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Directors Report of NRB Industrial Bearings Ltd.

Dec 31, 2013

To The Members of NRB Industrial Bearings Limited,

The Directors are presenting the 3rd Annual Report and Audited Statement of Accounts for the Fifteen Months period ended 31st December, 2013.

1. FINANCIAL RESULTS

For the Period For the Period Particulars From 01.10.2012 From 01.04.2012 to 31.12.2013 30.09.2012 Rs. Lacs Rs. Lacs

Sales & Other Income 3,154.97 -

EBITDA (1,041.46) (0.27)

Less :

Provision For :

- Depreciation 693.47 -

- Interest 688.90 -

- Tax (106.12) -

Profit/ Loss After Tax (2,316.90) (0.27)

Surplus brought forward (1.70) (1.43)

Profit available for appropriation - -

Transfer to General Reserve

Balance Carried Forward (2,318.60) (1.70)

2. FINANCIAL/OPERATION PERFORMANCE REVIEW:

The Company had started its operation and has during the year under review, recorded a turnover of Rs.3001.87 lacs. Further, the Company has incurred loss after tax of Rs.2,316.90 lacs.

Your company originally the Industrial Bearings Division was demerged from NRB Bearings Limited on October 1, 2012. Machinery and equipment engaged in production of certain types of Industrial Bearing was shifted from the NRB Bearings Plants. Transfer and installation of these machines was completed by March 2013. Many of the old machines need to be refurbished and this process would be completed in next six months.

Production of Ball and Cylindrical Roller Bearings as also setting up modern tool room, metrology and R&D facilities, has commenced with latest state of art machinery and equipment mainly imported from Europe and installed.

The company has recruited young and talented workforce with ITI qualified workman for machine and other operation engineer for operational/supervision. Practical training about product and processes has also been imparted at the company''s Learning Centre.

During the period, business environment remained difficult and operating in such an environment was challenging. The economy has grown at a very slow rate leading to low production and low investment for expansion or new ventures. Distributors are carrying large stocks, leading to lower off - take.

This difficult and challenging environment has resulted into operating losses.

We however, are optimistic for the coming financial period of 15 months, ending 31st March, 2015. We are enlarging our customer base and offering of new products both within India and in overseas. The global economy is steadily growing and surge in demand is expected to result in improved sales turnover and better profitability.

3. DIVIDEND:

Considering the loss made, the Directors of your Company do not recommend any dividend for the period under review.

4. LISTING OF SHARES:

The shares of the company were listed on National Stock Exchange Limited (NSE) and Bombay Stock Exchange (BSE) and got trading permission effective from 9th April, 2013.

5. EXTENSION OF ACCOUNTING YEAR:

The Company got the permission to extend the financial year from the Registrar of Company for three months and extend it up to 31st March 2014 (i.e in aggregate by 6(six) months). The Board of Directors decided to keep the accounting year of 15(fifteen) months starting from 1st October, 2012 and ending on to 31st, December, 2013. As a consequences of the said change the figures in statement of profit and loss figures for current year are of fifteen months ending 31st December, 2013, whereas the comparative figures for previous year are for 6(six) months ending 30th September, 2012.

6. DIRECTORS:

In accordance with the provisions of Companies Act, 1956 and the Articles of Association of the Company, Mr. Trilochan Singh Sahney retires by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.

Further, during the period under review, three additional Directors Mr. Shailesh Rajnikant Sheth, Mr. Pankaj Madhav Baliga, and Mr. Daljit Lilaram Mirchandani were appointed on 31st October, 2012. However, on 14th February, 2014, Mr. Daljit Lilaram Mirchandani resigned from Directorship of the company. The Board placed on record its appreciation of the valuable contribution made by Mr. Daljit Lilaram Mirchandani at the Board meeting held and his guidance and conduct of the Audit Committee meetings during his tenure as Chairman of the Audit Committee.

7. SUBSIDIARY COMPANY :

The Company had one wholly owned Subsidiary namely NRB-IBC Bearing Pvt. Limited, which ceased to be the wholly owned subsidiary of the company w.e.f. 9th December, 2013. Therefore the Statement specified in Section 212 of the Companies Act, 1956 relating to Subsidiary Companies are not attached to this report and also the Audited Consolidated financial statements, which form part of the Annual Report as required by the Listing Agreement with the stock exchanges are also not attached.

8. DIRECTORS'' RESPONSIBILITY STATEMENT:

In accordance with the provisions of Section 217(2AA) of the Companies Act, 1956, your Directors state and confirm as under:

a) That in the preparation of the annual accounts, 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 made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the Financial Year as on 31st December, 2013 and the profit of the Company for that period;

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.

9. MANAGEMENT DISCUSSIONS AND ANALYSIS REPORT:

Management Discussion and Analysis Report as required under Clause 49(F) of the Listing Agreement is annexed hereto as Annexure-I and forms part of Directors'' Report.

