Directors Report of Balkrishna Industries Ltd.
Mar 31, 2023
Your directors are pleased to present the 61st Annual Report of Balkrishna Industries Limited (the "Company") along with the audited Financial Statements for the financial year ended 31st March, 2023. The consolidated performance of the Company and its subsidiaries for the year ended 31st March, 2023 has been referred to wherever required.
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('' in Lakhs) |
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Standalone |
Consolidated |
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Particulars |
Current Year ended |
Previous Year ended 31s1 March, 2022 |
Current Year ended |
Previous Year ended |
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31st March, 2023 |
31st March, 2023 |
31st March, 2022 |
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Revenue from Operations |
9,81,052 |
8,26,671 |
9,75,953 |
8,29,512 |
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Other Income |
33,779 |
43,060 |
34,653 |
43,792 |
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Total Income |
10,14,831 |
8,69,731 |
10,10,606 |
8,73,304 |
|
Gross Profit |
2,00,779 |
2,39,824 |
2,00,560 |
2,43,752 |
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Less: Depreciation |
55,663 |
44,377 |
57,081 |
45,537 |
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Profit before tax |
1,45,116 |
1,95,447 |
1,43,479 |
1,98,215 |
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Less: Provision for tax |
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Current Tax |
34,457 |
45,746 |
34,922 |
46,045 |
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Income Tax of earlier years |
225 |
6,154 |
225 |
6,154 |
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Deferred Tax |
2,563 |
2,478 |
2,592 |
2,478 |
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Profit after Tax |
1,07,871 |
1,41,069 |
1,05,740 |
1,43,538 |
2. INDUSTRY STRUCTURE AND DEVELOPMENT:
Your Company is one of the world''s leading manufactures of "Off- Highway Tires". It has the widest product range with more than 3,200 SKU''s (Stock Keeping Units). Your Company has made it''s mark in speciality segments like Agricultural, Mining, Construction, Industrial, Earthmover, Port, ATV (All-Terrain Vehicle), and Turf care applications in both cross ply and radial construction.
Your Company is always paying close attention when it comes to latest market trends as well as the technological developments.
As a result of global economic slowdown and ongoing war, there is some pressure on exports which seems to be improving. We are fairly hopeful of the demand growing in the coming quarters with a reduction in inflation.
3. OPERATIONS AND STATE OF AFFAIRS:
Standalone: During the year under consideration on Standalone basis, your Company achieved Revenue from Operations of '' 9,81,052 Lakhs as against '' 8,26,671 Lakhs during the previous financial year, an increase of 18.67%. EBITDA has decreased to '' 2,05,343 Lakhs from '' 2,40,610 Lakhs during previous financial year and Net profit has decreased to '' 1,07,871 Lakhs from '' 1,41,069 Lakhs during previous financial year. The revenue from exports is about 79%.
Consolidated: During the year under consideration on Consolidated basis, your Company achieved Revenue from operations '' 9,75,953 Lakhs as against '' 8,29,512 Lakhs during the previous financial year, an increase of 17.65%. EBITDA has decreased to '' 2,05,364 Lakhs from '' 2,44,667 Lakhs during previous financial year, and Net profit has decreased to '' 1,05,740 Lakhs from '' 1,43,538 Lakhs during previous financial year.
4. EXPORT HOUSE AND AUTHORISED ECONOMIC OPERATOR STATUS:
I n accordance with provisions of Foreign Trade Policy, your Company continues to enjoy the "Five Star Export House" status w.e.f September 2021. In addition to this, your Company is also Authorised Economic Operator (AEO) Tier II which helps your company in faster processing and clearance of cargo, deferred payment of duty, direct port delivery/entry and other benefits.
Expansion of Carbon Black and Captive Power Plant: During the year the capacity to manufacture Carbon Black has been increased from 1,15,000 MTPA to 2,00,000 MTPA in December, 2022 (well ahead of schedule) leading to an increase in the capacity of power generation in the Captive Power Plant. The high value advanced Carbon Black of 30,000 MTPA is now expected to be completed by H2 FY 2024.
Modernization, Automation and Technology Upgradation: During the year under review, your Company has successfully completed the modernization, automation and technology upgradation at its Bhiwadi, Chopanki and Bhuj Plants.
Waluj Plant: The expansion at new Waluj plant to have overall capacity of 55,000 MTPA is completed.
You are aware of the consistent track record of dividend payment by your Company over last three decades. In keeping with this trend, the Board of Directors are pleased to recommend a Final Dividend of '' 4 (200%) per equity share for the financial year 20222023. This is in addition to 3 interim dividends each of '' 4 (200%) per equity share aggregating to '' 12 (600%) per equity share. The aggregate dividend for the year thus works out to '' 16 (800%) per equity share. The final dividend is subject to approval of the Shareholders at the ensuing Annual General Meeting of the Company Scheduled to be held on 22nd July, 2023. The final dividend once approved by Shareholders will be paid within the stipulated time after deduction of applicable tax at source. The Record Date for the purpose of payment of final dividend will be 11th July, 2023.
Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations, 2015"), the Dividend Distribution Policy can be accessed at the Company''s website at: https://www.bkt-tires.com/ww/us/investors-desk.
The paid-up Share Capital of the Company as on 31st March, 2023 remains unchanged at '' 3,866 Lakhs. The Company has neither issued shares with differential voting rights, nor granted stock options, nor sweat equity and none of the Directors of the Company hold any such shares or convertible instruments.
The Company proposes to transfer '' 40,000 Lakhs to General Reserves.
9. OUTLOOK FOR THE FINANCIAL YEAR 2023-24:
Concerns of global economic slowdown, the Impact of war in Ukraine and the Risks of stagflation envisaging numerous market scenarios are pressing the need for Tire Material industry players to be more vigilant and forward-looking. COVID-19 has changed the dynamics of Tire Material supply chain which is further influenced by the burgeoning drive for a cleaner and sustainable environment.
Over the last few years, the global automobile industry has witnessed a considerable increase in demand for different vehicles, which boosted the sale of Tire globally. Most of our customer segments are thriving for mechanization and modernization. This trend is expected to prevail with continuing growth in tire production and demand over the next five years.
Despite the Challenges due to global economy due to recessionary conditions, rising interest rate and political turmoil which has led to slowing of external demand, your Company is determined to grow further in "Off Highway Tire" segment with its core strength of Research and Development which is supported by the state-of-the-art manufacturing facilities. Simultaneous expansion projects at Company''s plants are leading to the launch of advanced and eco-friendly tires also lead to sustainable market growth of tires. In the Union Budget of 2022-23 there is Duty tweak of Compounded rubber which according to the industry will pinch the margins. The increase in duty is in line with the demands of the All India Rubber Industry Association.
The Captive Power Plant of the Company at Bhuj will hedge energy cost and provide better flow of energy to the plant. While your Company''s demand outlook is strong, our approach is to remain vigilant to ensure that we are agile and evolve our dynamics.
10. MATERIAL CHANGES AND COMMITMENTS:
In terms of Section 134(3)(l) of the Companies Act, 2013, there are no material changes and commitments affecting the financial position of your Company which have occurred between the close of the financial year of the Company on 31st March, 2023 to which the Financial Statements relate and up to the date of this report.
Opportunities:
Your Company operates into a segment predominantly known as "large varieties - low volume segment", which is not only capital intensive but also labour intensive. Your Company is fully geared to take advantage of the peculiarities of the said segment and has developed a large base of SKUs to meet the diverse needs and applications. Your Company is witnessing gains in market leadership due to its strong and robust product portfolio.
Moreover, this segment is neither exposed to any technological obsolescence nor wild fluctuations in demand for its products.
The Company is continuously marching ahead to explore incremental opportunity in the form of developing "Ultra Large Earthmovers & Mining Radial Tires" markets and taking advantage of the shift from Bias to Radial Tires, which is growing continuously. In order to take advantage of this opportunity, the Company had set up India''s first Ultra Large size all-steel OTR Radial tire plant at Bhuj and
further added capacity to cater the market demand. Your Company is continuously expanding its base into various segments like agricultural, mining, industrial, construction, winter and solid tires under both technologies - Bias as well as Radials.
Like any other Company, your Company is also exposed to various threats like competition, retention of employees, labour issues, increase in raw material prices and its timely availability, etc.
An economic downturn or slowdown in the key markets (India and Europe) may lead to decrease in volumes and capacity utilisation. Volatile exchange rates, Price Competition and fears of aggravation in Russia-Ukraine war are some of the threats. It may increase the operating cost of running the business. Increases in raw material cost can impact the profitability of the Company.
12. SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS & RETURN ON NET WORTH:
As per Schedule V read with Regulation 34(3) of Listing Regulations, details of significate changes (i.e change of 25% or more as compared to the immediate previous financial year) in Key Financial Ratios and any changes in Return on Net Worth of the Company including explanations thereof are provided in Note No. 52 & 54 of Standalone and Consolidated financial statement respectively forming part of this Annual Report.
13. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
The Company has put in place well defined procedures, covering financial and operating functions. Delegation of authority and segregation of duties are also addressed to ensure that the financial transactions are properly authorised. The Company believes that Internal Control is one of the key pillars of governance, which provides freedom to the management within a framework of appropriate checks and balances. The Company has a robust internal control framework, which has been developed considering the nature, size and risks in the business. The Company has adequate internal control systems in place and has reasonable assurance on authorising, recording and reporting transactions of its operations. The Company has well-placed, proper and adequate internal controls environment, commensurate with its size, scale and complexities of its operations. The Company has already developed and implemented a framework for ensuring internal controls over financial reporting. This framework includes entity level policies, processess and operating level standard operating procedures (SOP). Internal control systems are an integral part of your Company''s Corporate Governance structure. Information Technology (IT) policies and processes also ensure that they mitigate the current business risks. The Company has successfully implemented ERP system, supported by SAP software & backed by necessary Bandwidth. The systems and processes are continuously improved by adopting best in class processes and automation and implementing the latest IT tools which help further for maintaining financial and commercial discipline. These have been designed to provide reasonable assurance with regard to credibility of data and compliances, inter-alia:
a. recording and providing reliable financial and operational information;
b. complying with the applicable statutes;
c. safeguarding assets from unauthorized use;
d. executing transactions with proper authorization, and ensuring compliance with corporate policies;
e. prevention and detection of frauds / errors;
f. continuous updating of IT systems;
g. managing the risk of security exposure or compromise.
Your Company has adopted Cyber Security and Data Privacy Policy. Further, your Company understands the significance of protecting personal and sensitive data (as per the regulatory provisions such as price sensitive information, details of complainant in case of discrimination or POSH related incidents) and the requirement for appropriate controls while collecting, transferring, storing and processing personal data. It anticipates that all information shall be handled responsibly in accordance with the applicable laws.
The management has assessed the effectiveness of the Company''s internal control over financial reporting as of 31st March, 2023.
The Company recognizes that in today''s fast growing digital world, one must be equally conscious of cyber threats. Your Company has a robust system to prevent any intrusion into their IT systems and servers thereby protecting the IT assets of the Company.
Your Company has appointed M/s. Deloitte Haskins & Sells LLP to assess the effectiveness of internal financial controls of the Company. Their assessment was based on an internal audit plan, which was reviewed in consultation with the Audit Committee and is found to be quite adequate.
The Audit Committee reviewed the reports submitted by the Management and Internal Auditors. Based on their evaluation (as defined in section 177 of the Companies Act, 2013 and Regulation 18 of Listing Regulations, 2015), the Company''s Audit Committee has concluded that, as of 31st March, 2023, the Company''s internal financial controls were adequate and operating effectively.
With a motivated team of 3,472 employees (permanent) as on 31st March, 2023, your Company is proud to inform that the employees have been the key players in its progress. This workforce is focussed towards building a Sustainable organisation. Immense emphasis
is placed on to have a safe workplace with an agile team. Your Company believes in a culture of inclusion, trust, skill development, empowerment, and all-round development of its employees. Your Company continues to build strong pillars of cultural values which strengthens the business operations. Young Talent is coached and mentored by a seasoned leadership team. Effective Communication channels help your Company to transcend its Vision and Mission till the bottom of the pyramid. Your Company visualises the greater good of its workforce which would conversely make the Company achieve its business goals in a competitive environment. Your Company keeps an "Employee First" approach and accords topmost priority to all human issues within the organisation. The core cultural values of your Company is nurturing top quality talent, teamwork, innovation, respect for all, open door policy and creation of a future ready workforce with Happy Hearts. Your Company''s organisation structure is robust and committed to deliver the best business results. Your Company through its people policies, promotes the congruence of employee personal vision and the Company''s goals.
