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Directors Report of Shivam Autotech Ltd.

Mar 31, 2015

Dear Members,

The Directors have pleasure in presenting their 10th Annual Report on the business and operations of the Company together with the Audited Statement of Accounts for the year ended March 31, 2015.

Financial Highlights

During the year under review, performance of your Company is as under:

Business Overview

With the main customer being, Hero MotoCorp Limited (HMCL), the Company continues to maintain its growth at a constant rate. Other customers of the Company like BOSCH, DENSO etc have increased their sales/business share marginally as compared to last year. To cater to the requirements of the customers, the company is utilising its available resources to achieve a satisfactory growth rate. With the increase in growth rate of Customers, the Company is expecting to maintain its profits. There is pressure on the EBITDA margin, due to competitive pricing and increase in employees cost.

Particulars Year ended Year ended March 31,2015 March 31,2014

Gross Sales & Other Income 47,012.08 41,937.79

Profit before Depreciation and Interest 8,407.20 8,031.80

Depreciation 2,745.27 3,090.92

Interest 1,997.13 2,045.89

Profit before Taxation 3,664.79 2,894.99

Provision for Taxation (Deferred & Current) 728.13 51.75

Profit after Taxation 2936.66 2,843.24

Profit available for appropriations 2936.66 2,843.24

Appropriations

Amount transferred to General Reserve 300.00 300.00

Proposed Dividend on Equity Shares 600.00 450.00

Tax on Dividend 122.14 76.48

Profit after Appropriations 1914.52 2,016.76

State of Company's Affairs and Future Outlook

During the year under review, your Company has taken measures to enhance operational efficiencies by focusing on improving yields, reducing rejections and enhancing capacity utilisation.

The total sales of the Company increased by 12.10% from Rs. 41,937.79 Lacs in 2013-14 to Rs.47,012.08 lacs in 2014-15. Operating profit (PBDIT) of the company has increased by 4.67% from Rs. 8,031.80 Lacs in 2013-14 to Rs. 8,407.20 Lacs.

The overall performance of the company can be termed as satisfactory.

Transfer to General Reserve

The Board proposes to transfer an amount of Rs.300 lacs to General Reserve. The balance amount of Rs. 11,703.83 lacs (Previous year Rs. 9,964.36 lacs) will be retained as surplus in the statement of Profit and Loss Account.

The Directors are pleased to inform that in order to meet the ever-increasing demand; the Company has planned to set up two new plants at Bangalore and Rohtak location. Bangalore plant is expected to be operationalised in H2 of FY16 and Rohtak plant is expected to be in operation by H1 of FY17.

The company is working towards the PM's Make in India deliberation through Bangalore plant as the production from this plant will help in import substitution of indigenised products.

Dividend

Your directors are pleased to recommend a final dividend of 60% i.e. Rs. 1.20 per equity share of the face value of Rs. 2/- each for the year ended March 31, 2015 which is provided for in the accounts absorbing a sum of Rs. 6 crore, if approved by the members in the ensuing Annual General Meeting. Dividend will be tax free in the hands of shareholders, as the Company will bear the dividend distribution tax of Rs. 122.14 lacs (Previous year Rs. 76.48 lacs). The dividend paid during the previous year was 45% (Rs. 4.50 per share).

The Register of Members and Share Transfer Books will remain closed from Monday, August 31, 2015 to Monday, September 07, 2015 (both days inclusive).

(a) Split of Equity Shares: During the Financial Year 2014- 15, the face value of Equity Shares of the Company has been split from Rs. 10/- per share to Rs. 2/- per share. The record date for the same was October 31, 2014.

(b) Issue of Bonus Shares: In the Board Meeting held on May 18, 2015, the Board has recommended Bonus Issue of Shares to the existing Equity Shares holders of the Company, in the proportion of 1(One) Equity Share for every 1 (One) Equity Share held by them, subject to the approval of shareholders in the ensuing Annual General Meeting.

(c) The paid up Equity Share Capital as on March 31,2015 was Rs. 10 Crore. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor 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.

(d) Your company has not made any provisions of money for purchase of its own shares by employees or by trustees for the benefit of employees during the year under review.

Extract of Annual Return

The extract of Annual Return, in format MGT -9, for the Financial Year 2014-15 is enclosed as Annexure - C to this report.

Meeting of Board of Directors

A calendar of Meetings is prepared and circulated in advance to the Directors. During the Financial Year 2014- 15, 5 meetings of the Board of Directors of the company were held on 30-May-2014, 06-Aug-2014, 29-Sep-2014, 12-Nov-2014 and 14-Feb-2015. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013 and Listing Agreement. For details of the meetings of the board, please refer to the Corporate Governance report, which forms part of this report.

Particulars of Loan, Guarantees and Investments under Section 186 of the Companies Act, 2013

The particulars of loans, guarantees and investments have been disclosed in the financial statements.

Particulars of Contracts or Arrangements with Related Parties

All contracts /arrangements/transactions entered by the Company during the financial year with the related parties were in the ordinary course of business and on arm's length basis and do not attract the provisions of Sec 188 of the Companies Act, 2013. During the year, the Company had not entered into any contracts /arrangements/transactions with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Suitable disclosure as required by the Accounting Standards (AS18) has been made in the notes to the Financial Statements.

