

Our existing customers have targeted to meet predetermined sales targets with around 10 per cent growth, with the support of new models likely to be launched both in 2 Wheeler and 4 Wheeler segment in the coming year i.e.2012-13. In brief, all customers of the Company are on growth path and Company is confident to meet their increased demand.

TRANSFER TO GENERAL RESERVE

The Board proposes to transfer an amount of Rs.2000.00 lacs to General Reserve, having regard to the requirements of Section 205 (2A) of the Companies Act, 1956. The balance amount of Rs. 6908.43 lacs (Previous year Rs. 3,590.03 lacs) will be retained in the Profit and Loss Account.

DIVIDEND

Your directors are pleased to recommend a dividend of 150 per cent (i.e. Rs. 3/- Per equity share of Rs. 2/- each) for the year ended March 31, 2012 amounting to Rs.1199.85 lacs in aggregate as compared to 125 per cent i.e. Rs. 2.50 per share in the corresponding last year. Dividend will be tax free in the hands of shareholders, as the Company will bear the dividend distribution tax of Rs. 194.64 lacs. The dividend, if approved, at the Annual General Meeting shall be payable to the shareholders registered in the books of the Company and the beneficial owners whose names are furnished by the depositories, determined with reference to the book closure from July 21, 2012 to August 09, 2012 (both days inclusive).

DIRECTORS

Mr. Krishan Chand Sethi, Mr. Ashok Kumar Munjal and Mr. Vinod Kumar Agrawal, the directors of the Company are liable to retire by rotation from the Board at the ensuing Annual General Meeting. Mr. Krishan Chand Sethi, Mr. Ashok Kumar Munjal and Mr. Vinod Kumar Agrawal being eligible have offered themselves for re-appointment.

Mr. Akira Kadoya- non executive director has resigned from the post of director w.e.f. May 23, 2012. The Board places on record their appreciation for the valuable services rendered by Mr. Akira Kadoya during his tenure as Director of the Company.

Mr. Katsuhiko Matsuura has been appointed as an additional director under Section 260 of the Companies Act, 1956 read with Article 89 of the Articles of Association of the Company w.e.f May 23, 2012. He shall hold office of director up to the date of ensuing Annual General Meeting. A notice under Section 257 of the Companies Act, 1956, proposing his candidature as Director at the ensuing Annual General Meeting of the Company, has been received.

Brief resumes of Mr. Krishan Chand Sethi, Mr. Ashok Kumar Munjal, Mr. Vinod Kumar Agrawal and Mr. Katsuhiko Matsuura have been appended to the Notice of the Annual General Meeting.

Your directors recommend their appointment/ re-appointment at the ensuing Annual General Meeting.

CORPORATE GOVERNANCE

Report on Corporate Governance and Management Discussion & Analysis Report along with Certificate of the Auditors of your Company pursuant to clause 49 of the Listing Agreement with the Stock Exchanges, have been included in this Report as Annexure-A. Your Company has been practicing the principles of good Corporate Governance over the years.

In terms of sub-clause (v) of Clause 49 of the Listing Agreement, Certificate of CEO/CFO, inter alia, confirming the correctness of the financial statements, adequacy of internal control measures and reporting of matters to the Audit Committee in terms of the said Clause, is also enclosed as a part of the Report.

The Board of Directors has laid down a Code of Conduct to be followed by all the Directors and members of Senior Management of your Company. The Board of Directors support the broad principles of Corporate Governance. In addition to the basic governance issues, the Board also lays strong emphasis on transparency, accountability and integrity.

AUDITORS

M/s S.R. Batliboi & Co., Chartered Accountants, Gurgaon, the Auditors of the Company retire at the conclusion of the forthcoming Annual General Meeting, and being eligible, offer themselves for re-appointment. The Company has also received certificate from the auditors to the effect that their re-appointment, if made, would be in accordance with Section 224(1B) of the Companies Act, 1956.

The Board recommends their re-appointment.

AUDITORS REPORT

The observations of the Auditors in their report read with the notes to accounts are self-explanatory and do not require any specific comments. However as pointed out by the Auditors in annexure to their report at point number (ix) (a), the slight delay in payment of undisputed statutory dues in few cases was on account of finalization of accounts beyond the due date.