There is a constant sharing of information about the business with the employees. Your Company provides fast track career paths for the young talent. Employee engagement programmes and developmental sessions have created an outstanding workforce which is focussed and cognizant of its responsibilities. An objective performance management system has provided satisfaction and growth to all employees. Your Company strongly believes in harnessing a culture of trust and mutual respect amongst all employees. The values and principles of your Company have given good results in challenging times. Industrial relations continue to be cordial across the plants.
At the end of the year under review, the Company had one Domestic and four Overseas Wholly Owned Subsidiary Companies (WOS). The domestic WOS is known as BKT Tires Limited and the Overseas WOS are BKT EUROPE S.R.L., BKT USA INC, BKT TIRES (CANADA) INC., BKT EXIM US, INC. The Company also has one step down subsidiary in the name of BKT Tires Inc. based in USA which is a 100% subsidiary of BKT Exim US, INC. The Company does not have any material subsidiary as per the thresholds laid down under the Listing Regulations. A policy on material subsidiaries has been formulated by the Company and posted on the website of the Company and can be accessed at: https://www.bkt-tires.com/ww/us/investors-desk.
Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of the financial position of subsidiary companies in Form AOC-1 attached as Annexure I.
16. DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to Section 134 (3)(c) and 134(5) of the Companies Act, 2013, your Directors, to the best of their knowledge and belief, make the following statements that:
(i) that in the preparation of the annual accounts for the year ended 31st March, 2023, the applicable accounting standards have been followed and there are no material departures from the same;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2023 and the Statement of Profit and Loss of the Company for the financial year ended 31st March, 2023;
(iii) the Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the annual accounts of the Company on a "Going Concern" basis;
(v) the Directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and
(vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that systems are adequate and operating effectively.
17. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:
All contracts /arrangements / transactions entered by the Company during the financial year with related parties were in ordinary course of business and on an arm''s length basis. During the year, the Company has 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.
Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC - 2 is not applicable to your Company.
The Policy on materiality of related party transactions and dealing with related party transactions are approved by the Board and can be accessed on the Company''s website at: https://www.bkt-tires.com/ww/us/investors-desk. The details of transactions / contracts / arrangements entered by the Company with Related parties during the financial year are set out in the Notes to the Financial Statement.
The Board of Directors of the Company has approved the criteria for making the omnibus approval by the Audit Committee within the overall framework of the policy on related party transactions. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and proposed to be entered in the ordinary course of business and at arm''s length during the financial year. All related party transactions are placed before the Audit Committee for review and approval.
18. CORPORATE SOCIAL RESPONSIBILITY:
The Company''s social initiatives empower society at a large and provide a holistic growth platform. The Company believes that Corporate Social Responsibility (CSR) projects undertaken by it should be sustainable with the long-term purpose of improving the quality of livelihood of the less privileged. The funds on CSR projects / activities are spent very carefully to ensure that the desired objectives are achieved. CSR Activities has been segregated as to have a reach in different areas such as promoting education, improving healthcare, sustainability, rural development.
The Board of Directors of the Company has approved a Corporate Social Responsibility (CSR) Policy based on the recommendation of the CSR Committee. The brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure-II. The Board of Directors has formed a committee on CSR in accordance with the Companies Act, 2013. The terms of reference of the Corporate Social Responsibility Committee, number and dates of meetings held, composition and attendance of the Directors during the financial year ended 31st March, 2023 are given separately in the Corporate Governance Report. During FY 2021-22, the Company had spent excess CSR amount of ''11 lakhs. During the year under review, the Company was required to spend '' 2,889 Lakhs. The Company had identified various CSR projects having a total commitment of '' 2,878 Lakhs and after considering the excess spend in FY 2021-22 the company has completed their obligation of '' 2,889 Lakhs for FY 2022-23. In terms of Amendment to Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (the CSR Rules 2021") effective from 22nd January, 2021, the Company in FY 2021-22 had identified Ongoing Project upto '' 75 lakhs of which Company had spent '' 72 lakhs till 31st March, 2022 and had deposited '' 3 lakhs in separate Bank account opened with a Scheduled Bank in Compliance with CSR Rules 2021. During the year under review, out of '' 3 lakhs, Company had spent '' 1.5 lakhs towards ongoing Project and would spend remaining '' 1.5 lakhs in FY 2023-24 in Compliance with CSR Rules 2021.
The CSR policy of the Company is available on the Company''s website and can be accessed at: https://www.bkt-tires.com/ww/us/ investors-desk.
19. RISKS RELATED TO BUSINESS:
Risk is an integral and unavoidable component of business. BKT''s nature and scale of the business operations calls for a robust risk management framework to deal with impacts of external and internal environment. In today''s challenging and competitive environment, mitigating risks is imperative. The range of risks are not only limited to business disruptions to COVID-19, but include volatile commodity prices, raw material price fluctuation, growing demand of customers, cybersecurity risks, etc. Common risks include changing regulations, competition, business risk, technology obsolescence, investments and retention of talent. Business risk, inter alia, further includes financial risk, social risk, political risk, environmental risk and legal risk. These ranges of risks have been meticulously addressed through a comprehensive risk management process. For managing risks more efficiently, the Company has undertaken a detailed risk management exercise and has identified key risks that can have a critical impact on the Company''s performance. Risks, once identified, are periodically monitored, along with emerging risks on the dual scale of impact and probability. The Company has inter alia identified the following key risks:
Operational risks like equipment obsolescence can impact production. To mitigate such risks, the Company continuously monitors equipment obsolescence and upgrades equipment from time to time and undertakes preventive maintenance measures. The Company has also made significant investment in equipment modernisation.
The Company''s major raw material is Natural and Synthetic Rubber, Carbon Black and Nylon fabric. Due to the high demand of all the major raw materials and shutting down of some raw material manufacturers, the prices and the supply have been adversely affected. In view of this we have experienced that an increase in cost gets set off by an increase in prices over a period of time.
Your Company manages market risk by expanding its presence in different markets, deeper penetration into existing markets and by launching new products. Furthermore, the Company spends requisite amount on marketing and promotional activities to ensure customer retention and brand-building. Company has also invested in building larger network of distributors and dealers across the market to avoid the risk in case of fluctuations in market.
Since the manufacturing process of the Company is labour intensive, it requires lot of skilled as well as un-skilled workers. Maintaining a huge work force is a challenging task.
I n order to mitigate the said risk, the Company follows good HR practices to promote the welfare and safety of its workmen and maintain a cordial working environment. All workers are paid more than government stipulated wages.
Retention of skilled manpower:
Like other players in the industry, the Company is also exposed to this risk, more particularly when there is shortage of skilled manpower in the industry. However, the Company is able to manage the said risk by good HR practices and rewarding its employees handsomely. Company provides various opportunities for career development.
The Company revenues are mainly through exports. Further, since most of the raw materials and capital equipment are imported, the Company is exposed to foreign currency risk. However, it enjoys natural hedge as most of its revenues are in foreign currency.
However, since, the Company is a net foreign exchange earner and mostly hedges its net exposure in advance by way of forward contracts, it is immune to a large extent from the fluctuation in currencies.
Due to growing digitalisation the company is exposed to vulnerability to cyber-attacks. To avoid such risks your company has put in place policies and procedure for data privacy. Also, adaptation of Security operations control and technologies to safeguard IT data and applications. Focus is also maintained on mandatory employee training on cybersecurity awareness.
RISK MANAGEMENT AND MITIGATION:
''Risk Management'' is the identification, assessment, and prioritisation of risks followed by coordinated and economical application of resources to minimise, monitor and control the probability and/or impact of uncertain events or to maximise the realisation of opportunities. Risk management also provides a system for the setting of priorities when there are competing demands on limited resources. Risk management also attempts to identify and manage threats that could severely impact or bring down the organisation.
The Company''s Board of Directors has overall responsibility for the establishment and overseeing of the Company risk management framework. Pursuant to Regulation 21 of Listing Regulations, Risk Management Committee was constituted comprising of Mr. Pannkaj Ghadiali, an Independent Director as Chairman of the Committee, Mr. Arvind Poddar and Mr. Vipul Shah, Directors of the Company are Members of the Committee. The primary objective of the Committee is to control the various risks that the Company is exposed to, with a view to prevent unacceptable losses, to provide an effective means of identifying, measuring and monitoring credit exposure risks by the Company and to keep such risk at or below predetermined levels. The Company has framed an Enterprise Risk Management Policy (the "Policy") to realise the following benefits for the Company:
a. Enhanced risk management for the organization including strategy setting.
b. Facilitate risk-based decision making.
c. Improve governance and accountability.
d. Enhance credibility with key stakeholders such as investors, employees, government, regulators, society, etc.
e. Create, protect and enrich stakeholder value.
The policy contains the objectives of risk management, company''s approach to risk management and the risk organization structure for identification, management and reporting of risks. The policy specifies the roles and responsibilities of key stakeholders and other key personnel of the Company with regards to risk management. The policy also aims to ensure and identify process of risk identification and management in compliance with the provisions of the Companies Act, 2013.
Following objectives are achieved through the Risk Management program of the Company viz:
a. Enable organizational sustainability taking cognizance of the impact of its products, services & operations on society and the environment
b. Reduce potential gaps in achieving company''s objectives
c. Align and integrate existing risk management practices in the organization
d. Build confidence of investor community and stakeholders
e. Enhanced Corporate Governance
f. Successfully respond to changing business environment
Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s Activities.
The Audit Committee oversees how management monitors compliance with the Company''s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit Committee.
There are no risks, which in the opinion of the Board threaten the existence of the Company.
20. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
During the year under review, as recommended by the Nomination and Remuneration Committee, the Board of Directors of the Company has approved the re-appointment of Mr. Pannkaj Ghadiali as Independent Director of the Company for a term of five years w.e.f. 8th November, 2022 which was duly approved by the members of the Company at the 60th Annual General Meeting held on 7th July, 2022.
The Company has received declaration from all Independent Directors of the Company confirming that they meet with the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 as well as Regulation 16(1)(b) of the Listing Regulations, 2015.
The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirement set out by the SEBI. The Company has complied with the requirements of Corporate Governance as stipulated under the Listing Regulations, 2015 and accordingly, the Report on Corporate Governance forms part of this Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of the Corporate Governance is attached to the Report on Corporate Governance.
21. POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION:
The Company has devised the Nomination and Remuneration Policy for the selection, appointment and remuneration of Directors, Key Managerial Personnel and remuneration of other employees including Senior Management employees who have the capacity and ability to lead the Company towards achieving sustainable development. The extract of Nomination and Remuneration Policy is provided in the Corporate Governance Report and forms part of Board''s Report.
The Criteria for appointment and remuneration of Directors is as under:
(i) Criteria for Appointment of Managing Director / Whole Time Director/ Director:
The Nomination and Remuneration Committee shall identify persons of integrity who possess relevant expertise and experience particularly in Tire Industry, leadership qualities required for the position and shall take into consideration recommendation, if any, received from any member of the Board.
(ii) Criteria for Appointment of Independent Director:
The Independent Director shall be of high integrity with relevant expertise and experience so as to have a diverse Board with Directors having expertise in the fields of manufacturing, marketing, finance, taxation, law, governance and general management.
The Board of Directors has carried out an annual evaluation of its own performance, Board Committees and individual Directors pursuant to applicable provisions of the Act and the corporate governance requirements as prescribed by applicable regulations of Listing Regulations 2015.
The performance of the Board was evaluated after seeking inputs from all the Directors present in the meeting based on criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.
The Nomination and Remuneration Committee had evaluated the performance of individual Directors based on 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.
The Securities and Exchange Board of India (SEBI) vide circular SEBI /HO /CFD /CMD/ CIR/ 2017/004 dated 5th January, 2017, issued a Guidance Note on Board Evaluation about various aspects involved in the Board Evaluation process to benefit all stakeholders. While evaluating the performance, the above guidance note was considered. Performance evaluation of Independent Directors was carried out by the entire board. A meeting of the Independent Director for the 2022-23, with Mr. Pannkaj Ghadiali as the Chairman, was held on 18th March, 2023, to review the performance of the Non-Independent Directors, the Board as a whole and the Chairman on the parameters of effectiveness and to assess the quality, quantity and timeliness of the flow of information between the Management and the Board. The same were 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 were also discussed. The Directors expressed their satisfaction with the evaluation process.
Statutory Auditor:
During the year under review, as recommended by the Audit Committee, the Board of Directors has approved the appointment of M/s Jayantilal Thakkar & Co. (Firm Registration Number 104133W) as Statutory Auditors of the Company, for a period of 5 (five) consecutive financial years from the conclusion of 60th AGM till the conclusion of the 65th AGM on remuneration, terms and conditions as may be approved by the Board and pursuant to approval of members of the Company at 60th Annual General Meeting M/s Jayantilal Thakkar & Co. was appointed as Statutory Auditors of the Company.
The Notes on Financial Statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report do not contain any qualification, reservation, adverse remark or disclaimer.