Statutory Auditors

M/s. S. S. Kothari Mehta & Co., Chartered Accountants, existing Statutory Auditors' will retire at the conclusion of the ensuing Annual General Meeting and seek re- appointment as Statutory Auditors of the Company at the ensuing Annual General Meeting.

The Company has received letters from them to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment.

The Board of Directors recommends to the shareholders the appointment of M/s. S.S. Kothari Mehta & Co. as Statutory Auditors of the Company for the financial year 2015-16.

Explanation to Auditors' Remarks

The comments on statement of accounts referred to in the report of the auditors are self explanatory.

Material Changes Affecting the Financial Position of the Company

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 on the date of this report.

Your Company was able to raise the short-term/long term funds needed for its working capital related requirements & term loans for new capital expenditure at reasonable rates. By efficient management of working capital, the Company has been able to reduce some interest cost. The Company continues to focus on judicious management of its working capital. During the year under review, the financial position of the Company was satisfactory.

Significant or Material Orders passed by the Regulators

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.

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.

Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

The Company continues to use the latest technologies for improving the productivity and quality of its products and components. The details of Energy, Technology, Absorption, Foreign Exchange Earnings and Outgo are attached as Annexure - D to this Report.

Holding Company

The promoters of the Company i.e. Dayanand Munjal Investments Private Limited (DMIPL) hold 37,397,975 equity shares of Rs. 2/- each which represents 74.80% of the paid up equity capital of the Company.

Your company continues to be a subsidiary company of DMIPL.

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.

Details of Directors and Key Managerial Personnel

Mr. Satyanand Munjal, Mr. Brijmohan Lal Munjal and Mr. O. P. Munjal have resigned from the Board of Directors of Company w.e.f August 06, 2014. The Board of Directors places on record their appreciation for the valuable services and guidance provided by them as Directors of the Company.

Mr. Davendra Ujlayan, Chief Financial Officer has resigned from the post of Company Secretary w.e.f. February 14, 2015 and Ms. Shivani Kakkar has been appointed as the Company Secretary and Compliance Officer of the Company w.e.f. February 14, 2015.

Mrs. Charu Munjal and Dr. Anil Kumar Gupta, Whole Time Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Brief profile of the Director, as required by the Listing Agreement provisions, is given in the Notice / Corporate Governance Report forming part of this Annual Report.

The appointment/re-appointments form part of the Notice of the Tenth Annual General Meeting and the relevant Resolutions are recommended for your approval.

Declaration by Independent Director

The Company has received necessary declaration from each Independent Director under section 149 (7) of the Companies Act, 2013, that he/she meets the criteria of Independence laid down in Section 149(6) of Companies Act, 2013 and Clause 49 of the Listing Agreement.

Statement in Respect of Adequacy of Internal Financial Control with Reference to the Financial Statements Your company has adequate internal control for its business processes across departments to ensure efficient operations, compliance with internal policies, applicable laws and regulations. The internal controls are complemented, on an on-going basis, by an extensive program of internal audits being implemented throughout the year. The internal controls are designed to ensure that the financial and other records of the company are reliable for preparing financial statement and other data for maintaining the accountability of assets in conformity with established accounting principles and that the assets of the company are adequately safe-guarded against any significant misuse or loss.

The Company also has an internal audit system which is conducted by an independent firm of Chartered Accountants. A summary of Internal audit report and observations thereon are reviewed by the Audit Committee on regular basis and have been found to be adequate.

Deposits

During the year, the Company has not accepted any fixed deposit.

Receipt of any commission by MD / WTD from a Company

Details of commission received by Mr. Neeraj Munjal, Managing Director and Mrs. Charu Munjal, Whole Time Director is as follows:

(Amount in Lacs)

Mr. Neeraj Munjal, Mrs. Charu Munjal, Managing Director Whole Time Director

Commission 50.00 79.00

Secretarial Audit

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s Satyender Kumar & Associates, a proprietorship firm of Company Secretaries to undertake the Secretarial Audit of the Company. Secretarial Audit Report in prescribed format MR-3 is annexed as Annexure - E to this Board's Report.

Corporate Social Responsibility (CSR) Policy

During the year, your directors have constituted the Corporate Social Responsibility Committee comprising with the following members:

Mr. Bhagwan Dass Narang - Chairman

Dr. Anil Kumar Gupta - Member

Mrs. Charu Munjal - Member

The details about the policy indicating the activities to be undertaken by the Company, activities implemented by the company and the amount spent on CSR activities as per the provisions of Companies (Corporate Social Responsibility Policy) Rules, 2014, is annexed as Annexure - F to this report.