COST AUDITORS

The Board on the basis of recommendation of Audit Committee and subject to the approval of Central Government appointed M/s. Ramanath Iyer & Co., Cost Accountants, New Delhi, as the Cost Auditors of the Company under Section 233B of the Companies Act, 1956 for the financial year 2012-13 and the necessary application for obtaining the requisite approval will be filed with the Central Government before due date.

DIRECTORS' RESPONSIBILITY STATEMENT

In compliance with Section 217(2AA) of the Companies Act, 1956, the Directors confirm:

a) that the applicable accounting standards have been followed in the preparation of annual accounts and that there are no material departures;

b) that such accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent 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;

c) that 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; and

d) that the annual accounts have been prepared on a going concern basis;

AUDIT COMMITTEE RECOMMENDATION

During the year there was no such recommendation of the Audit Committee which was not accepted by the Board. Hence, there is no need for the disclosure of the same in this Report.

FIXED DEPOSIT

The Company has not accepted any Fixed Deposits during the year under Section 58A or 58AA of the Companies Act, 1956 and the rules made there-under, and as such no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND RESEARCH & DEVELOPMENT AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pursuant to Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 regarding Conservation of Energy, Technology Absorption and R & D and Foreign Exchange earnings & outgo are given in Annexure-B which forms part of Directors' Report.

ENVIRONMENT COMPLIANCE

As India's economy continues to accelerate, the performance of both the environmental regulations and the regulator will come under increased national and international scrutiny and pressure. The increasing public demand for better performance by the environmental regulatory agencies is matched by adequate support to these agencies, conditioned on institutional reforms to increase efficiency, transparency and accountability; it would be unfair to expect substantial progress from the corporate and also unfair to solely blame the regulator for the lack of it. We need to replicate climate change initiatives on finance and technology for pollution abatement within the country as this model has suggested. We must induct some concern and commitment in our profiting from Clean Development Mechanism to ensure compliance of pollution standards.

We have started believing "waste is a precious resource kept in a wrong place". We further believe that "there is no waste as per the law of the nature". Hence from the solid waste like Iron & Steel from old scrap machines, we are collecting the raw material and we are manufacturing "Lean and Low cost" machines with a philosophy of "Easy to run, Easy to maintain, Easy to clean and Zero accident" by meeting all the quality and productivity standard. Everything is done in house starting from design up to finishing of the machine. This concept of reuse of metallic waste is highly appreciated by CII, ACMA and experts of our Japanese Collaborator.

By Regular training for workers and staff to prevent accident related to mechanical, electrical, chemical, physiological and psychological safety the Company has made "Zero incidents" as acceptable standard.

The Company is a regular member of Haryana Environment Management Society.

The Company has started Green Vendor Development Programme (GVDP) in 2009-10. The aim of the project is to conserve water and Energy, Minimize generation of waste, terminate hazardous chemicals with non- hazardous chemicals, minimize carbon foot print, generate pollution prevention awareness throughout the plant and to achieve 100 per cent legal compliance.

ISO/TS 16949 ACCREDITATION

Your Company's manufacturing facilities plants located at Gurgaon and Manesar continue to maintain and uphold the prestigious ISO/TS 16949:2009, ISO 14001:2004 and OHSAS 18001: 2007 (Occupational Health & Safety Assessment Series) certifications from reputed leading Indian and International Certification Institutions. Company's third plant located at Haridwar has also got TS 16945. These certifications help in continuous improvements, besides emphasis being laid on prevention of defects, reduction of wastes and variation in supply chain management.

TPM

The Company has taken up the journey of Total Productive Maintenance (TPM) with the help of JIPM (Japan Institute of Plant Maintenance) Japan and CII, TPM Club India. Major objectives of TPM are to increase Productivity, to improve Quality, to reduce Costs, to ensure in time Delivery, to increase Safety, to increase profitability, to build Moral and to protect environment by formation of small cross functional work groups (PQCDSME) and to improve overall Plant efficiency. The other objectives are to procure and install maintenance free plant and machinery; and to achieve zero defects, zero break down, zero losses and zero accidents. In nut shell TPM convert all the losses into Profit.