The Board has appointed M/s. RTD & Associates, Chartered Accountants as Internal Auditors for a period of 1 (One) year for Financial Year 2022-23 under Section 138 of the Companies Act, 2013 and they have completed the Internal Audit as per the scope as defined by the Audit Committee.
The Company has appointed Mr. G.B.B Babuji, Company Secretary in Whole Time Practice, to conduct Secretarial Audit for the financial year 2022-23 as required by Section 204 of the Companies Act, 2013 and rules made thereunder. The Company provided all assistance and facilities to the Secretarial Auditors for conducting their audit. Further, pursuant to SEBI Circular CIR/CFD/ CMD1/27/2019 dated 8th February, 2019, Mr. G.B.B Babuji, has also conducted the Annual Secretarial Compliance. The Secretarial Audit Report for the financial year ended 31st March, 2023 is annexed herewith marked as Annexure - III.
In terms of Section 148 of the Companies Act, 2013 read with Rule 4(3) of Companies (Cost Records and Audit) Rules, 2014, ("Cost Records Rules") as amended from time to time, the Company maintained its Cost Records on regular basis in such manner which facilitates the calculation as may be prescribed by the Rules. The cost records are maintained in such manner which enable the Company to exercise, to the extent possible, control over the various operating costs to achieve optimum economies in utilization of resources. Since the Company''s revenue from exports, in foreign exchange, exceeds 79% per cent of the Company''s total revenue and pursuant to Rule 4 of Cost Records Rules of Companies Act, 2013 as amended from time to time, Cost Audit is not applicable to the Company for the financial year 2022-23.
There are no qualifications in the reports of the Statutory Auditors and Secretarial Auditor. There was no instance of fraud during the year under review, which is required to be reported by Statutory Auditors in their reports as mentioned under sub-section (12) of Section 143 of the Act. Subject Audit Report.
The industrial relations with staff and workers during the year under review continue to be cordial.
26. CHANGE IN THE NATURE OF BUSINESS, IF ANY:
There is no change in the nature of business of your Company during the year under review.
i. Vigil Mechanism /Whistle Blower Policy:
The Vigil Mechanism of the Company which also incorporate a whistle blower policy in the terms of SEBI (Listing Obligations and Disclosure Requirements), 2015 deals with instances of fraud and mismanagement, if any. Adequate safeguards have been provided against victimization of persons who use the vigil mechanism. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company''s website at: https://www.bkt-tires.com/ww/us/investors-desk.
The Audit Committee consist of Mr. Pannkaj Ghadiali an Independent Director as Chairman, Mr. Rajendra Hingwala, Mr. Sandeep Junnarkar & Mrs. Shruti Shah, Independent Directors as the members. All the recommendations made by the Audit Committee have been accepted by the Board. All the members have relevant experience in financial matters.
Ministry of Corporate Affairs vide the Notification dated 24.03.2021 has mandated that every company which uses accounting software for maintaining its books of account, shall use only such accounting software which has a feature of recording audit trail of each and every transaction, creating an edit log of each change made in books of account along with the date when such changes were made and ensuring that the audit trail cannot be disabled.
Accordingly, your Company has already in past placed an accounting software in place which records the audit trail of each and every transaction which creates an edit log of each changes made in the books of accounts and the audit trail is being preserved by the Company as per the Statutory requirements.
The Board of Directors of the Company met five times in the year, the details of which are provided in the Corporate Governance Report.
v. Particulars of loans given, investment made, guarantees given and securities provided:
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilised by the recipient are provided in Note Nos. 5,10,14, 46 and 48 to the financial statement forming part of this Annual Report.
vi. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo:
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 are provided in Annexure - IV and forms an integral part of this report.
Pursuant to Section 92(3) read with section 134(3)(a) of the Companies Act, 2013, copies of the Annual Returns of the Company prepared in accordance with Section 92(1) of the Act read with Rule 11 of the Companies (Management and Administration) Rules, 2014 may be accessed on the Company''s website at: https://www.bkt-tires.com/ww/us/investors-desk.
viii. Particulars of Employees and related disclosures:
The information required under Section 197(12) of the Companies Act, 2013 read with Rules 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure - V.
A statement comprising the names of top 10 employees in terms of remuneration drawn and every person employed throughout the year, who were in receipt of remuneration in terms of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Report.
However, having regard to the provisions of the first proviso to Section 136 of the Act, the details are excluded in the report sent to members. Members who are interested in obtaining the particulars may write to the Company Secretary at registered/ corporate office of the Company. The aforesaid information is available for inspection 21 days before and up to the date of the ensuing AGM during the business hours on working days.
ix. Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013:
The Company has adopted zero tolerance for sexual harassment at the workplace and has formulated a policy on prevention, prohibition, and redressal of sexual harassment at the workplace in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules thereunder for prevention and redressal of complaints of sexual harassment at workplace. The Company has complied with provisions relating to the constitution of Internal Complaints Committee (ICC) under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Company have setup ICCs to redress complaints on sexual harassment.
x. Business Responsibility and Sustainability Committee Report:
Your Company does business that delivers long-term shareholder value and benefits the society. Your Company continue to focus on its commitments which are aligned with national priorities and United Nations Sustainability Development Goals.
In terms of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations") read with relevant SEBI Circulars, new reporting requirements on ESG parameters were prescribed under "Business Responsibility and Sustainability Report" (''BRSR''). The BRSR seeks disclosure on the performance of the Company against nine principles of the "National Guidelines on Responsible Business Conduct'' (''NGRBCs''). As per the SEBI Circulars, effective from the financial year 2022-23, filing of BRSR is mandatory for the top 1000 listed companies by market capitalisation. Accordingly, for the financial year ended 31st March, 2023, your Company is publishing BRSR instead of Business Responsibility Report. BRSR describes the initiatives taken by the Company from an environmental, social and governance prospective, in the prescribed form is annexed as Annexure - VI and forms an integral part of the Annual Report.
xi. Compliance with the Institute of Company Secretaries of India ("ICSIâ) Secretarial Standards:
The relevant Secretarial Standards issued by the ICSI related to the Board Meetings and General Meeting have been complied with by the Company.
No disclosure or reporting is required in respect of the following items as there were no transaction on these items during the year under review:
a. Details relating to deposit and unclaimed deposits or interest thereon.
b. Issue of equity shares with differential rights as to dividend or voting.
c. Issue of shares (including sweat equity shares) and Employee Stock Option Scheme of the Company under any scheme.
d. None of the managerial personnel i.e. Managing Director, Joint Managing Director and Whole-time Director of the Company are in receipt of remuneration / commission from Subsidiary Companies of the Company.
e. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern and Company''s operation in future.
xii. IBC Code & One-time Settlement:
There is no proceeding pending against the Company under the Insolvency and Bankruptcy Code, 2016 (IBC Code). There has not been any instance of one-time settlement of the Company with any bank or financial institution.
Certain statements in the "Director''s Report & Management Discussion and Analysis" describing the Company''s views about the Industry, expectations/ predictions, objectives etc., may be forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed in the Statement. Company''s operations may inter-alia affect with the supply and demand stipulations, input prices and their availability, changes in Government regulations, taxes, exchange fluctuations and other factors such as Industrial relations and economic developments etc. Investors should bear the above in mind.
Your Company has been able to operate efficiently because of the culture of professionalism, creativity, integrity and continuous improvement in all functions and areas as well as the efficient utilization of the Company''s resources for sustainable and profitable growth.
The Board of Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. The Board of Directors also wish to place on record its deep sense of appreciation for the dedicated and committed services by the Company''s executives, staff and workers.
Last but not the least, your Directors wish to place on record their warm appreciation to you for your continuous support and encouragement.
For and on behalf of the Board of Directors ARVIND PODDAR
Place: Mumbai, Chairman & Managing Director
Dated: 27th May, 2023 DIN: 00089984
Mar 31, 2021
Your Directors are pleased to present the 59th Annual Report of Balkrishna Industries Limited (the "Company") along with the audited Financial Statements for the financial year ended 31st March, 2021. The consolidated performance of the Company and its subsidiaries for the year ended 31st March, 2021 has been referred to wherever required.
|
('' in Lakhs) |
||||
|
Standalone |
Consolidated |
|||
|
Particulars |
Year Ended |
Year Ended |
Year Ended |
Year Ended |
|
31st March, 2021 |
31st March, 2020 |
31st March, 2021 |
31st March, 2020 |
|
|
Revenue from Operations |
5,75,792 |
4,78,249 |
5,78,319 |
4,81,124 |
|
Other Income |
16,145 |
24,877 |
17,216 |
25,078 |
|
Total Income |
5,91,937 |
5,03,126 |
5,95,535 |
5,06,202 |
|
Gross Profit |
1,93,714 |
1,49,085 |
1,97,122 |
1,51,313 |
|
Less: Depreciation |
40,615 |
36,801 |
41,630 |
37,361 |
|
Profit before tax |
1,53,099 |
1,12,284 |
1,55,492 |
1,13,952 |
|
Less: Provision for tax |
||||
|
Current Tax |
36,916 |
29,230 |
37,904 |
29,431 |
|
Deferred Tax |
645 |
(11,444) |
645 |
(11,444) |
|
Profit after Tax |
1,15,538 |
94,498 |
1,17,753 |
95,965 |
2. INDUSTRY STRUCTURE AND DEVELOPMENT:
The key product range of your Company is Specialty Tires commonly known as "Off Highway Tires" which caters to Agriculture, Industrial, Construction, Earthmoving, Mining, Port, Lawn and Garden and All-Terrain Vehicle (ATVs) Tires. The Company''s Carbon Black Product which is mainly used for captive and partly sold in Market has been well accepted in terms of quality.
The Tire segment is highly technical & capital intensive and known as "large varieties low volume segment" where any credible player needs to maintain large number of Stock Keeping Units (SKUs) to meet the diverse requirement of its customers worldwide. Apart from this, it needs to service its clients pre & post sales. While the sub segment (agriculture) is largely known as non-cyclical in nature, the other sub segment (industrial, construction and mining) is generally considered as cyclical and the performance of it is largely linked to overall economic outlook of the world. The market for Company''s range of tires is mainly Europe, America, Australasia and India.
Considering that several European countries and USA has a very strong vaccination program, the economy seems to opening up and despite the second wave of Covid-19 in India, the outlook is optimistic.
3. OPERATIONS AND STATE OF AFFAIRS:
Standalone: During the year under consideration on Standalone basis, your Company achieved Revenue from Operations of '' 5,75,792 Lakhs as against '' 4,78,249 Lakhs during the previous financial year, an increase of 20.39%. Earnings before Interest, Depreciation and Tax (EBIDTA) has increased to '' 1,94,696 Lakhs from '' 1,49,812 Lakhs during the previous financial year, an increase of 29.96% and Net profit has increased to '' 1,15,538 Lakhs from '' 94,498 Lakhs during the previous financial year, an increase of 22.27%. The revenue from exports was more than 78%.
Consolidated: During the year under consideration on Consolidated basis, your Company achieved Revenue from operations '' 5,78,319 Lakhs as against '' 4,81,124 Lakhs during the previous financial year, an increase of 20.20%. Earnings before Interest, Depreciation and Tax (EBIDTA) has increased to '' 1,98,260 Lakhs from '' 1,52,203 Lakhs during the previous financial year, an increase of 30.26% and Net profit has increased to '' 1,17,753 Lakhs from '' 95,965 Lakhs during the previous financial year, an increase of 22.70%.
Your Company enjoys the status of "Four Star Export House".
During FY 2020-21, the Board of Directors of your Company at its meeting held on 8th February, 2021 had approved following New Projects:
⢠Brown Field Tire Project: Considering the overall increase in the demand of products, your Company has commenced set up of Brownfield and Debottlenecking project along with addition of balancing and ancillary equipment at Company''s plant located at Bhuj. The implementation of said project will result in increased achievable tire production capacity by 50,000 MTPA and the said project is expected to be completed by H2FY23. The estimated Capex cost of the project is up to '' 800 crores.
⢠Enhancement of Carbon Black capacities and setting up a Captive Power Plant: Considering the overall demand / supply outlook as well as internal demand of Carbon Black, your Company has embarked to enhance the installed capacity of carbon black from an achievable capacity 1,15,000 MTPA to 2,00,000 MTPA including 30,000 MTPA of high value of advanced carbon black material.
The increase in production would obviate an increased power requirement. To meet the additional power requirement, the Company proposes to set up an additional power plant of 20 MW by tapping flue gas, a by-product from the carbon black plant which will provide the required additional power at lower cost. The capex of the increased capacity of carbon black and co-gen power plant will be '' 650 crores and is expected to be completed by H1FY23.