Audit Committee

The Audit Committee comprises mainly of Independent Directors and the composition is as under:

Mr. Surrinder Lal Kapur - Chairman

Mr. Bhagwan Dass Narang - Member

Dr. Vinayshil Gautam - Member

Mr. Sunil Kant Munjal - Member

Dr. Anil Kumar Gupta - Member

The terms of reference of the Audit Committee are wide enough to cover the matters specified for the Audit Committee under Clause 49 of the Listing Agreement as well as Section 177 of the Companies Act, 2013; the detailed terms of reference are as mentioned in the Annexure B of the Board Report. During the year, the Board has accepted all recommendation of Audit Committee and accordingly no disclosure is required to be made in respect of non-acceptance of the recommendation of the Audit Committee by the Board.

Nomination & Remuneration Committee

Nomination and Remuneration Committee (NRC) has been constituted according to section 178(5) of the Companies Act, 2013 and the composition is as under:

Dr. Vinayshil Gautam - Chairman

Mr. Bhagwan Dass Narang - Member

Mr. Surrinder Lal Kapur - Member

Mr. Sunil Kant Munjal - Member

The detailed terms of reference are as mentioned in the Annexure B of the Board Report.

Risk Management Policy

In order to mitigate the risks, the Company has adopted the implementation of the risk management policy focusing on the elements of risks which in the opinion of the Board may threaten the existence of the company.

The Company has constituted a risk management committee, the constitution and the terms of reference of the same are mentioned in the Annexure B of the Board Report.

Board Evaluation

The Board of Directors has carried out an annual evaluation of its own performance, Board committees and individual directors pursuant to the provisions of the Act and the corporate governance requirements as prescribed by Securities and Exchange Board of India ("SEBI") under Clause 49 of the Listing Agreements ("Clause 49").

The performance of the Board was evaluated by the Board after seeking inputs from all the directors on the basis of the criteria such as the Board composition and structure, effectiveness of board processes, information and functioning, etc.

The performance of the committees was evaluated by the board after seeking inputs from the committee members on the basis of the criteria such as the composition of committees, effectiveness of committee meetings, etc. The Board and the Nomination and Remuneration Committee ("NRC") reviewed the performance of the individual directors on the basis of the criteria such as the contribution of the individual director to the Board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings, etc. In addition, the Chairman was also evaluated on the key aspects of his role.

Separate Meeting of Independent Directors

In terms of requirements under Schedule IV of the Companies Act 2013 and clause 49 of the listing agreement, a separate meeting of Independent Directors was held on March 24, 2015. In a separate meeting of independent Directors, performance of non-independent directors, performance of the board as a whole and performance of the Chairman was evaluated, taking into account the views of executive directors and non-executive directors. The same was discussed in the board meeting that followed the meeting of the independent Directors, at which the performance of the Board, its committees and individual directors was also discussed.

Postal Ballot updates

During the year under review, the Company conducted the postal ballot for taking approval of shareholders and declared the results on December 29, 2014 for passing the following resolutions:

(a) Creation of Mortgage/Charge over the movable and immovable properties of the Company under Section 180(1)(a) of the Companies Act, 2013 and

(b) Increase in Sitting Fees/Commission of Independent Directors

Policy on directors' appointment and remuneration and other details

The Company's policy on directors' appointment and remuneration and other matters provided in Section 178(3) of the Act has been disclosed in the corporate governance report, which forms part of the Board's report.

Disclosure on Establishment of a Vigil Mechanism

The Company has adopted a policy on vigil mechanism for directors and employees to report their genuine concerns or grievance to be the Vigilance and Ethics Officer. The policy is available on the company's website www. shivamautotech.com.

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. The Company has also paid the annual custodian fees for the year 2015- 16 in respect of Shares held in dematerialized mode to National Securities Depository Limited (NSDL) & Central Depository Services Limited (CDSL).

Corporate Governance

Your Company is committed to follow the highest standards and principles of Corporate Governance with all integrity and fairness. The Company always places major thrust on managing its affairs with diligence, transparency, responsibility and accountability thereby upholding the important dictum that an organisation's corporate governance philosophy is directly linked to high performance.

A certificate from the Practising Company Secretary regarding the compliance of the conditions of Corporate Governance by the Company stipulated under Clause 49 of the Listing Agreement is also attached to this Report.

Separate detailed chapters on Corporate Governance, Additional Shareholder information and Management Discussion and Analysis are attached herewith and form part of this Report Declaration by CEO/CFO that the Board Members and Senior Management Personnel have complied with the Code of Conduct for the Financial Year 2014-15 is annexed with this report.

Managerial Remuneration

The information required under Section 197 of the Act read with Rcxule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is attached as Annexure - G to this Report.

Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013

Your Company is committed to provide work environment that ensures every employee is treated with dignity and respect and afforded equitable treatment. The Company has adopted the policy for prevention of sexual harassment at workplace. An appropriate complaint mechanism in the form of "Complaints Committee" has been created in the Company for time-bound redressal of the complaint made by the victim.

Directors' Responsibility Statement

Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013, as amended, with respect to the directors' responsibility statement, it is hereby confirmed:

(i) That in preparation of accounts for the financial year ended March 31, 2015, the applicable accounting standards have been followed along with proper explanation relating to the material departures;

(ii) That the directors' of the company 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 profits of the Company for the year ended March 31, 2015;

(iii) That the directors' of the company 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; and

(iv) That the directors' of the company have prepared the annual accounts on a going concern basis.