We have achieved Japan Institute of Plant Maintenance TPM Excellency Award "category A" for Gurgaon as well as our Manesar Plants in the year 2008 & 2010 respectively. We are working towards challenging the next level which is consistency level by the end of 2012. Top Management has made the TPM declaration for our Haridwar Plant on 23rd March 2011. Munjal Showa is helping some of our Vendors in doing TPM in their Organizations.

To share the TPM & Lean achievements we receive many delegations not only from India rather from all over the World Countries like USA, Germany, UK, Japan, Thailand, Brazil, Indonesia, Vietnam, China, etc. Besides that we receive lots of Delegations from CII, (all the regions) ACMA, Honda cluster club, IMTMA, etc.)

Lean Activities:

We have clubbed TPM with lean manufacturing system. Our Company has conducted Lean Manufacturing System (Value Stream Mapping) Work Shop. We have converted lots of huge & complicated machines to Lean Machines & manufactured Lean machines in house. We receive many visitors not only from India but also from all over the World to see our TPM & Lean machine manufacturing activity. Munjal Showa is taking a lead role in spreading this concept of Lean Machines across the Country thru CII, ACMA, IMTMA, MSIL, HMCL, Honda Siel Club, etc.

At present we were able to re-build many very big & very complicated machines into very simple & Lean machines, which have many advantages besides the space saving. We have manufactured many new machines by using the TPM, Lean & Low cost Automation concepts. And the Journey is still on.

LISTING

The shares of your Company are listed at National Stock Exchange of India Limited and Bombay Stock Exchange Limited, and pursuant to Clause 38 of the Listing Agreement, the Annual Listing fees for the year 2012-2013 have been paid to them well before the due date i.e. April 30, 2012. The Company has also paid the annual custodian fees for the year 2012-13 in respect of Shares held in dematerialized mode to NSDL & CDSL.

PARTICULARS OF EMPLOYEES

A statement under sub-section (2A) of Section 217 of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended, forming part of this Directors' Report is given in Annexure-C.

HUMAN RESOURCES

Your Company believes that employees form the fulcrum of growth and differentiation for the organization. The Company recognizes that people are its principal assets and that to continued growth is dependent upon the Company's ability to attract and retain quality people. The total headcount increased to 3494 at the end of the year as compared to 3477 of the previous year. The Company encourages long-term commitment to the Company by rewarding its people for the opportunities they create and the value generated for customers and shareholders. The Company conducts several training programmes to upgrade the skills of the workforce.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation of the co-operation and support extended to the Company by Government of India, State Governments of Haryana and Uttrakhand, other local authorities, bankers, suppliers, customers and other stakeholders whose continued support has been a source of strength to the Company. The continued dedication and sense of commitment shown by the employees at all levels during the year deserve special mention.

The Directors also place on record their appreciation for the valuable assistance and guidance extended to the Company by Showa Corporation, Japan and for the encouragement and assurance, which our collaborator has provided from time to time for the growth and development of the Company.

The Directors also take this opportunity to express their deep gratitude for the continued co-operation and support received from its valued shareholders.

For and on behalf of the Board

Place: New Delhi BRIJMOHAN LALL MUNJAL

Date: May 23, 2012 Chairman


Mar 31, 2010

The Directors have great pleasure in presenting the 25th Annual Report together with the Audited Statement of Accounts for the financial year ended March 31,2010.

FINANCIAL RESULTS AND APPROPRIATIONS

The salient features of the Companys Financial Results for the year under review are as follows:

(Rs. In Lacs)

Year Ended Year Ended 31.03.10 31.03.09

Sales and other Income 108092.61 95392.24

Profit before Depreciation & Tax 6178.52 4975.51

Depreciation 2307.64 1685.70

Profit before Tax 3870.88 3289.81

Provision for Taxation 1409.88 1221.24

Profit after Tax 2461.00 2068.58

Net Profit brought forward 1821.96 1689.23

Profit available for appropriation 4282.96 3757.81

Dividend (Recommended) 799.90 799.90

Dividend Tax 135.94 135.94

Transfer to General Reserve 1000.00 1000.00

Surplus carried to Balance Sheet 2347.12 1821.96

OPERATIONS

The Company has achieved a record sales turnover of Rs. 108,962.61 lacs registering a growth of 14.23 per cent vis-a-vis Rs. 95,392.24 lacs in the previous year. The profit before tax in the current year was at Rs. 3,870.87 lacs as compared to Rs. 3,289.81 lacs in the previous year registering a growth of 17.66 per cent.