⢠Modernization, Automation and Technology Upgradation: The Board has approved an estimated capex of '' 450 crores for modernization, automation and technology upgradation of certain existing equipment and installation of automated material handling systems. Capex is being undertaken at existing facilities at Company Plants located at Rajasthan and Bhuj leading to further improvement in quality and efficiency. The said project is expected to be completed by H1FY23.
The total planned Capex up to '' 1,900 Crores will be funded by Internal Accruals and Debt, if required.
⢠Bhuj Plant: Expansion of mixing facility and enhancing the warehousing capacity has been completed and setting up of ultra large sized all steel OTR Radial Tire Plant is completed and undergoing final trial run.
⢠Waluj Plant: The Green Field Tire project was progressing as per schedule, however due to COVID-19, the work was temporarily shut from 25th March, 2020 to 20th April, 2020. Thereafter the project work resumed gradually after the lockdown was lifted. Considering the present uncertain situation, this project is expected to be completed by 30th September, 2021.
⢠Greenfield Tire Plant in US: The Board had given its approval for setting up a Green Field Tire Project of 20,000 MTPA capacity in USA with an estimated capital outlay up to USD 100 million through its wholly owned US subsidiary company. After reviewing various aspects of the project in the backdrop of challenging economic and business environment, the Board of the Directors at their meeting held on 8th February, 2021 decided to shelve the project.
You are aware of the consistent track record of dividend payment by your Company for the last over three decades. In keeping with this trend, the Board of Directors are pleased to recommend a Final Dividend of '' 5 per equity shares for the financial year 2020-21 after paying 3 interim dividends during the year aggregating to '' 12 per equity share. The total dividend for the financial year 202021 aggregates to '' 17 per equity share. The final dividend is subject to approval of the Shareholders at the ensuing Annual General Meeting of the Company scheduled to be held on 30th June, 2021. The final dividend once approved by Shareholders will be paid within the stipulated time subject to deduction of tax at source. The Record Date for the purpose of payment of final dividend will be 21st June, 2021.
Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations, 2015"), the Dividend Distribution Policy can be accessed at Company website at: https://www.bkt-tires.com/en/investors-desk.
The paid-up Share Capital of the Company as on 31st March, 2021 remains unchanged at '' 3,866 Lakhs. The Company has neither issued shares with differential voting rights, nor granted stock options, nor sweat equity and none of the Directors of the Company hold any convertible instruments.
The Company proposes to transfer '' 40,000 Lakhs to General Reserves.
9. OUTLOOK FOR THE FINANCIAL YEAR 2021-22:
The vaccination drive across the globe is a silver lining in the dark cloud despite Covid-19 and gives us strong reasons to see light at the end of the tunnel. As tire industry''s fortunes are closely linked to economic growth, the outlook is positive in the near to medium term. Overall demand in replacement as well as OEM tires across the globe including India is encouraging for all segments following recovery in economic activity which will drive volumes up in the coming fiscal year. The long-term prospects of the company are good and promising as your Company continues to explore all the avenues to ensure growth of its business which includes deeper penetration into new and existing markets. With the continuous expansion of its product range, your Company is proud to say that it has more than 2700 SKUs.
10. MATERIAL CHANGES AND COMMITMENTS:
In terms of Section 134(3)(l) of the Companies Act, 2013, there are no material changes and commitments affecting the financial position of your Company which have occurred between the close of the financial year of the Company on 31st March, 2021 to which the Financial Statements relate and up to the date of this report, except a delay in completion of expansion at Waluj, as stated earlier.
11. OPPORTUNITIES AND THREAT:Opportunities:
Your Company operates into a segment predominantly known as "large varieties - low volume segment", which is not only capital intensive but also labour intensive. Your Company is fully geared to take advantage of the peculiarities of the said segment and has developed a large base of SKUs to meet the diverse needs and applications.
Moreover, this segment is neither exposed to any technological obsolescence nor wild fluctuations in demand for its products.
The Company is continuously marching ahead to explore incremental opportunity in the form of developing "Ultra Large Earthmovers & Mining Radial Tires" markets and also taking advantage of the shift from Bias to Radial Tires, which is growing continuously. In order to take advantage of this opportunity, the Company had set up an Ultra Large size all-steel OTR Radial tire plant and have further added such capacities by setting up a Brown field tire plant at Bhuj to produce Ultra large size all steel OTR Radial Tires besides other categories of tires. Your Company is proud to be the first Company in India to set up such a plant. Your Company is continuously expanding its base into various sub-segments like agricultural, industrial, construction, mining, winter and solid tires under both technologies - Bias as well as Radials.
The COVID-19 issue has led to a situation where most of the countries are thinking to reshuffle their sourcing plan / strategy. It may open up lot of opportunities for India including our Company.
Like any other Company, your Company is also exposed to various threats like competition, retention of employees, labour issues, increase in raw material prices and its timely availability, etc.
An economic downturn or slowdown in the key markets (India and Europe) may lead to decrease volumes and capacity utilisation. Volatile exchange rate and Price Competition are also a threat. A new threat has emerged out of second wave of COVID-19 which may change the manner and pattern of the business and also may intensify the various threats to which we are already exposed to. It may increase the operating cost of running the business.
12. SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS & RETURN ON NET WORTH:
There is no significant change (i.e. 25% or more) in any of the financial ratios viz., Debtors Turnover, Inventory Turnover, Interest Coverage Ratio, Current Ratio, Debt-Equity Ratio, Operating Profit Margin, Net Profit Margin and Return on Investment.
13. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
The Company believes that Internal Control is one of the key pillars of governance, which provides freedom to the management within a framework of appropriate checks and balances. The Company has a robust internal control framework, which has been developed considering the nature, size and risks in the business. The Company has adequate internal control systems in place and also has reasonable assurance on authorizing, recording and reporting transactions of its operations. The Company has well-placed, proper and adequate internal controls environment, commensurate with its size, scale and complexities of its operations. The Company had already developed and implemented a framework for ensuring internal controls over financial reporting. This framework includes entity level policies, processes and operating level standard operating procedures (SOP). Internal control systems are an integral part of your Company''s Corporate Governance structure. Information Technology (IT) policies and processes also ensure that they mitigate the current business risks. The Company has successfully implemented ERP system, supported by SAP software & backed by necessary Bandwidth. The systems and processes are continuously improved by adopting best in class processes and automation and implementing the latest IT tools which help further for maintaining financial and commercial discipline. These have been designed to provide reasonable assurance with regard to credibility of data and compliances, inter-alia:
a. Recording and providing reliable financial and operational information;
b. Complying with the applicable statutes;
c. Safeguarding assets from unauthorized use;
d. Executing transactions with proper authorization, and ensuring compliance with corporate policies;
e. Prevention and detection of Frauds / errors;
f. Continuous updating of IT systems.
The management has assessed the effectiveness of the Company''s internal control over financial reporting as of 31st March, 2021.
Your Company has appointed M/s KPMG to assess the effectiveness of internal financial controls of the Company. Their assessment was based on an internal audit plan, which was reviewed in consultation with the Audit Committee and is found to be quite adequate.
The Audit Committee reviewed the reports submitted by the Management and Internal Auditors. Based on their evaluation (as defined in section 177 of the Companies Act, 2013 and Regulation 18 of Listing Regulations, 2015), the Company''s Audit Committee has concluded that, as of 31st March, 2021, the Company''s internal financial controls were adequate and operating effectively.
With a vibrant team of 2,861 employees as on 31st March, 2021, your Company believes that employees are instrumental in its progress. In Company, they work towards its goal of building the 3s of the organization i.e., sustainable, smarter and safer. Your Company believes in a culture of inclusion, trust, skill development, empowerment and development for its employees. Your Company continues to invest significantly in building a culture of coaching and mentoring and further aims to make coaching, mentoring and communication ability the foundation of its leadership style which further helps the Company and its workforce to keep pace with the changing world. Your Company believes the fact that your organization is only as good as its employees. Your Company considers its human resources as its biggest asset and believes in People at the heart of its Human resource strategy which set the Company apart from Company''s peers. Your Company believes that employees continuously strive to make the organization as inclusive as possible. Your Company has established an organization structure that is agile and focused on delivering business
results. With regular communication and sustained efforts, it is ensuring that employees are aligned on common objectives and have the right information on business evolution. Your Company endeavours to provide employees with all the support, resources and incentives. Your Company ensures that young talent is nurtured and mentored consistently, that rewards and recognition are commensurate with performance and that employees have the opportunity to develop and grow. Your Company strongly believes in fostering a culture of trust and mutual respect in all its employees and seeks to ensure that Company''s values and principles are understood by all and are the reference point in all matters. Employee relations continue to be cordial.
COVID-19 has created a lot of challenges on the Human Resources front; both in the staff category as well as in workmen category. Your Company has implemented strict Covid-19 protocols, regular testing and in-house medical centre to take care against Covid infections of its employees and their family members. To take care of serious infections, your Company has also added state-of-the-art ICU/HDU unit to its medical centre.
Thristha Synthetics Limited, a wholly owned subsidiary of your Company, incorporated in year 2013, has voluntarily made an application with the Registrar of Companies (ROC), Mumbai, Ministry of Corporate Affairs, for striking off its name from the records of ROC after meeting / discharging all the necessary requirements for striking off. During the year under review, Ministry of Corporate Affairs vide its order dated 21st September, 2020 had struck off the name of the Company from its Register of Companies and hence said Company ceases to exist.
At the end of the year under review, the Company had one Domestic and Four Overseas Wholly Owned Subsidiary Companies (WOS). The domestic WOS is known as BKT Tires Limited and the Overseas WOS are BKT EUROPE S.R.L., BKT USA INC, BKT TIRES (CANADA) INC., BKT EXIM US, INC. The Company also has one step down subsidiary in the name of BKT Tires Inc. based in USA which is a 100% subsidiary of BKT EXIM US, INC. The Company does not have any material subsidiary as per the thresholds laid down under the Listing Regulations, 2015. A policy on material subsidiaries has been formulated by the Company and posted on the website of the Company and can be accessed at: https://www.bkt-tires.com/en/investors-desk.
Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of the financial position of subsidiary companies in Form AOC-1 attached as Annexure I.
16. DIRECTORS'' RESPONSIBILITY STATEMENT:
Pursuant to Section 134 (3)(c) and 134(5) of the Companies Act, 2013, your Directors, to the best of their knowledge and belief, make the following statements that:
(i) that in the preparation of the annual accounts for the year ended 31st March, 2021, the applicable accounting standards have been followed and there are no material departures from the same;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2021 and the Statement of Profit and Loss of the Company for the financial year ended 31st March, 2021;
(iii) the Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the annual accounts of the Company on a "Going Concern" basis;
(v) the Directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and are operating effectively; and
(vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that systems are adequate and operating effectively.
17. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:
All contracts /arrangements / transactions entered by the Company during the financial year with related parties were in ordinary course of business and on an arm''s length basis. During the year, the Company has 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.
Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC - 2 is not applicable to your Company.
The Policy on materiality of related party transactions and dealing with related party transactions are approved by the Board and can be accessed on the Company''s website at: https://www.bkt-tires.com/en/investors-desk. The details of transactions / contracts / arrangements entered by the Company with Related parties during the financial year are set out in the Notes to the Financial Statement.
The Board of Directors of the Company has approved the criteria for making the omnibus approval by the Audit Committee within the overall framework of the policy on related party transactions. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and proposed to be entered in the ordinary course of business and at arm''s length during the financial year. All related party transactions are placed before the Audit Committee for review and approval.
18. CORPORATE SOCIAL RESPONSIBILITY:
The Company''s social initiatives empower society at a large and provide a holistic growth platform. The Company believes that Corporate Social Responsibility (CSR) projects undertaken by it should be sustainable with the long-term purpose of improving the quality of living for the less privileged. The funds on CSR projects / activities are spent very carefully to ensure that the desired objectives are achieved.
The Board of Directors of the Company has approved a Corporate Social Responsibility (CSR) Policy based on the recommendation of the CSR Committee. The brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure-II. The Board of Directors has formed a committee on CSR in accordance with The Companies Act, 2013. The terms of reference of the Corporate Social Responsibility Committee, number and dates of meetings held, composition and attendance of the Directors during the financial year ended 31st March, 2021 are given separately in the Corporate Governance Report.
During the year under review, the Company was required to spend '' 2,232 lakhs. The Company had identified various CSR projects having a total commitment of '' 2,232 lakhs and had spent an amount of '' 1,812 Lakhs till March, 2021. In terms of Amendment to Companies (Corporate Social Responsibility Policy) Amendment Rules, 2021 (the CSR Rules 2021") effective from 22nd January, 2021, the Company''s CSR Committee at its meeting held on 8th February 2021 had revised / identified Ongoing Project up to '' 420 lakhs. Hence, the balance unspent amount of '' 420 lakhs out of '' 2,232 lakhs have been identified as Ongoing project which would be spent by the Company within stipulated time. The Company has deposited '' 420 lacs in a separate Bank account opened with a Scheduled Bank in Compliance with CSR Rules 2021 for the CSR identified projects.