(v) That the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

Environment, Health & Safety

The Company is very keen on its responsibilities with respect to the clean environment. Company's Health and Safety Policy commits to provide a healthy and safe work environment to all employees.

The Company regularly conducts counselling and safety review meetings for the employees to appraise and educate them on the adoption of safety measures and avoidance of unsafe practices. Safe operating procedures, standards and systems have been laid down at all manufacturing locations. Prompt medical assistances is provided to its employees. The Company has an internal plant dispensary which operates round the clock and is managed by the qualified doctors supported by staff who are available for addressing health issues of employees.

Human Resource Development

The Company continues its focus on retention through employee engagement initiatives and provides a holistic environment where employees get opportunities to realize their potential. The Company believes that its human capital is the most valuable asset that helps it remain competitive. The Company's policy not only meets all applicable statutory requirements but also focuses on motivation, learning and training of employees. Human resources being one of the most important factors of production, the Company is initiating measures towards competence and overall development of people at all levels to be future ready. The Company arranges training sessions for its employees to empower and upgrade them to achieve business motives and help them build their career.

The Company encourages long-term commitment by rewarding its people for the opportunities they create through KAIZEN activities and the value generated for customers and shareholders. The Company's progressive workforce policies and benefits, various employee engagement and welfare initiatives program, have addressed stress management, promoted work life balance and helped the Company maintain a low attrition rate. The Directors are pleased to record their appreciation for the services rendered by the employees and staff at all levels.

Acknowledgments

The Directors express their appreciation for the sincere co-operation and assistance of Central and State Government Authorities, Bankers, Customers, Suppliers and Business Associates. Your Directors also wish to place on record their deep sense of appreciation for the committed services by your Company's employees. Your Directors acknowledge with gratitude the encouragement and support extended by our valued shareholders.

For and on behalf of the Board For and on behalf of the Board

Sd/- Sd/- Neeraj Munjal Dr. Anil Kumar Gupta Managing Director Whole Time Director DIN: 00037792 DIN: 02643623

Place: New Delhi Date: August 4, 2015


Mar 31, 2014

Dear Members,

The Directors have pleasure in presenting the 9th Annual Report of the Company together with its Audited Statement of Profit and Loss Account for the year ended March 31, 2014 and the Balance Sheet as on that date:

FINANCIAL RESULTS

The summarized financial results of the Company for the year ended March 31, 2014 are presented below:

The Register of Members and Share Transfer Books will remain closed from Monday, September 22, 2014 to Monday, September 29, 2014 (both days inclusive).

BUSINESS OVERVIEW

Hero MotoCorp Limited (HMCL), the main customer of the company and the world No. 1 two wheeler manufacturer for 13 consecutive years, continues to maintain its leadership position in the two wheeler industry.

(Rs. In Lacs)

Particulars 2013-14 2012-13

Gross Sales & Other Income 41,937.79 39,208.79

Profit before Depreciation 8031.80 8,734.23 and Interest

Depreciation 3,090.92 3,077.00

Interest 2,045.89 2,482.30

Profit before Taxation 2,894.99 3174.94

Provision for Taxation 51.75 353.46 (Deferred & Current)

Profit after Taxation 2,843.24 2821.48

Profit available for 2,843.24 2821.48 appropriations

Appropriations

Amount transferred to 300.00 300.00 General Reserve

Proposed Dividend on 450.00 400.00 Equity Shares

Tax on Dividend 76.48 67.98

Profit after Appropriations 2,016.76 2053.50

PERFORMANCE

During the year under review, your Company focused on enhancing operational efficiencies - improving yields, lowering rejections and enhancing capacity utilisation.

The total sales of the Company increased by 6.96% from Rs.39,208.79 Lacs in 2012-13 to Rs. 41,937.79 Lacs in 2013-14. Operating profit (PBDIT) of the company has decreased by 8.04% from Rs. 8,734.23 Lacs in 2012-13 to Rs. 8,031.80 in 2013-14.

The overall performance of the company can be termed as satisfactory.

DIVIDEND

The Board of Directors of the Company recommend, for consideration of shareholders at the 9th Annual General Meeting, payment of dividend of 45% (Rs. 4.50 per share) on equity shares of the face value of Re.10/- each for the year ended March 31, 2014. The dividend paid during the previous year was 40% (Rs. 4.00 per share).

Our existing customers have assured to meet predetermined sales targets and the Company has consolidated supply to other customers like BOSCH, DENSO etc. The Company is utilising the resources available to expand the basket of the customers. The customers of the Company are on a growth path and the Company is confident to meet their increased demand.

Competitive pressure on pricing and increase in employees cost has put pressure on EBITA margin. However, the volume increase and reduction in Interest Cost during the year have held company to contain decline in PBT to Rs. 279.95 lacs in 2013-14.

NEW PROJECTS & EXPANSION

To cater the requirements of its existing customer BOSCH, the Company is required to have a new manufacturing setup. The Directors are happy to inform that the Company has finalised the project and chosen Kolar-District (Near Bangalore, Karnataka) as new location for new plant.