FUTURE PROSPECTS

Auto Component Industry is gathering speed as it has direct bearing to Auto Companies. Robust automobile sales should translate into strong order inflows for auto component manufacturers. In the year 2009-10 Auto component Industry has registered encouraging results and growth, which augur well for the year ahead. The company recorded an impressive growth of 19.15 per cent in value and 21.67 per cent in volume.

India has emerged as one of the favorite destinations of global auto majors considering huge demand growth potential driven by substantially low penetration. Entrance of new players into the small car market and with new launches of cars, motor cycles and scooters by existing players to capture the share of growing segment is indicator for favorable growth of Auto Component Industry.

Our existing customers have targeted to meet predetermined sales targets with around 20 per cent growth, with the support of new models likely to be launched both in 2 Wheeler and 4 Wheeler segment in the coming year i.e.2010-11. In brief, all customers of the Company are on growth path and Company is confident to meet their increased demand.

TRANSFER TO GENERAL RESERVE

The Board proposes to transfer an amount of Rs.1,000.00 lacs to General Reserve, having regard to the requirements of section 205 (2A) of the Companies Act, 1956. The balance amount of Rs.2,347.12 lacs (previous year Rs.1,821.96 lacs) will be retained in the Profit and Loss Account.

DIVIDEND

Your directors are pleased to recommend a dividend of 100 per cent (i.e. Rs. 21- Per equity share of Rs. 21- each) for the year ended March 31, 2010 amounting to Rs. 799.90 lacs in aggregate. Dividend will be tax free in the hands of shareholders, as the Company will bear the dividend distribution tax of Rs. 135.94 lacs. The dividend, if approved, at the Annual General Meeting shall be payable to the shareholders registered in the books of the Company and the beneficial owners whose names are furnished by the depositories, determined with reference to the book closure from July 24,2010 to August 11,2010 (both days inclusive).

DIRECTORS

Mr. Pankaj Munjal, Mr. Anil Kumar Vadehra and Mr. Surinder Kumar Mehta, the directors of the Company, liable to be retire by rotation from the Board at the ensuing Annual General Meeting. Mr. Pankaj Munjal, Mr. Anil Kumar Vadehra and Mr. Surinder Kumar Mehta being eligible have offered themselves for re-appointment.

Mr. Akira kadoya and Mr. Tetsuo Terada have been appointed additional directors under section 260 of the Companies Act, 1956 read with Article 89 of the Articles of Association of the Company.

Brief resumes of Mr. Pankaj Munjal, Mr. Anil Kumar Vadehra, Mr. Surinder Kumar Mehta, Mr. Akira kadoya and Mr. Tetsuo Terada have been appended to the Notice of the Annual General Meeting.

Your directors recommend their appointment at the ensuing Annual General Meeting,

CORPORATEGOVERNANCE

Report on Corporate Governance and Management Discussion & Analysis Report along with Certificate of the Auditors of your Company pursuant to clause 49 of the Listing Agreement with the Stock Exchanges, have been included in this Report as Annexure-A. Your Company has been practicing the principles of good Corporate Governance over the years.

In terms of sub-clause (v) of Clause 49 of the Listing Agreement, Certificate of CEO/CFO, inter alia, confirming the correctness of the financial statements, adequacy of internal control measures and reporting of matters to the Audit Committee in terms of the said Clause, is also enclosed as a part of the Report.

The Board of Directors has laid down a Code of Conduct to be followed by all the Directors and members of Senior Management of your Company. The Board of Directors supports the broad principles of Corporate Governance. In addition to the basic governance issues, the Board also lays strong emphasis on transparency, accountability and integrity.

AUDITORS

M/s S.R. Batliboi & Co., Chartered Accountants, Gurgaon, the Auditors of the Company retire at the conclusion of the forthcoming Annual General Meeting, and being eligible, offer themselves for re-appointment. The company has received copy of valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India from the Auditors. The Company has also received certificate from the auditors to the effect that their re-appointment, if made, would be in accordance with Section 224(1 B) of the Companies Act, 1956.