In line with Company''s objective under its CSR policy to support the society at a large, the Company has distributed cooked food and food grains in various part of India to the people affected by lockdown due to COVID-19. The Company has also distributed PPE kits and masks to various hospitals in Mumbai and other part of India.
The CSR policy of the Company is available on the Company''s website and can be accessed at: https://www.bkt-tires.com/en/ investors-desk.
19. RISKS RELATED TO BUSINESS:
Risk is an integral and unavoidable component of business. In today''s challenging and competitive environment, mitigating risks is imperative. Common risks include changing regulations, competition, business risk, technology obsolescence, investments and retention of talent. Business risk, inter alia, further includes financial risk, social risk, political risk, environmental risk and legal risk. For managing risks more efficiently, the Company has undertaken a detailed risk management exercise and has identified key risks that can have a critical impact on the Company''s performance. The Company has inter alia identified the following key risks:
Operational Risk:
Operational risks like equipment obsolescence can impact production. To mitigate such risks, the Company continuously monitors equipment obsolescence and upgrades equipment from time to time and undertakes preventive maintenance measures. The Company has also made significant investment in equipment modernization.
Fluctuation in Raw Material prices:
The Company''s major raw material is Natural and Synthetic Rubber, Carbon Black and Nylon fabric. Due to the high demand of all the major raw materials and shutting down of some raw material manufacturers, the prices and the supply have been adversely affected. In view of this we foresee an increase in cost which will be set off by an increase in prices over a period of time.
The second wave of COVID-19 across the globe has disrupted the entire supply chain which has led to higher delivery time coupled with increase in logistic cost. The company is continuously developing alternative sources of raw material as well as their supply chain to ensure timely delivery of goods at a minimal cost.
Your Company manages market risk by expanding its presence in different markets, deeper penetration into existing markets and by launching new products. Furthermore, the Company spends requisite amount on marketing and promotional activities to ensure customer retention and brand-building.
COVID-19 including the second wave has led to lockdown across the globe which may adversely impact the demand to some extent. The Company believes that due to the vaccination drive across the world, the disruption in demand if any, may be temporary in nature and do not foresee any long-term challenges in demand.
Since the manufacturing process of the Company is labour intensive, it requires lot of skilled as well as un-skilled workers. Maintaining a huge work force is a big challenge.
In order to mitigate the said risk, the Company follows good HR practices to promote the welfare and safety of its workmen and maintain a cordial working environment. All workers are paid more than government stipulated wages.
COVID-19 led to migration of labour from various industrial zones to their home towns; this may create a situation of shortage of labour which may impact the operations of the Company adversely. Despite this and as mentioned earlier, your Company does not foresee any major challenge as it has taken good care of all its staff members as well as workers during the period of lockdown and continues to do so regularly ensuring smooth and seamless operations of the Company.
Retention of skilled manpower:
Like other players in the industry, the Company is also exposed to this risk, more particularly when there is shortage of skilled manpower in the industry. COVID-19 has further intensified this risk. However, the Company is able to manage the said risk by good HR practices and rewarding its employees handsomely.
The Company revenues are mainly generated through exports. Further, since most of the raw materials and capital equipment are imported, the Company is exposed to foreign currency risk. However, it enjoys natural hedge as most of its revenues are in foreign currency. COVID-19 issue has created imbalance in the economies of various countries including India and therefore we could be exposed to wider risk due to currency fluctuation.
However, since, the Company is a net foreign exchange earner and hedges its net exposure well in advance by way of forward contracts, it is immune to a great extent from the fluctuation in currencies.
RISK MANAGEMENT AND MITIGATION:
''Risk Management'' is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor and control the probability and/or impact of uncertain events or to maximize the realization of opportunities. Risk management also provides a system for the setting of priorities when there are competing demands on limited resources. Risk management also attempts to identify and manage threats that could severely impact or bring down the organization.
The Company''s Board of Directors has overall responsibility for the establishment and overseeing of the Company risk management framework. Pursuant to Regulation 21 of Listing Regulations, 2015, Risk Management Committee was constituted comprising of Mr. Pannkaj Ghadiali, an Independent Director as Chairman of the Committee, Mr. Arvind Poddar, Mr. Rajiv Poddar, Mr. Vipul Shah, Directors of the Company and Mr. Madhusudan Bajaj, KMP are Members of the Committee. The primary objective of the Committee is to control the various risks that the Company is exposed to, with a view to prevent unacceptable losses, to provide an effective means of identifying, measuring and monitoring credit exposure risks by the Company and to keep such risk at or below predetermined levels. The Company has framed an Enterprise Risk Management Policy (the "Policy") to realize the following benefits for the Company:
a. Enhanced risk management for the organization including strategy setting.
b. Facilitate risk-based decision making.
c. Improve governance and accountability.
d. Enhance credibility with key stakeholders such as investors, employees, government, regulators, society, etc.
e. Create, Protect and enrich stakeholder value.
The policy contains the objectives of risk management, company''s approach to risk management and the risk organization structure for identification, management and reporting of risks. The policy specifies the roles and responsibilities of key stakeholders and other key personnel of the company with regards to risk management. The policy also aims to ensure and identify process of risk identification and management in compliance with the provisions of the Companies Act, 2013.
Following objectives are achieved through the Risk Management program of the Company viz:
⢠Enable organizational sustainability taking cognizance of the impact of its products, services & operations on society and the environment.
⢠Reduce potential gaps in achieving company''s objectives.
⢠Align and integrate existing risk management practices in the organization.
⢠Build confidence of investment community and stakeholders.
⢠Enhance Corporate Governance.
⢠Successfully respond to changing business environment.
Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Company''s Activities.
The Audit Committee oversees how management monitors compliance with the Company''s risk management policies and procedures and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit Committee.
There are no risks, which in the opinion of the Board threaten the existence of the Company.
20. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
Following the resignation of Mr. Basant Bansal as the CFO of your Company w.e.f. 28th August, 2020, Mr. Madhusudan Bajaj was given additional charge as CFO with immediate effect and was thereafter appointed and re-designated as President (Commercial) & CFO at the Board Meeting of the Company held on 24th September 2020. Your directors would like to place on records their appreciation for the services rendered by Mr. Bansal during his tenure with the Company.
As recommended by the Nomination and Remuneration Committee, the Board of Directors of the Company has approved the re-appointment of Mr. Arvind Poddar as Chairman and Managing Director of the Company for a term of five years w.e.f. 1st August, 2022, subject to approval of members of the Company and also subject to sub regulation (1B) of Regulation 17 of Listing Regulations, 2015 which is proposed to be effective from 1st April, 2022 as amended from time to time.
In accordance with provisions of the Companies Act, 2013 and Articles of Association of the Company, Mrs. Vijaylaxmi Poddar, Director of the Company, retires by rotation at the ensuing AGM and being eligible offers herself for re-appointment.
The Board recommends both the re-appointments.
Brief profile of the Director being re-appointed as required under Regulations 36(3) of Listing Regulations, 2015 and Secretarial Standard on General Meetings is provided in the Notice of the forthcoming AGM of the Company.
The Company has received declaration from all Independent Directors of the Company confirming that they meet with the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 as well as Regulation 16(1)(b) of the Listing Regulations, 2015.
The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirement set out by the SEBI. The Company has complied with the requirements of Corporate Governance as stipulated under the Listing Regulations, 2015 and accordingly, the Report on Corporate Governance forms part of this Annual Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of the Corporate Governance is attached to the Report on Corporate Governance.
21. POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION:
The Company has devised the Nomination and Remuneration Policy for the selection, appointment and remuneration of Directors, Key Managerial Personnel and also remuneration of other employees including Senior Management employees who have the capacity and ability to lead the Company towards achieving sustainable development. The extract of Nomination and Remuneration Policy is provided in the Corporate Governance Report and forms part of Board''s Report.
The Criteria for appointment and remuneration of Directors is as under:
(i) Criteria for Appointment of Managing Director / Whole Time Director/ Director:
The Nomination and Remuneration Committee shall identify persons of integrity who possess relevant expertise and experience particularly in Tire / Carbon Industry, leadership qualities required for the position and shall take into consideration recommendation, if any, received from any member of the Board.
(ii) Criteria for Appointment of Independent Director:
The Independent Director shall be of high integrity with relevant expertise and experience so as to have a diverse Board with Directors having expertise in the fields of manufacturing, marketing, finance, taxation, law, governance and general management.
Annual evaluation of Board, its performance, Committees and individual Directors pursuant to applicable provisions of the Act and applicable regulations of Listing Regulations, 2015, were carried out.
The performance of the Board was evaluated after seeking inputs from all the Directors present in the meeting on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.
The Board and Nomination and Remuneration Committee had evaluated / reviewed the performance of individual Directors on the basis of 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.
The Securities and Exchange Board of India (SEBI) vide circular SEBI /HO /CFD /CMD/ CIR/ 2017/004 dated 5th January, 2017, issued a Guidance Note on Board Evaluation about various aspects involved in the Board Evaluation process to benefit all stakeholders. While evaluating the performance, the above guidance note was considered. Performance evaluation of Independent Directors was carried out by the entire board, excluding the Independent Director being evaluated. A meeting of the Independent Director for the FY 2020-21, with Mr. Pannkaj Ghadiali as the Chairman, was held on 26th March 2021, to review the performance of the NonIndependent Directors, the Board as a whole and the Chairman on the parameters of effectiveness and to assess the quality, quantity and timeliness of the flow of information between the Management and the Board. The same were 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 were also discussed. The Directors expressed their satisfaction with the evaluation process.
Statutory Auditor:
Pursuant to Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the members of the Company at its AGM held on 9th September, 2017 had approved the appointment of M/s. N G Thakrar & Co., Chartered Accountants (Firm Registration No. 110907W) as the Statutory Auditors for a period of five years. Pursuant to amendments in Section 139 of the Companies Act, 2013, the requirements to place the matter relating to such appointment for ratification by members at every AGM, is not required. The Auditors have confirmed that they are not disqualified from continuing as Auditors of the Company.
The Notes on Financial Statements referred to in the Auditors'' Report are self-explanatory and do not call for any further comments. The Auditors'' Report do not contain any qualification, reservation, adverse remark or disclaimer.
The Board has appointed M/s. R T D & Associates, Chartered Accountants as Internal Auditors for a period of 1 (One) year for Financial Year 2020-21 under Section 138 of the Companies Act, 2013 and they have completed the Internal Audit as per the scope as defined by the Audit Committee.
The Company has appointed Mr. G.B.B Babuji, Company Secretary in Whole Time Practice, to conduct Secretarial Audit for the financial year 2020-21 as required by Section 204 of the Companies Act, 2013 and rules made thereunder. The Company provided all assistance and facilities to the Secretarial Auditors for conducting their audit. Mr. G.B.B Babuji, has also conducted the Annual Secretarial Compliance pursuant to Listing Regulations, 2015. The Secretarial Audit Report for the financial year ended 31st March, 2021 is annexed herewith marked as Annexure - III.
In terms of Section 148 of the Companies Act, 2013 read with Rule 5 of Companies (Cost Records and Audit) Rules, 2014, ("Cost Records Rules") as amended from time to time, the Company maintained its Cost Records on regular basis in such manner which facilitates the calculation as may be prescribed by the Rules. The cost records are maintained in such manner which enable the Company to exercise, to the extent possible, control over the various operating costs to achieve optimum economies in utilization of resources. Since the Company''s revenue from exports, in foreign exchange, exceeds 78% per cent of the Company''s total revenue and pursuant to Rule 4 of Cost Records Rules of Companies Act, 2013 as amended from time to time, Cost Audit is not applicable to the Company for the financial year 2020-21.
There are no qualifications in the reports of the Statutory Auditors and Secretarial Auditor. There was no instance of fraud during the year under review, which is required to be reported by Statutory Auditors in their reports as mentioned under sub-section (12) of Section 143 of the Act.
The industrial relations with staff and workers during the year under review continue to be cordial.
26. CHANGE IN THE NATURE OF BUSINESS, IF ANY:
There is no change in the nature of business of your Company during the year under review.
27. DISCLOSURES:i. Vigil Mechanism /Whistle Blower Policy:
The Vigil Mechanism of the Company which also incorporate a whistle blower policy in the terms of Listing Regulations, 2015 deals with instances of fraud and mismanagement, if any. Adequate safeguards have been provided against victimization of persons who use the vigil mechanism. The Policy on vigil mechanism and whistle blower policy may be accessed on the Company''s website at: https://www.bkt-tires.com/en/investors-desk.