In order to meet the ever-increasing demand for its existing business and for the potential of new business, the Company has identified IMT Rohtak (Near Delhi/NCR) as new location.

Lands have already been acquired at both the locations.

CORPORATE GOVERNANCE

Your Company is committed to follow the highest standards and principles of Corporate Governance with all integrity and fairness. The Company always places major thrust on managing its affairs with diligence, transparency, responsibility and accountability thereby upholding the important dictum that an organisation''s corporate governance philosophy is directly linked to high performance.

Separate detailed chapters on Corporate Governance, Additional Shareholder information and Management Discussion and Analysis are attached herewith and form part of this Report. All the board members and senior managerial personnel have affirmed compliance with the code of conduct for the Financial Year 2013-14.

A certificate from the Practising Company Secretary regarding the compliance of the conditions of Corporate Governance by the Company stipulated under Clause 49 of the Listing Agreement is also attached to this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217 (2AA) of the Companies Act, 1956, as amended, with respect to the directors'' responsibility statement, it is hereby confirmed:

(i) That in preparation of accounts for the financial year ended March 31, 2014, the applicable accounting standards have been followed along with proper explanation relating to the material departures;

(ii) That the directors'' of the company 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, 2014 and of the profits of the Company for the year ended March 31, 2014;

(iii) That the directors'' of the company have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) That the directors'' of the company have prepared the accounts of the company for the financial year ended March 31, 2014 on a going concern basis.

FIXED DEPOSITS

During the year, the Company has not accepted any fixed deposit.

FINANCE

Your Company was able to raise the short-term/long term funds needed for its working capital related requirements & term loans for new capital expenditure at reasonable rates. By efficient management of working capital, the Company has been able to reduce some interest cost. During the year under review, the financial position of the Company was satisfactory.

DIRECTORS

Mrs. Charu Munjal and Dr. Anil Kumar Gupta, Whole Time Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for re-appointment. Brief profile of the Director, as required by the Listing Agreement provisions, is given in the Notice / Corporate Governance Report forming part of this Annual Report.

Further in terms of the provisions of the Companies Act, 2013, Mr. Sunil Kant Munjal, Mr. Bhagwan Dass Narang, Mr. Surrinder Lal Kapur and Dr. Vinayshil Gautam, NonExecutive and Independent Directors of the Company whose office are liable to determination by retirement of Directors by rotation have been appointed as Independent Directors in term of Sections 149 and 152 of the Companies Act, 2013 for 5 (five) consecutive years from the date of the 9th Annual General Meeting for a term upto the conclusion of the 14th Annual General Meeting of the Company in the Calendar year 2019.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. Thus, the Board recommend their appointment as Independent Directors.

Mr. Satyanand Munjal, Mr. Brijmohan Lal Munjal and Mr. O. P. Munjal have resigned from the Board of Directors of Company w.e.f August 06, 2014. The Board of Directors places on record their appreciation for the valuable services and guidance provided by them as Directors of the Company.

The appointment/re-appointments form part of the Notice of the Ninth Annual General Meeting and the relevant Resolutions are recommended for your approval.

HOLDING COMPANY

The promoters of the Company i.e. Dayanand Munjal Investments Private Limited (DMIPL) hold 74,79,595 equity shares which represents 74.80% of the paid up equity capital of the Company. Your company continues to be a subsidiary company of DMIPL.

SUBSIDIARY COMPANIES

The Company has no subsidiary.

INTERNAL CONTROL SYSTEMS

Your company has adequate internal control for its business processes across departments to ensure efficient operations, compliance with internal policies, applicable laws and regulations. The internal controls are complemented, on an on-going basis, by an extensive program of internal audits being implemented throughout the year. The internal controls are designed to ensure that the financial and other records of the company are reliable for preparing financial statement and other data for maintaining the accountability of assets in conformity with established accounting principles and that the assets of the company are adequately safe-guarded against any significant misuse or loss.

The Company also has an internal audit system which is conducted by an independent firm of Chartered Accountants. A summary of Internal audit report and observations thereon are reviewed by the Audit Committee on regular basis and have been found to be adequate.

AUDIT COMMITTEE RECOMMENDATION

During the year, the Board has accepted all recommendation of Audit Committee and accordingly no disclosure is required to be made in respect of no acceptance of the recommendation of the Audit Committee by the Board.

AUDITORS

M/s. S. S. Kothari Mehta & Co., Chartered Accountants, existing Statutory Auditors'' will retire at the conclusion of the ensuing Annual General Meeting and seek reappointment as Statutory Auditors of the Company at the ensuing Annual General Meeting.

The Company has received letters from them to the effect that their re-appointment, if made, would be within the prescribed limits under Section 141(3)(g) of the Companies Act, 2013 and that they are not disqualified for re-appointment.

The Board of Directors recommends to the shareholders the appointment of M/s. S.S. Kothari Mehta & Co. as Statutory Auditors of the Company for the financial year 2014-15.

AUDITORS'' REPORT

The comments on statement of accounts referred to in the report of the auditors are self explanatory.