The Board recommends their re-appointment.

AUDITORS REPORT

The observations of the Auditors in their report read with the notes to accounts are self-explanatory and do not require any specific comments. However, as pointed out by the Auditors in annexure to their report at point number (ix) (a), the delay was on account of finalisation of accounts beyond the due date of depositing the tax.

DIRECTORSRESPONSIBILITY STATEMENT

lncompliancewithSection217(2AA)oftheCompaniesAct, 1956, the Directors confirm: a) that the applicable accounting standards have been followed in the preparation of annual accounts and that there are no material departures;

b) that such accounting policies have been selected and applied consistently and the judgments and estimates made are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31 st March2010 and of the profit of the Company forthe year ended on that date;

c) that 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; and

d) that the annual accounts have been prepared on a going concern basis;

AUDIT COMMITTEE RECOMMENDATION

During the year there was no such recommendation of the Audit Committee which was not accepted by the Board. Hence, there is no need forthe disclosure of the same in this Report.

RATINGS

The rating agency CRISIL Limited has reviewed and reaffirmed the AA/stable for Companys long term loans & cash credit loans and P1 + to its Letter of Credit limits, Bank guarantees limits & Commercial Paper.

FIXED DEPOSIT

The Company has not accepted any Fixed Deposits during the year under Section 58Aor 58AAof the Companies Act, 1956 and the rules made there-under, and as such no amount on account of principal or interest on public deposits was outstanding on the date of the Balance Sheet.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND RESEARCH & DEVELOPMENT AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The information pursuant to Section 217(1) (e) of the Companies Act, 1956 read with the Companies (Disclosure of particulars in the report of the Board of Directors) Rules, 1988 regarding Conservation of Energy, Technology Absorption and R&D and Foreign Exchange earnings & outgo are given in Annexure-B which forms part of DirectorsReport:

ENVIRONMENT COMPLIANCE

"One planet, one earth, one nature" is the slogan of the Company which propagates "Save the earth for a better tomorrow".

Safety and environment performance is integral to the business performance of the Company and received continued focus throughout the year. Zero accidents is acceptable standard of safety performance which was achieved during the financial year 2009-10. Now, to put more focus on safety, we have made Zero incidents as our acceptable standard. The Company regularly organizes training for staff and workers to prevent incidents related to mechanical, electrical, chemical, physiological and psychological safety.

For all manufacturing facilities/which require environmental consents such as air, water and hazardous waste, proper authorizations from respective Pollution Control Boards have been obtained and are in compliance with the present Environmental Legislation. The Company initiated many programmes to improve the health and safety of employees by way of Internal Environment Management Programmes. These initiatives and the improvements are monitored and reviewed through structured audits and management reviews.

The Company is a member of Haryana Environment Management Society. Government of Haryana has identified and notified a site in District Faridabad for use of disposal facility for hazardous waste.

The Company believes waste is a precious resource kept in a wrong place. We have started collection of all kind of waste paper and giving it to authorized agency, who is recycling and reusing it. By doing this activity we are able to save around four to five trees per month. Company believes there is no waste as per the "law of nature".

Manufacturing of machines from old or scrapped machine is a unique initiative by our Company. A lot of machines were overhauled and rebuilt by incorporating all the best practices in the world like lean manufacturing, easy to clean, easy to maintain, zero accident, zero defect, zero breakdown, cockpit concept etc. Experts from overseas plant of Japan, China, Indonesia, Thailand, Vietnam and Brazil including CM delegates are the regular visitors to our plants and understand the cost effectiveness of new technology.

The Company has started a new project for improvement in its performance in environment management. The project is specifically designed and named as Green Vendor Development Programme (GVDP). As a part of the project, six pillars named as Water, Energy, Waste, Chemical Substitution, Pollution Prevention and Legal Compliances have been constituted.

Basic objectives of GVDP are;

100 per cent compliance of legal requirements

To conserve Water and Energy through process mapping

To minimize generation of Waste including hazardous waste and effectuate 3R principles i.e. Reduce,

Recycle and Reuse.