During the year under review, Mr. Sandeep Junnarkar, Independent Director was appointed as member of Audit Committee w.e.f. 24th September, 2020. Hence consequent to appointment of Mr. Sandeep Junnarkar, the Audit Committee was reconstituted and comprised of the following Directors as on 31st March, 2021 viz. Mr. Pannkaj Ghadiali, an Independent Director as Chairman, Mr. Rajendra Hingwala, Mr. Sandeep Junnarkar & Mrs. Shruti Shah, Independent Directors and Mr. Rajiv Poddar, Joint Managing Director. All the recommendations made by the Audit Committee have been accepted by the Board.
iii. Number of Board Meetings:
The Board of Directors of the Company met six times in the year, the details of which are provided in the Corporate Governance Report.
iv. Particulars of loans given, investment made, guarantees given and securities provided:
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in Note Nos. 5,10,14,47 and 50 to the Financial statement forming part of this Annual Report.
v. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo:
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 are provided in Annexure - IV and forms an integral part of this report.
vi. Annual Return:
Pursuant to Section 92(3) read with section 134(3)(a) of the Companies Act, 2013, copy of the Annual Return of the Company prepared in accordance with Section 92(1) of the Act read with Rule 11 of the Companies (Management and Administration) Rules, 2014 may be accessed on the Company''s website at: https://www.bkt-tires.com/en/investors-desk.
vii. Particulars of Employees and related disclosures:
The information required under Section 197(12) of the Companies Act, 2013 read with Rules 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure - V.
A statement comprising the names of top 10 employees in terms of remuneration drawn and every person employed throughout the year, who were in receipt of remuneration in terms of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Report.
However, having regard to the provisions of the first proviso to Section 136 of the Act, the details are excluded in the report sent to members. Members who are interested in obtaining the particulars may write to the Company Secretary at registered/ corporate office of the Company.
viii. Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013:
The Company has formulated and implemented a policy of prevention of sexual harassment at the workplace with mechanism of loading/redressal complaints. During the year under review, there were no complaints reported to the Board.
ix. Business Responsibility Report:
As mandated by Regulations - 34(2)(f) of Listing Regulations, 2015, Business Responsibility Report, of the Company for the year ended 31st March, 2021, describing the initiatives taken by the Company from an environmental, social and governance prospective, in the prescribed form is annexed as Annexure - VI.
x. Compliance with the Institute of Company Secretaries of India ("ICSIâ) Secretarial Standards:
The relevant Secretarial Standards issued by the ICSI related to the Board Meetings and General Meeting have been complied with by the Company.
No disclosure or reporting is required in respect of the following items as there were no transaction on these items during the year under review:
a. Details relating to deposit and unclaimed deposits or interest thereon.
b. Issue of equity shares with differential rights as to dividend or voting.
c. Issue of shares (including sweat equity shares) and Employee Stock Option Scheme of the Company under any scheme.
d. None of the managerial personnel i.e. Managing Director, Joint Managing Director and Whole-time Director of the Company are in receipt of remuneration / commission from Subsidiary Companies of the Company.
e. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern and Company''s operation in future.
Certain statements in the "Director''s Report & Management Discussion and Analysis" describing the Company''s views about the Industry, expectations/ predictions, objectives etc., may be forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed in the Statement. Company''s operations may inter-alia affect with the supply and demand stipulations, input prices and their availability, changes in Government regulations, taxes, exchange fluctuations and other factors such as Industrial relations and economic developments etc. Investors should bear the above in mind.
Your Company has been able to operate efficiently because of the culture of professionalism, creativity, integrity and continuous improvement in all functions and areas as well as the efficient utilization of the Company''s resources for sustainable and profitable growth.
The Board of Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. The Board of Directors also wish to place on record its deep sense of appreciation for the dedicated and committed services by the Company''s executives, staff and workers.
Last but not the least, your Directors wish to place on record their warm appreciation to you for your continuous support and encouragement.
For and on behalf of the Board of Directors ARVIND PODDAR
Place : Mumbai Chairman & Managing Director
Dated : 14th May, 2021 DIN: 00089984
Mar 31, 2019
Dear Shareholders,
The Directors are pleased to present the 57th Annual Report of Balkrishna Industries Limited (the âCompanyâ) along with the audited financial statements for the financial year ended 31st March, 2019. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.
HOMAGE:
Shri Dharaprasadji Poddar, erstwhile Chairman Emeritus left for heavenly abode on 20th October, 2018. Late Shri Dharaprasadji Poddar was associated with Company since 1993, as a Chairman of the Company. Under the able leadership of Late Shri Dharaprasadji Poddar, the Company has grown from strength to strength and has benefited immensely from his valuable guidance and foresightedness over the years. He was a man of vision, determination and intelligence yet believed in simplicity. He stepped down as a Chairman of the Company in 2012. The Board of Directors of the Company express their deep condolences and pay tribute to Late Shri Dharaprasadji Poddar, a great visionary leader.
1. FINANCIAL RESULTS:
(Rs. in Lakhs)
|
Standalone |
Consolidated |
|||
|
Particulars |
Current Year ended |
Previous Year ended |
Current Year ended |
Previous Year ended |
|
31st March, 2019 |
31st March, 2018 |
31st March, 2019 |
31st March, 2018 |
|
|
Revenue from Operations |
5,24,450 |
4,46,446 |
5,20,999 |
4,46,097 |
|
Other Income |
21,421 |
33,621 |
21,817 |
33,975 |
|
Total Income |
5,45,871 |
4,80,067 |
5,42,816 |
4,80,072 |
|
Gross Profit |
1,51,556 |
1,42,983 |
1,50,917 |
1,42,744 |
|
Less: Depreciation |
33,255 |
31,134 |
33,261 |
31,140 |
|
Profit before tax |
1,18,301 |
1,11,849 |
1,17,656 |
1,11,604 |
|
Less: Provision for tax |
||||
|
Current Tax |
39,160 |
36,903 |
39,350 |
37,002 |
|
Deferred Tax |
941 |
1,021 |
941 |
1,023 |
|
Profit after Tax |
78,200 |
73,925 |
77,365 |
73,579 |
2. EXPORT HOUSE STATUS:
Your Company enjoys the status of âFour Star Export Houseâ.
3. PROJECT AND EXPANSION:
Your Company has undertaken various projects/expansion 2018-19 which are as under :
A) Carbon Black: The Company had started the Carbon Project during the financial year 2017-18 with a capacity of 60,000 MTs p.a. The company revised the said capacity to 1,40,000 MTs p.a during the financial year under consideration. The total capital outlay for full capacity of 1,40,000 MTs is estimated at Rs. 42,500 Lakhs. The first phase of project of 60,000 MTs is almost complete and company is in the process of giving a finishing touch to it and hoping to commence commercial production by end of June 2019. The second phase of 80,000 MTs capacity is likely to be completed by financial year 2020-21.
B) Greenfield Tire Plant in US: Your Company have approved a Capex plan for setting up a Greenfield tire plant in United State of America (USA) with a capacity of 20,000 MTs p.a through its wholly owned subsidiary company in USA. The board has approved total investment upto USD 100 million. It will be funded via investments from your Company and debt. However, the Company is still trying to find out right location for the plant.
C) Waluj Plant : The Company had set up the Waluj plant in 1987 to produce 2-3 wheeler tires and from time to time the company carried out modernization / expansion during last 30 years as per the changing requirement of the company. Since plant is very old and need complete revamping to protect its existing capacity, the Board decided to construct a green field tire project on its freehold land of 22 acres which is in the vicinity of around 5 kms from existing plant. The total capital outlay of the said project is estimated at Rs. 50,000 Lakhs which will include Co-generation plant, mixing plant and in-house warehousing facilities for raw materials and finished goods. It will bring lot of operational efficiency and will lead to saving of operational cost as well.
D) Bhuj Plant: The company is currently producing All Steel OTR Radial Tires upto 49â. In order to complete the entire range and to meet overall demand in higher dimensional tires, your company is proposing to set up additional facilities of 5,000 MTs p.a. for 51â to 57â tires with an estimated Capital out lay of Rs. 50,000 Lakhs. It also includes setting up of an additional mixing line and warehouse.
4. DIVIDEND:
Your Directors are pleased to inform that your Company has a consistent track record of dividend payment. The Board of Directors are pleased to recommend a Final Dividend of Rs. 2.00 per equity share for the financial year 2018-19. The total Dividend for financial year 2018-19 aggregates to Rs. 8.00 per equity share which includes three Interim Dividend aggregate to Rs. 6.00 per equity share. The final dividend on equity shares is subject to the approval of the Shareholders at the ensuing Annual General Meeting of the Company scheduled to be held on 13th July, 2019. The final dividend once approved by Shareholders will be paid on or after 15th July, 2019 but within stipulated time. The Register of Members and Share Transfer Books of the Company will remain closed from 8th July, 2019 to 9th July, 2019 (both days inclusive) for the purpose of payment of the Dividend and 57th Annual General Meeting.
Pursuant to Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (âListing Regulations, 2015â), the Board has approved and adopted a Dividend Distribution Policy, attached as Annexure - I.
5. SHARE CAPITAL:
The paid up Share Capital of the Company as on 31st March, 2019 was Rs. 3,866 Lakhs. As on 31st March, 2019, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity and none of the Directors of the Company hold any convertible instruments.
6. RESERVES:
The Company proposes to transfer Rs. 30,000 Lakhs to General Reserves.
7. SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS AND RETURN ON NET WORTH:
As per amendment made under Schedule V read with Regulation 34(3) to the Listing Regulations, details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in Key Financial Ratios and any changes in Return on Net Worth of the Company including explanations therefor are given below:
|
Particulars |
Standalone |
Consolidated |
||
|
2018-19 |
2017-18 |
2018-19 |
2017-18 |
|
|
Debtors Turnover ratio (Days) * |
40.92 |
41.92 |
37.50 |
40.09 |
|
Inventory Turnover ratio (Days) ** |
15.34 |
15.67 |
18.76 |
17.74 |
|
Interest Coverage Ratio ( ICR) # $ 1 |
121.84 |
86.64 |
106.71 |
81.46 |
|
Current Ratio ## |
1.76 |
1.43 |
1.70 |
1.41 |
|
Net Debt - Equity Ratio ! $ 2 |
0.01 |
0.08 |
0.01 |
0.09 |
|
Operating Profit Margin !! |
22.74 |
25.35 |
22.80 |
25.33 |
|
Net Profit Margin ~ |
15.43 |
16.92 |
14.25 |
15.33 |
|
Return on Net Worth |
25.49 |
27.63 |
25.52 |
27.67 |
* Accounts receivables / Sales * 365 days
** Closing stock of finished and traded goods / sales *365 days
# EBIT / finance cost
## Current Assets /Current liabilities
! (Long term borrowings short term borrowing current maturities less current investment, cash and Cash Equivalents) / Total equity !! EBIT / Operating Income ~ PAT / Total Income EBIT / Net Worth $ Reason for variance (> 25%)
$ 1 The ICR increased due to lower finance cost as company paid its term loan.
$ 2 The net debt / equity decreased due to repayment of long term loan.
8. SUBSIDIARY COMPANIES:
During the year under review, Thristha Synthetics Limited, the wholly owned subsidiary of your Company, incorporated in year 2013, has voluntarily made an application with the Registrar of Companies (ROC), Mumbai, Ministry of Corporate Affairs, for striking off its name from the records of ROC after meeting / discharging all the necessary requirements for striking off, which is currently under process of striking off.
At the end of the year under review, the Company had following wholly owned subsidiary companies namely BKT Tyres Limited and following Overseas Subsidiary Companies namely BKT EUROPE S.R.L., BKT USA INC, BKT TIRES (CANADA) INC., BKT EXIM US, INC and subsidiary of BKT EXIM Us, INC - BKT TIRES INC. The Company does not have any material subsidiary as per the thresholds laid down under the Listing regulations. A policy on material subsidiaries has been formulated by the Company and posted on the website of the Company and can be accessed on the Companyâs website at the link: https://www.bkt-tires.com/en/investors-desk/shareholding-info.
Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of the financial position of subsidiary companies in Form AOC-1 attached as Annexure II.
9. DIRECTORSâ RESPONSIBILITY STATEMENT:
Pursuant to Section 134 (3)(c) and 134(5) of the Companies Act, 2013, your Directors, to the best of their knowledge and belief, make following statements that:
(i) that in the preparation of the annual accounts for the year ended 31st March, 2019, the applicable accounting standards have been followed and there are no material departures from the same;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2019 and the Statement of Profit and Loss of the Company for the financial year ended 31st March, 2019;
(iii) the Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the annual accounts of the Company on a âgoing concernâ basis;
(v) the Directors have laid down internal financial controls to be followed by the Company and the such internal financial controls are adequate and are operating effectively; and
(vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that systems are adequate and operating effectively.
10. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:
All contracts /arrangements / transactions entered by the Company during the financial year with related parties were in ordinary course of business and on an armâs length basis. During the year, the Company has 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.
Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC - 2 is not applicable to your Company.
The Policy on materiality of related party transactions and dealing with related party transactions are approved by the Board and can be accessed on the Companyâs website at the link: https://www.bkt-tires.com/en/investors-desk/shareholding-info. The details of transactions / contracts / arrangements entered by the Company with Related parties during the financial year are set out in the Notes to the Financial Statement.
The Board of Directors of the Company has approved the criteria for making the omnibus approval by the Audit Committee within the overall framework of the policy on related party transactions. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and proposed to be entered in the ordinary course of business and at armâs length during the financial year. All related party transactions are placed before the Audit Committee for review and approval. None of the Directors has any pecuniary relationship or transactions vis-a-vis the Company except remuneration and sitting fees.
11. CORPORATE SOCIAL RESPONSIBILITY:
The Companyâs social initiatives empower society and provide a holistic growth platform. The Company believes that Corporate Social Responsibility (CSR) projects should be sustainable and with the long term purpose of improving the quality of living for the less privileged and for increasing social assets. The funds should be carefully spent on CSR so that they result in the ultimate objectives meted out in the Companyâs CSR Policy. The Board of Directors of the Company has approved a Corporate Social Responsibility (CSR) Policy based on the recommendation of the CSR Committee. The brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure-III. The Board of Directors has formed a committee on CSR in accordance with Companies Act, 2013. The terms of reference of the Corporate Social Responsibility Committee, number and dates of meetings held, composition and attendance of the Directors during the financial year ended 31st March, 2019 are given separately in the Corporate Governance Report. During the year, the Company was required to spend Rs. 1,893 lakhs. The Company has already identified various CSR projects having a total commitment of Rs. 1,894 lakhs. Out of the total commitment of Rs. 1,894 lakhs, the Company has actually spent Rs. 1,697 lakhs and balance amount of Rs. 197 lakhs was unspent. Out of balance amount of Rs. 197 lakhs, Company had already spent Rs. 70 lakhs on the identified CSR project in the month of April, 2019 and remaining amount of Rs. 127 lakhs will be spent as the CSR project progresses further, considering the fact that the CSR projects are already identified.
The CSR policy of the Company is available on the Companyâs website and can be accessed on the Companyâs website at the link: https://www.bkt-tires.com/en/investors-desk/shareholding-info.
12. RISK MANAGEMENT:
âRisk Managementâ is the identification, assessment, and prioritization of risks followed by coordinated and economical application of resources to minimize, monitor, and control the probability and/or impact of uncertain events or to maximize the realization of opportunities. Risk management also provides a system for the setting of priorities when there are competing demands on limited resources. Risk management also attempts to identify and manage threats that could severely impact or bring down the organization.
The Companyâs Board of Directors has overall responsibility for the establishment and oversight of the Company risk management framework. Pursuant to Regulation 21 of Listing Regulations, the Board of Directors at their meeting held on 8th February, 2019, has constituted Risk Management Committee comprising of Mr. Pankaj Ghadiali, Chairman of the Committee and Independent Director, Mr. Arvind Poddar, Mr. Rajiv Poddar, Mr. Vipul Shah, Directors of the Company and Mr. Basant Bansal, KMP are Members of the Committee. The primary objective of Committee to control risk incurred by the Company with a view to prevent unacceptable losses, to provide an effective means of identifying, measuring and monitoring credit exposures incurred by Company and to keep such risk at or below pre-determined levels. The Company has framed a Risk Management Policy to identify and access the key business risk areas and a risk mitigation process. The policy aims to ensure resilience for sustainable growth and sound corporate governance by having an identified process of risk identification and management in compliance with the provisions of the Companies Act, 2013. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Companyâs Activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment.
The Audit Committee oversees how management monitors compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit Committee.
There are no risks, which in the opinion of the Board threaten the existence of the Company.
13. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
Your Directors are pleased to inform that based on the recommendations of the Nomination and Remuneration Committee as well as Board of Directors, the Shareholders by passing Ordinary resolution through Postal Ballot have re-appointed Mr. Rajiv Poddar, as Joint Managing Director of the Company for a period of further five years with effect from 22nd January, 2019. During the year, Mr. Khurshed Doongaji, one of the Independent Director of the Company, had resigned from the Directorship of the Company with effect from close of business hours of 8th February, 2019 due to his personal health conditions. Your Directors place on record his appreciation of the guidance given and services rendered by Mr. Khurshed Doongaji during his tenure as Independent Director of the Company.
During the year under review, based on the recommendations of the Nomination and Remuneration Committee, the Board had appointed three New Additional Directors i.e Mrs. Shruti Shah (DIN:08337714) with effect from 8th February, 2019, Mr. Sandeep Junnarkar (DIN:00003534) and Mr. Rajendra Hingwala (DIN:00160602) with effect from 28th March, 2019 respectively, to hold the office upto the date of forthcoming 57th Annual General Meeting (AGM). Further, subject to approval of the Members at the ensuing AGM, the Board had appointed, Mrs. Shruti Shah as an Independent Director for a term of 5 years with effect from 8th February, 2019 till 7th February, 2024, Mr. Sandeep Junnarkar and Mr. Rajendra Hingwala as an Independent Directors for a term of 5 years with effect from 28th March, 2019 till 27th March, 2024 respectively. The above appointments form a part of the Notice of the forthcoming 57th AGM and the resolutions are recommended for your approval. It is proposed to appoint Mrs. Shruti Shah, Mr. Sandeep Junnarkar and Mr. Rajendra Hingwala as an Independent Directors, not liable to retire by rotation, for a period of five years from date of appointment.
I n accordance with provisions of the Companies Act, 2013 and Articles of Association of the Company, Mrs. Vijaylaxmi Poddar, Non Executive Non Independent Director of the Company, retires by rotation at the ensuing AGM and being eligible seeks reappointment. The Board recommends her re-appointment.
Brief profile of the Directors being appointed and re-appointed as required under Regulations 36(3) of Listing Regulations, 2015 and Secretarial Standard on General Meetings are provided in the notice for the forthcoming AGM of the Company.
The Company has received declaration from all Independent Directors of the Company confirming that they meet with the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 as well as Regulation 16(1)(b) of the Listing Regulations, 2015.
The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirement set out by the SEBI. The Company has complied with the requirements of Corporate Governance as stipulated under the Listing Regulations, 2015 and accordingly, the Report on Corporate Governance forms a part of this Annual Report. The requisite certificate from the auditors of the Company confirming compliance with the conditions of the Corporate Governance is attached to the Report on Corporate Governance.
14. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:
The Company has devised the Nomination and Remuneration Policy for the selection, appointment and remuneration of the Directors, Key Managerial Personnel and also remuneration of other employees including Senior Management employees who have the capacity and ability to lead the Company towards achieving sustainable development. The extract of Nomination and Remuneration Policy is provided in the Corporate Governance Report and forms part of Boardâs Report.
The Criteria for appointment and remuneration of Directors is as under:
(i) Criteria for Appointment of Managing Director / Whole Time Director / Director:
The Nomination and Remuneration Committee shall identify persons of integrity who possess relevant expertise and experience particularly in Tire Industry, leadership qualities required for the position and shall take into consideration recommendation, if any, received from any member of the Board.
(ii) Criteria for Appointment of Independent Director:
The Independent Director shall be of high integrity with relevant expertise and experience so as to have as diverse Board with Directors having expertise in the fields of manufacturing, marketing, finance, taxation, law, governance and general management.
15. PERFORMANCE EVALUATION:
The Board of Directors has carried out an annual evaluation of its own performance, board committees and individual Directors pursuant to applicable provisions of the Act and the corporate governance requirements as prescribed by applicable regulations of Listing Regulations 2015.
The performance of the board was evaluated by the board after seeking inputs from all the Directors present in the meeting on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.
The Nomination and Remuneration Committee had evaluated the performance of individual Directors on the basis of 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.
The Securities and Exchange Board of India (SEBI) vide circular SEBI/H0/CFD/CMD/CIR/2017/004 dated 5th January, 2017, issued a Guidance Note on Board Evaluation about various aspects involved in the Board Evaluation process to benefit all stakeholders. While evaluating the performance the above guidance note was considered. Performance evaluation of Independent Directors was carried out by the entire board, excluding the Independent Director being evaluated. A meeting of the Independent Director, with Mr. Pannkaj Ghadiali as the Chairman, was held on 28th March, 2019, to review the performance of the Non-Independent Directors, the Board as a whole and the Chairman on the parameters of effectiveness and to assess the quality, quantity and timeliness of the flow of information between the Management and the Board. The same were 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 were also discussed. The Directors expressed their satisfaction with the evaluation process.
16. AUDITORS:
Statutory Auditor:
Pursuant to Section 139 of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, the members of the Company at its AGM held on 9th September, 2017 had approved the appointment of M/s. N G Thakrar & Co., Chartered Accountants (Firm Registration No. 110907W) as the Statutory Auditors in place of the retiring Statutory Auditors M/s. Jayantilal Thakkar & Co., Chartered Accountants (Firm Registration No. 104133W) for a period of 5 years for the auditing of the accounts of the Company from the conclusion of 55th AGM till the conclusion of 60th AGM of the Company (from financial year 2018 to financial year 2022). Pursuant to amendments in Section 139 of the Companies Act, 2013, the requirements to place the matter relating to such appointment for ratification by members at every AGM has been omitted with effect from 7th May, 2018.
Internal Auditor:
The Board has appointed M/s. Dilip A. Jain & Associates as an Internal Auditors for a period of 1 (One) year for Financial Year 2018-19 under Section 138 of the Companies Act, 2013 and they have completed the Internal Audit as per the scope as defined by the Audit Committee. Further, the Board has appointed M/s R T D & Associates as an Internal Auditors for the Financial year 2019-20 under Section 138 of the Companies Act, 2013 and they will be completing the Internal Audit as per the scope as defined by the Audit Committee.
Secretarial Auditor:
The Company has appointed Mr. G.B.B Babuji, Company Secretary in Whole Time Practice, to conduct Secretarial Audit for the financial year 2018-19 as required by Section 204 of the Companies Act, 2013 and rules made thereunder. The Company provided all assistance and facilities to the Secretarial Auditors for conducting their audit. Further, pursuant to SEBI Circular CIR/CFD/ CMD1/27/2019 dated 8th February, 2019, Mr. G.B.B Babuji, has also conducted the Annual Secretarial Compliance. The Secretarial Audit Report for the financial year ended 31st March, 2019 is annexed herewith marked as Annexure - IV.
Cost Auditor:
In terms of Section 148 of the Companies Act, 2013 read with Rule 5 of Companies (Cost Records and Audit) Rules, 2014, (âCost Records Rulesâ) as amended from time to time, the Company maintained its Cost records on regular basis in such manner which facilitated the calculation as may be prescribed by the Rules. Also, cost records maintained in such manner which enable the Company to exercise, to the extent possible, control over the various operations and costs to achieve optimum economies in utilization of resources. The Companyâs revenue from exports, in foreign exchange, exceeds 80% per cent of Companyâs total revenue. Pursuant to Rule 4 of Cost Records Rules of Companies Act, 2013 as amended from time to time, Cost Audit is not applicable to the Company for the financial year 2018-19.
17. AUDITORâS QUALIFICATION:
There are no qualifications in the reports of the Statutory Auditors and Secretarial Auditor.
There was no instance of fraud during the year under review, which required to be reported by Statutory Auditors in their reports as mentioned under sub-section (12) of Section 143 of the Act.
18. INDUSTRIAL RELATIONS:
The industrial relations with staff and workers during the year under review continue to be cordial.
19. CHANGE IN THE NATURE OF BUSINESS, IF ANY:
There is no change in the nature of business of your Company during the year under review.
20. DISCLOSURES:
i. Vigil Mechanism /Whistle Blower Policy:
The Vigil Mechanism of the Company which also incorporate a whistle blower policy in the terms of SEBI (Listing Obligations and Disclosure Requirements), 2015 deals with instances of fraud and mismanagement, if any. Adequate safeguards have been provided against victimization of persons who use the vigil mechanism. The Policy on vigil mechanism and whistle blower policy may be accessed on the Companyâs website at the link:https://www.bkt-tires.com/en/investors-desk/shareholding-info.
ii. Audit Committee:
The Audit Committee comprised of Four Independent Non-Executive Directors as on 31st March, 2019 viz. Mr. Pannkaj Ghadiali (Chairman), Mr. Ashok Saraf, Mr. Laxmidas Merchant and Mrs. Shruti Shah. All the recommendations made by the Audit Committee were accepted by the Board.
iii. Number of Board Meeting:
The Board of Directors of the Company met six times in the year, the details of which are provided in the Corporate Governance Report.
iv. Particulars of loans given, investment made, guarantees given and securities provided:
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the Notes Nos. 14,5,10,47 & 50 to Financial statement forming a part of this Annual Report.
v. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo:
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 are provided in Annexure - V and forms an integral part of this report.
vii. Extract of Annual Return:
Extract of Annual Return of the Company is annexed herewith as Annexure - VI to this report.