COST AUDIT

The Directors have appointed M/s Gurdeep Singh & Associates, Cost Accountants, as Cost Auditors to audit the Cost Records relating to "Engineering Industries" for the year ending March 31, 2015.

LISTING

The shares of your Company are presently listed on BSE and NSE.

CORPORATE SOCIAL RESPONSIBILITY

During the year, your directors have constituted the Corporate Social Responsibility Committee comprising with the following members:

Mr. Bhagwan Dass Narang - Chairman

Dr. Anil Kumar Gupta - Member

Mrs. Charu Munjal - Member

The said Committee has been entrusted with the responsibility of formulating and recommending to the Board, a Corporate Social Responsibility Policy (CSR Policy) indicating the activities to be undertaken by the Company, monitoring the implementation of the framework of the CSR Policy and recommending the amount to be spent on CSR activities.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A and 205C of the Companies Act, 2013, the dividend which remained unclaimed for a period of 7 (seven) years shall be transferred by the Company to the Investor Education and Protection Fund (IEPF).

The Company shall transfer the unclaimed / unpaid dividend, declared for the year 2006-07 to IEPF by November 03, 2014. The amount of Rs. 400,613/-(Rupees Four Lacs Six Hundred and Thirteen only) which was unclaimed / unpaid shall be transferred to IEPF.

ENVIRONMENT, HEALTH & SAFETY

Regular training is being imparted to the workers and staff to safeguard the interest of company against the accidents which may occur in mechanical, electrical, chemical areas. Safe operating procedures, standards and systems have been laid down at all manufacturing locations. The Company has an effective policy framework of highest standard, on safety, health and environment for protecting the safety health and welfare of its employees and

workers. Regular training of employees regarding safe working guidelines, audit and review of every accident, mock drills on emergency are some of the steps that are followed to achieve higher safety standards. The Company''s policy not only meets all applicable statutory requirements but also focuses on motivation, learning and training of employees in these areas.

The Company regularly conducts counselling and safety review meetings for the employees to appraise and educate them on the adoption of safety measures and avoidance of unsafe practices. The Company is very keen on its responsibilities with respect to the clean environment. To spread the awareness of the subject, and taken numbers of plantation drives.

The Company provides prompt medical assistances to its employees. The Company has an internal plant dispensary which operates round the clock and is managed by the qualified doctors supported by staff who are available for addressing health issues of employees. The Company maintains high hygienic and housekeeping standards across the workplace.

Your company also continues to be a constituent of a very important and responsible initiative of Hero MotoCorp Limited toward the commitment to environment, viz. GREEN SUPPLY-CHAIN MANAGEMENT PROGRAMME. Your company has also entered into an arrangement for recycling of waste paper and its substitute use. This initiative of the Company has resulted in to saving of around 250 trees.

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

Information required under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given as per Annexure - ''D'' and forms an integral part of this Report.

PARTICULARS OF EMPLOYEES

The Directors express their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from them.

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are set out in the Annexure - ''C'' included in this report.

HUMAN RESOURCE DEVELOPMENT

The Company believes that its human capital is the most valuable asset that helps it remain competitive. Hence, it always nurtures its human resource pool to build competitive advantage. Human resources being one of the most important factors of production, the Company is initiating measures towards competence and overall development of people at all levels to be future ready. The Company arranges training sessions for its employees to empower and upgrade them to achieve business motives and help them build their career.

The Company aims to develop persuasion skills of its employees, which will enable them to reach the goals set by the organisation and align them with the ultimate organisational strategies. Performance measurement and skill upgradation programs are widely deployed within the Company. This includes skill enhancement, training and soft skills. Coaching/guidance for selected talent are also included. This initiative is aimed at preparing the company for high growth in the coming years.

The Learning and Development Programmes of the organization go beyond just imparting the basic knowledge needed for performance. They carry a strategic content and perspective. The effort is rooted in an iterative relationship with our customer requirements and their growth plans. In this manner, our marketing and sales efforts are executed in a dynamic mould which is highly client focused. The approach takes to its logical conclusion, our manufacturing orientation and product profile. Human resource management is the linking pin in all this.

The Company encourages long-term commitment by rewarding its people for the opportunities they create and the value generated for customers and shareholders. The Directors are pleased to record their appreciation for the services rendered by the employees and staff at all levels.

ACKNOWLEDGMENTS

The Directors express their appreciation for the sincere co-operation and assistance of Central and State Government Authorities, Bankers, Customers, Suppliers and Business Associates. Your Directors also wish to place on record their deep sense of appreciation for the committed services by your Company''s employees. Your Directors acknowledge with gratitude the encouragement and support extended by our valued shareholders.