10. CORPORATE GOVERNANCE & COMPLIANCE CERTIFICATE:

A detailed report on corporate governance of the Company as required under Clause 49(VI) of the Listing Agreement is enclosed as Annexure-II. A Practicing Company Secretary has certified compliance with requirement of corporate governance in relation to clause 49 of the Listing Agreement.

11. PUBLIC DEPOSITS:

Your Company has neither invited nor accepted any deposits from public within the meaning of the Companies (Acceptance of Deposits) Rule, 1975, during the last Financial Period.

12. AUDITORS:

M/s. Delloitte Haskins & Sells, Chartered Accountants, Mumbai, the Statutory Auditors, retire at the conclusion of ensuing Annual General Meeting and have confirmed their eligibility and willingness to accept the office if reappointed.

They have furnished a certificate stating that their re-appointment would be within the limits specified under section 224(IB) of the Companies Act, 1956.

The product "Bearings" is subject to cost audit under the Central Government Rules. M/s Nanabhoy & Co., Cost Accountants, Mumbai have been appointed as the Cost Auditors for period ending 31st March, 2015.

13. AUDITORS'' REPORT:

Trie Auditors'' Report to the members together with Audited Accounts for the Fifteen months period ended 31st December, 2013 and notes thereon are attached, which are self-explanatory except on the given below matters on which they have drawn attention to:

(i) Note 41 to the Financial Statement: The Company has paid and debited to the Statement of Profit and Loss, managerial remuneration of Rs. 79.51 lacs to the Managing Director which is subject to the approval of the Central Government.

The Board noted that the requisite application has already made to the Central Government in this behalf and is confident that the same will be favorably considered as the scheme of Demerger provided that the terms and conditions of the employees joining from the Demerging company would be on the terms not less favorable than their previous employment

(ii) Note 45 of the Financial Statements: The Company had placed Inter Corporate Deposit with the company covered under Section 295 of the Companies Act, 1956 without obtaining previous approval of the Central Government. The Company will be application to the Central Government for approval of the deposit placed.

** The Board noted that the Inter corporate Deposit was placed for a short period of 30 days out of temporary surplus funds available with the company. The Inter corporate Deposit has been repaid with the interest on the due date.

14. PARTICULARS OF EMPLOYEES:

Information as per section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975 as amended is as follows:

Name Mr. Devesh Singh Sahney

Date of Birth 17.11.1968

Qualification Bachelors of Arts degree (Business Administration & Economics) from Richmond College, London and Master in business Administration (General Management) from the Asian Institute of Management (Philippines)

Experience 21 Years

Director Since May 2001

Date of Commencement of Employment 1st October, 2012

* Remuneration Rs. 79.51 Lacs

Last Employment NRB Bearings Limited

* Remuneration includes the basic salary and allowances.

15. PERSONNEL:

The employer-employee relations throughout the year were very cordial. The company enjoys a healthy working atmosphere that inspires the employees to put their best foot forward in achieving a high-sustainable growth. The Directors also wish to place on record the support and confidence reposed in the management by the employees. Total quality in every sphere of activities, employee training and development continues to be on the top priority of your management.

16. RESEARCH AND DEVELOPMENT:

Since the market scenario and technologies are changing rapidly, Research and Development (R&D) is important to ensure that company increases its market share, The company always attempts to use the latest and advanced technology in production process. Keeping pace with the technological developments, the company keeps on adding sophisticated equipments with focus on automation to minimize manual intervention in the manufacturing process thereby ensuring better quality of the final products.

17. INDUSTRIAL RELATIONS:

During the year the company maintained cordial relations with the workmen''s unions at plants.

18. SAFETY, HEALTH AND ENVIRONMENT:

The company committed for establishing and maintaining a safe working environment that promotes the health and performance of all our employees as well as taking active measures to protect the environment. The commitment to the environment extends beyond legal compliance requirements and initiatives are underway across the company''s locations to minimize the consumption of natural resources and reducing waste and emissions and include greening programmes, rainwater harvesting, vermiculture, treatment plants, etc.

Safety is accorded the highest priority by the company. The Safety Policy inter alia ensures safety of public, employees, plant, equipment and business associates, ensuring compliance with all statutory rules and regulations on an ongoing basis. Several training programmes and communication tools have been put in place. Special initiatives are being taken up such as mock drills, up gradation of Fire protection systems, encouraging reporting of near-miss incidents. All plants are striving to achieve "Accident Reduction".

19. CORPORATE SOCIAL RESPONSIBILITY:

Your company firmly believes in "inclusive growth"- improving the quality of life of the people we touch and in communities where we operate. However, the company has not undertaken any work in this area, being the first year of operation with focus on project implementation.

21. ACKNOWLEDGEMENT:

Your Directors look to the future with confidence and place on record their appreciation for the co-operation and assistance received from investors, customers, business associates, bankers, vendors as well as regulatory and government authorities. Your Directors also thank the employees at all levels who, through their dedication, co-operation, support and smart work have enabled the Company to implement the project and commercial production in good time.

By Order of the Board of Directors

For NRB Industrial Bearings Limited

Sd/-

Place: Mumbai Devesh Singh Sahney

Date: 28th February, 2014 Managing Director

 
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