- To terminate hazardous chemicals with less hazardous or non-hazardous chemicals. To understand and minimize carbon foot print.

- To generate pollution prevention awareness throughout the plant and to control & monitor all the pollution control devices to operate at optimum level within the Company and amongst the suppliers also.

ISO/TS16949 ACCREDITATION

Your Companys manufacturing facilities at both the plants at Gurgaon and Manesar continue to maintain and uphold the prestigious ISO/TS 16949:2009, ISO 14001:2004 and OHSAS 18001: 2007 (Occupational Health & Safety Assessment Series) certifications from reputed leading Indian and International Certification Institutions. These certifications help in continuous improvements, besides emphasis being laid on prevention of defects, reduction of wastes and variation in supply chain management. For the new facility at Haridwar, the Company will be able to take the certification by the end of this financial year i.e. March, 2011.

TPM

The Company has taken up the journey of Total Productive Maintenance (TPM) with the help of JIPM (Japan Institute of Plant Maintenance) Japan and Oil, India. Major objectives of TPM are to increase Productivity, to improve Quality, to reduce Costs, to ensure Delivery in time, to increase Safety, to increase profitability, to build Moral by formation of cross functional work groups (PQCDSM) and to improve overall effectiveness of equipment and processes within their areas. The other objectives are to procure and install maintenance free plant and machinery; and to achieve zero defects, zero break down, zero losses and zero accidents. In nut shell convert all the losses into Profit.

a) Gurgaon Plant:

We have challenged the TPM excellence award with JIPM Japan and were honored with TPM Excellence Award category Aat Kyoto on 12"1 March 2009. We are now going to challenge the next level of TPM Excellence Award by end of 2011. For the same the TPM Kick - Off Ceremony for 2nd stage was held on 23rt of April 2009.

b) Manesar Plant:

For Manesar Plant we have challenged the TPM Excellence Award & successfully cleared the health check - up Audit on 21" December 2009 & will clear the final Audit by end of December 2010.

Lean Activities:

We are in the process of clubbing TPM with lean manufacturing system in the near future. Our Company has conducted Lean Manufacturing System (Value Stream Mapping) Work Shop in the month of July 2008. We have converted lots of huge & complicated machines to Lean Machines & manufactured Lean machines in house. We receive many visitors not only from India and from all over the World to see our TPM & Lean machine manufacturing activity.

LISTING

The shares of your Company are listed at National Stock Exchange of India Limited and Bombay Stock Exchange Limited, and pursuant to Clause 38 of the Listing Agreement, the Annual Listing fees for the year 2010-2011 have been paid to them well before the due date i.e. April 30,2010. The Company has also paid the annual custodian fees for the year 2010-11 in respect of Shares held in dematerialized mode to NSDL & CDSL.

PARTICULARS OF EMPLOYEES

A statement under sub-section (2A) of Section 217 of the Companies Act, 1956 read with Companies (Particulars of Employees) Rules, 1975 as amended, forming part of this Directors Report is given in Annexure-C.

HUMAN RESOURCES

Your Company believes that employees form the fulcrum of growth and differentiation for the organization. The Company recognizes that people are its principal assets and that its continued growth is dependent upon the Companys ability to attract and retain quality people. The total headcount increased to 3012 at the end of the year as compared to 2343 of the previous year. The Company encourages long-term commitment to the Company by rewarding its people for the opportunities they create and the value generated for customers and shareholders. The Company conducts several training programmes to upgrade the skills of the workforce.

ACKNOWLEDGEMENT

Your Directors place on record their appreciation of the co-operation and support extended to the Company by Government of India, State Governments of Haryana and Uttrakhand, other local authorities, bankers, suppliers, customers and other stakeholders whose continued support has been a source of strength to the Company. The continued dedication and sense of commitment shown by the employees at all levels during the year deserve special mention.

The Directors also place on record their appreciation for the valuable assistance and guidance extended to the Company by Showa Corporation, Japan and for the encouragement and assurance, which our collaborator has provided from time to time for the growth and development of the Company.

The Directors also take this opportunity to express their deep gratitude for the continued co-operation and support received from its valued shareholders.

For and on behalf of the Board

Place: New Delhi Brijmohan Lall Munjal

Dated: May 18,2010 Chairman



 
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