For and on behalf of the Board Sunil Kant Munjal Chairman DIN: 00003902 Place: New Delhi

Date: August 06, 2014


Mar 31, 2013

To The Members,

The Directors have pleasure in presenting the 8th Annual Report of the Company together with its Audited Statement of Profit and Loss Account for the year ended March 31, 2013 and the Balance Sheet as on that date:

FINANCIAL RESULTS

The summarized financial results of the Company for the year ended March 31, 2013 are presented below:

(Rs. In Lacs) Particulars 2012-13 2011-12

Gross Sales & Other Income 39,208.79 37,908.70

Profit before Depreciation and Interest 8,734.23 8,497.27

Depreciation 3,077.00 2,941.88

Interest 2,482.30 2,705.01

Profit before Taxation 3174.94 2850.38

Provision for Taxation (Deferred & Current) 353.46 987.76

Profit after Taxation 2821.48 1862.63

Profit available for appropriations 2821.48 1862.63

Appropriations

Amount transferred to General Reserve 300.00 300.00

Proposed Dividend on Equity Shares 400.00 320.00

Tax on Dividend 67.98 51.91

Profit after Appropriations 2053.50 1190.72

PERFORMANCE

During the year under review, your Company focused on enhancing operational efficiencies - improving yields, lowering rejections and enhancing capacity utilisation

The total income of the Company increased by 3.43% from Rs. 37,908.70 Lacs in 2011-12 to Rs.39,208.79 Lacs in 2012-13. Operating profit (PBDIT) of the company increased by 2.79% from Rs.8,497.27 Lacs in 2011-12 to Rs. 8,734.23 Lacs in 2012-13.

The overall performance of the company can be termed as satisfactory.

DIVIDEND

The Board of Directors of the Company recommend, for consideration of shareholders at the 8th Annual General Meeting, payment of dividend of 40% (Rs. 4.00 per share) on equity shares of the face value of Re.10/- each for the year ended March 31, 2013. The dividend paid during the previous year was 32% (Rs. 3.20 per share).

BUSINESS OVERVIEW

India''s automobile industry faced significant challenges in 2012-13, owing to high interest rates, rising fuel prices and spiralling inflation. Despite these challenges, the Indian automobile industry has managed to carve a niche for itself in the global auto sector.

The company''s efforts in adding new customers and increased business from its existing customers have started yielding results.

Hero MotoCorp Limited (HMCL), the main customer of the company and the world No. 1 two wheeler manufacturer for 12 consecutive years, continues to maintain its leadership position in the two wheeler industry.

CORPORATE GOVERNANCE

Your Company is committed to follow the highest standards and principles of Corporate Governance with all integrity and fairness. The Company always places major thrust on managing its affairs with diligence, transparency, responsibility and accountability thereby upholding the important dictum that an organisation''s corporate governance philosophy is directly linked to high performance.

Separate detailed chapters on Corporate Governance, Additional Shareholder information and Management Discussion and Analysis are attached herewith and form part of this Report. All the board members and senior managerial personnel have affirmed compliance with the code of conduct for the Financial Year 2012-13.

A certificate from the Practising Company Secretary regarding the compliance of the conditions of Corporate Governance by the Company stipulated under Clause 49 of the Listing Agreement is also attached to this Report.

DIRECTORS'' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217 (2AA) of the Companies Act, 1956, as amended, with respect to the directors'' responsibility statement, it is hereby confirmed:

(i) That in preparation of accounts for the financial

year ended March 31, 2013, the applicable accounting standards have been followed along with proper explanation relating to the material departures;

(ii) That the directors'' of the company 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, 2013 and of the profits of the Company for the year ended March 31, 2013;

(iii) That the directors'' of the company have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 1956, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; and

(iv) That the directors'' of the company have prepared the accounts of the company for the financial year ended March 31, 2013 on a going concern basis.

FIXED DEPOSITS

During the year, the Company has not accepted any deposit under Section 58A and Section 58AA of the Companies Act, 1956 read with Companies (Acceptance of Deposits) Rules, 1975.

FINANCE

By efficient management of working capital, the Company has been able to reduce some interest cost. During the year under review, the financial position of the Company was satisfactory.

DIRECTORS

Pursuant to Section 256 of the Companies Act, 1956 and Articles of Association of the Company, Mr. Sunil Kant Munjal and Mr. Brijmohan Lal Munjal, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible, offer themselves for reappointment. Profiles of these Directors, as required by the Listing Agreement provisions, are given in the Notice / Corporate Governance Report forming part of this Annual Report.

The Board of Directors of the Company have appointed Mrs. Charu Munjal as an Additional Director of the Company w.e.f. May 28, 2013 and is appointed as "Whole Time Director" designated as Executive – Director w.e.f. June 1, 2013. Mrs. Charu Munjal holds office as an Additional Director till the date of the ensuing Annual General Meeting. A notice proposing appointment of Mrs. Charu Munjal as Director having been received, the matter is included in the Notice for the ensuing Annual General Meeting.

The appointment/re-appointments form part of the Notice of the Eighth Annual General Meeting and the relevant Resolutions are recommended for your approval.

HOLDING COMPANY

The promoters of the Company i.e. Dayanand Munjal Investments Private Limited (DMIPL) hold 74,79,595 equity shares which represents 74.80% of the paid up equity capital of the Company. Your company continues to be a subsidiary company of DMIPL.

SUBSIDIARY COMPANIES

The Company has no subsidiary.

INTERNAL CONTROL SYSTEMS

Your company has adequate internal control for its business processes across departments to ensure efficient operations, compliance with internal policies, applicable laws and regulations. The internal controls are complemented, on an on-going basis, by an extensive program of internal audits being implemented throughout the year. The internal controls are designed to ensure that the financial and other records of the company are reliable for preparing financial statement and other data for maintaining the accountability of assets in conformity with established accounting principles and that the assets of the company are adequately safe-guarded against any significant misuse or loss.

The Company also has an internal audit system which is conducted by an independent firm of Chartered Accountants. A summary of Internal audit report and observations thereon are reviewed by the Audit Committee on regular basis and have been found to be adequate.

AUDITORS

M/s. S. S. Kothari Mehta & Co., Chartered Accountants, existing Statutory Auditors'' will retire at the conclusion of the ensuing Annual General Meeting and seek re- appointment as Statutory Auditors of the Company at the ensuing Annual General Meeting.

The company has received certificate from M/s. S.S. Kothari Mehta. & Co. to the effect that their appointment, if made, would be within the limits prescribed under Section 224 (1B) of the Companies Act, 1956.

The Board of Directors recommends to the shareholders the appointment of M/s. S.S. Kothari Mehta & Co. as Statutory Auditors of the Company.

AUDITORS'' REPORT

The comments on statement of accounts referred to in the report of the auditors are self explanatory.

COST AUDIT

The Directors have appointed M/s Gurdeep Singh & Associates, Cost Accountants, as Cost Auditors to audit the Cost Records relating to "Engineering Industries" for the year ending March 31, 2014.

TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND

Pursuant to the provisions of Section 205A (5) of the Companies Act, 1956, the dividend which remained unclaimed for a period of 7 (seven) years shall be transferred by the Company to the Investor Education and Protection Fund (IEPF).

The Company shall transfer the unclaimed / unpaid dividend, declared for the year 2005-06 to IEPF by November 25, 2013. The amount of Rs. 3,76,137.50 (Rupees Three Lacs Seventy Six Thousand One Hundred Thirty Seven and Fifty Paise only) which was unclaimed / unpaid shall be transferred to IEPF.

ENVIRONMENT, HEALTH & SAFETY

The Company has an effective policy framework of highest standard, on safety, health and environment for protecting the safety health and welfare of its employees and workers. Safe operating procedures, standards and systems have been laid down at all manufacturing locations. Regular training of employees regarding safe working guidelines, audit and review of every accident, mock drills on emergency are some of the steps that are followed to achieve higher safety standards. The Company''s policy not only meets all applicable statutory requirements but also focuses on motivation, learning and training of employees in these areas.

The Company is very keen on its responsibilities with respect to the clean environment. To spread the awareness of the subject the company has taken numbers of plantation drives. The Company regularly conducts counselling and safety review meetings for the employees to appraise and educate them on the adoption of safety measures and avoidance of unsafe practices.

The Company provides prompt medical assistances to its employees. The Company has an internal plant dispensary which operates round the clock and is managed by the qualified doctors supported by staff who are available for addressing health issues of employees. The Company maintains high hygienic and housekeeping standards across the workplace.

Your company also continues to be a constituent of a very important and responsible initiative of Hero MotoCorp Limited toward the commitment to environment, viz. GREEN SUPPLY-CHAIN MANAGEMENT PROGRAMME. Your company has also entered into an arrangement for recycling of waste paper and its substitute use. This initiative of the Company has resulted in to saving of around 130 trees.

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

Information required under Section 217(1)(e) of the Companies Act, 1956, read with Companies (Disclosure of Particulars in the Report of the Board of Directors) Rules, 1988 is given as per Annexure – ''D'' and forms an integral part of this Report.

PARTICULARS OF EMPLOYEES

The Directors express their appreciation for the contribution made by the employees to the significant improvement in the operations of the Company and for the support received from them.

As required under the provisions of Section 217(2A) of the Companies Act, 1956, read with the Companies (Particulars of Employees) Rules, 1975, as amended, the names and other particulars of employees are set out in the Annexure – ''C'' included in this report.

HUMAN RESOURCE DEVELOPMENT

Human resources being one of the most important factors of production, the Company is initiating measures towards competence and overall development of people at all levels to be future ready. In doing so, the Company is organising indoor & outdoor training programs for their continued learning.

The skills being taught are not merely for the benefit of the Company, but for overall human development.

The Company continues to maintain its peaceful industrial relations ever since its inception. Performance measurement and skill up gradation programs are widely deployed within the Company. This includes skill enhancement, training and soft skills. Coaching/guidance for selected talent is also included. This initiative is aimed at preparing the company for high growth in the coming years.

The Directors are pleased to record their appreciation of the services rendered by the employees and staff at all levels.

ACKNOWLEDGMENTS

The Directors express their appreciation for the sincere co-operation and assistance of Central and State Government Authorities, Bankers, Customers, Suppliers and Business Associates. Your Directors also wish to place on record their deep sense of appreciation for the committed services by your Company''s employees. Your Directors acknowledge with gratitude the encouragement and support extended by our valued shareholders.



For and on behalf of the Board

Sunil Kant Munjal

Chairman

Place: New Delhi

Date: August 14, 2013

 
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