However, for the compliance of conditions of Section 134, copy of the Annual Return for the financial year ended 31st March, 2019 shall be placed on the Companyâs website www.bkt-tires.com.
viii. Particulars of Employees and related disclosures:
The information required under Section 197(12) of the Companies Act, 2013 read with Rules 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure - VII.
A statement comprising the names of top 10 employees in terms of remuneration drawn and every person employed throughout the year, who were in receipt of remuneration in terms of Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Report.
However, having regard to the provisions of the first proviso to Section 136 of the Act, the details are excluded in the report sent to members. Members who are interested in obtaining the particulars may write to the Company Secretary at registered/ corporate office of the Company. The aforesaid information is available for inspection 21 days before and up to the date of the ensuing AGM during the business hours on working days.
ix. Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013:
The Company has formulated and implemented a policy of prevention of sexual harassment at the workplace with mechanism of loading/redressal complaints. During the year under review, there were no complaints reported to the Board.
x. Business Responsibility Report:
As mandated by Regulations - 34(2)(f) of Listing Regulations, 2015, Business Responsibility Report, of the Company for the year ended 31st March, 2019, describing the initiatives taken by the Company from an environmental, social and governance prospective, in the prescribed form is annexed as Annexure - VIII.
xi. Compliance with the Institute of Company Secretaries of India (âICSIâ) Secretarial Standards:
The relevant Secretarial Standards issued by the ICSI related to the Board Meetings and General Meeting have been complied with by the Company.
No disclosure or reporting is required in respect of the following items as there were no transaction on these items during the year under review:
1. Details relating to deposit and unclaimed deposits or interest thereon.
2. Issue of equity shares with differential rights as to dividend or voting.
3. Issue of shares (including sweat equity shares) and Employee Stock Option Scheme of the Company under any scheme.
4. None of the managerial personnel i.e. Managing Director, Joint Managing Director and Whole-time Director of the Company are in receipt of remuneration / commission from Subsidiary Companies of the Company.
5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern and Companyâs operation in future.
21. APPRECIATION:
Your Company has been able to operate efficiently because of the culture of professionalism, creativity, integrity and continuous improvement in all functions and areas as well as the efficient utilization of the Companyâs resources for sustainable and profitable growth.
The Board of Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. The Board of Directors also wish to place on record its deep sense of appreciation for the dedicated and committed services by the Companyâs executives, staff and workers.
Last but not least, your Directors wish to place on record their warm appreciation to you for your continuous support and encouragement.
For and on behalf of the Board of Directors
Place : Mumbai, ARVIND PODDAR
Dated : 17th May, 2019 Chairman & Managing Director
DIN: 00089984
Mar 31, 2018
Dear Shareholders,
The Directors are pleased to present the 56th Annual Report of Balkrishna Industries Limited (the âCompanyâ) along with the audited financial statements for the financial year ended 31st March, 2018. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.
1. FINANCIAL RESULTS:
(Rs. in Lakhs)
|
Standalone |
Consolidated |
|||
|
Particulars |
Current Year ended |
Previous Year ended |
Current Year ended |
Previous Year ended |
|
31st March, 2018 |
31st March, 2017 |
31st March, 2018 |
31st March, 2017 |
|
|
Revenue from Operations |
4,46,446 |
3,78,466 |
4,46,097 |
3,78,011 |
|
Other Income |
33,621 |
24,961 |
33,975 |
25,363 |
|
Total Income |
4,80,067 |
4,03,427 |
4,80,072 |
4,03,374 |
|
Gross Profit |
1,42,983 |
1,36,010 |
1,42,744 |
1,36,260 |
|
Less: Depreciation |
31,134 |
30,383 |
31,140 |
30,400 |
|
Profit before tax |
1,11,849 |
1,05,627 |
1,11,604 |
1,05,860 |
|
Less: Provision for tax |
||||
|
Current Tax |
36,903 |
29,553 |
37,002 |
29,666 |
|
Deferred Tax |
1,021 |
4,516 |
1,023 |
4,509 |
|
Profit after tax |
73,925 |
71,558 |
73,579 |
71,685 |
2. SUBSIDIARY COMPANIES:
The Board of Directors of the Company, on 18th May, 2016, have approved the Scheme of Amalgamation of its wholly owned subsidiary Company M/s. BKT Exim Limited into itself under sections 391 to 394 and any other applicable provisions of the Companies Act, 1956 and Companies Act, 2013, to the extent notified and applicable. The Company has filed the necessary petition in the Honâble Bombay High Court, which was transferred to the Honâble National Company Law Tribunal (NCLT). NCLT has approved the Scheme of Amalgamation on 24th January, 2018 and on filing the NCLT Order with the Registrar of Companies, Mumbai, the Scheme became effective on 21st February, 2018. The appointment date of the scheme was 1st April, 2015.
At the end of the year under review, the Company had following wholly owned subsidiary companies namely BKT Tyres Limited, Thristha Synthetics Limited and following Overseas Subsidiary Companies namely BKT EUROPE S.R.L., BKT USA INC, BKT TIRES (CANADA) INC., BKT EXIM US, INC and subsidiary of BKT EXIM US, INC - BKT TIRES INC. The Company does not have any material subsidiary whose net worth or income exceeds 20% of the consolidated net worth or income respectively of the holding Company in the immediately preceding financial year. A policy on material subsidiaries has been formulated by the Company and posted on the website of the Company and can be accessed on the Companyâs website at the link: https://www.bkt-tires.com/en/investors-desk/ shareholding-info.
Pursuant to Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing the salient features of the financial position of subsidiary companies in Form AOC-1 attached as Annexure - I.
3. DIRECTORSâ RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 134(3)(c) and 134(5) of the Companies Act, 2013, your Directors to the best of their knowledge confirm that:
(i) that in the preparation of the annual accounts for the year ended 31st March, 2018, the applicable accounting standards have been followed and there are no material departures from the same;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2018 and of the Profit of the Company for that period;
(iii) the Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the annual accounts of the Company on a âgoing concernâ basis;
(v) the Directors have laid down internal financial controls to be followed by the Company and the such internal financial controls are adequate and are operating effectively; and
(vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that systems are adequate and operating effectively.
4. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:
All contracts /arrangements / transactions entered by the Company during the financial year with related parties were in ordinary course of business and on an armâs length basis. During the year, the Company has 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.
Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC - 2 is not applicable to your Company.
The Policy on materiality of related party transactions and dealing with related party transactions are approved by the Board and can be accessed on the Companyâs website at the link: https://www.bkt-tires.com/en/investors-desk/shareholding-info. Members can refer Note no. 43 to the Standalone financial statement which set out related party disclosures.
The Board of Directors of the Company has approved the criteria for making the omnibus approval by the Audit Committee within the overall framework of the policy on related party transactions. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and proposed to be entered in the ordinary course of business and at armâs length during the financial year. All related party transactions are placed before the Audit Committee for review and approval.
5. CORPORATE SOCIAL RESPONSIBILITY:
The Board of Directors of the Company has approved a Corporate Social Responsibility (CSR) Policy based on the recommendation of the CSR Committee. The brief outline of the CSR policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure - II. The Board of Directors has formed a committee on CSR in accordance with Companies Act, 2013. The composition of the same has been given in Corporate Governance Report. The CSR policy of the Company is available on the Companyâs website and can be accessed on the Companyâs website at the link: https://www.bkt-tires.com/en/ investors-desk/shareholding-info. During the year, the Company has spent Rs.1,655 Lakhs on CSR activities.
6. RISK MANAGEMENT:
The Companyâs Board of Directors has overall responsibility for the establishment and oversight of the Company risk management framework. The Company has framed a Risk Management Policy to identify and access the key business risk areas and a risk mitigation process. The policy aims to ensure resilience for sustainable growth and sound corporate governance by having an identified process of risk identification and management in compliance with the provisions of the Companies Act, 2013. Risk management policies and systems are reviewed regularly to reflect changes in market conditions and the Companyâs Activities. The Company, through its training and management standards and procedures, aims to maintain a disciplined and constructive control environment.
The Audit Committee oversees how management monitors compliance with the Companyâs risk management policies and procedures, and reviews the adequacy of the risk management framework in relation to the risks faced by the Company. Internal Audit undertakes both regular and ad hoc reviews of risk management controls and procedures, the results of which are reported to the audit Committee.
There are no risks, which in the opinion of the Board threaten the existence of the Company.
7. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
Mr. Sachin Nath Chaturvedi, ceased to be Director from the Board of Company w.e.f 13th October, 2017, as he has incurred disqualification under Section 164(2) of Companies Act, 2013 and he has vacated his office under Section 167 of Companies Act, 2013. Your Directors place on record his appreciation of the guidance given and services rendered by Mr. Sachin Nath Chaturvedi during his tenure as Independent Director of the Company.
During the year under review, on the recommendation received from the Nomination & Remuneration Committee, the Board had appointed Mr. Pannkaj Ghadiali as an Additional Director with effect from 8th November, 2017 and who holds office upto the date of the forthcoming 56th Annual General Meeting (âAGMâ). Mr. Pannkaj Ghadiali is eligible to be appointed as an Independent Director. It is proposed to appoint Mr. Pannkaj Ghadiali as an Independent Director, not liable to retire by rotation, for a period of five years from date of appointment.
In accordance with provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. Vipul Shah, Whole Time Director, designated as Director & Company Secretary of the Company, retires by rotation at the ensuing AGM and being eligible seeks re-appointment. The Board recommends his re-appointment.
Brief profile of the Directors being appointed and re-appointed as required under Regulations 36(3) of Listing Regulations, 2015 and Secretarial Standard on General Meetings are provided in the notice for the forthcoming AGM of the Company.
The Company has received declaration from all Independent Directors of the Company confirming that they meet with the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 confirming that they meet the criteria of independence as prescribed thereunder as well as Regulation 16(1)(b) of the Listing Regulations, 2015.
The Company has complied with the requirements of Corporate Governance as stipulated under the Listing Regulations, 2015 and accordingly, the Report on Corporate Governance forms a part of this Annual Report.
8. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:
The Company has devised the Nomination and Remuneration Policy for the selection, appointment and remuneration of the Directors and Key Managerial personnel and also remuneration of other employees who have the capacity and ability to lead the Company towards achieving sustainable development. The extract of Nomination and Remuneration Policy is provided in the Corporate Governance Report and forms part of Boardâs Report.
The Criteria for appointment and remuneration of Directors is as under:
(i) Criteria for Appointment of Managing Directors / Whole Time Director / Director:
The Nomination and Remuneration Committee shall identify persons of integrity who possess relevant expertise and experience particularly in Tyre Industry, leadership qualities required for the position and shall take into consideration recommendation, if any, received from any member of the Board.
(ii) Criteria for Appointment of Independent Director:
The Independent Director shall be of high integrity with relevant expertise and experience so as to have as diverse Board with Directors having expertise in the fields of manufacturing, marketing, finance, taxation, law, governance and general management.
9. PERFORMANCE EVALUATION:
The Board of Directors has carried out an annual evaluation of its own performance, board committees and individual Directors pursuant to applicable provisions of the Act and the corporate governance requirements as prescribed by Listing Regulations 2015.
The performance of the board was evaluated by the board after seeking inputs from all the Directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc.
The Nomination and Remuneration Committee had evaluated the performance of individual Directors on the basis of 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.
Performance evaluation of Independent Directors was carried out by the entire board, excluding the Independent Director being evaluated. A meeting of the Independent Directors, with Mr. Pannkaj Ghadiali as the Chairman, was held on 24th March, 2018, to review the performance of the Non-Independent Directors, the Board as a whole and the Chairman on the parameters of effectiveness and to assess the quality, quantity and timeliness of the flow of information between the Management and the Board. 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.
10. AUDITORS:
Statutory Auditor:
Pursuant to Section 139 of the Companies Act, 2013, the Company at its AGM held on 9th September, 2017 had appointed M/s. N G Thakrar & Co., Chartered Accountants (Firm Registration No. 110907W) as the Statutory Auditors in place of the retiring Auditors M/s. Jayantilal Thakkar & Co., Chartered Accountants (Firm Registration No. 104133W) for a period of 5 years for auditing the accounts of the Company from the conclusion of 55th AGM till the conclusion of 60th AGM of the Company (from financial year 2018 to financial year 2022).
Internal Auditor:
The Board has appointed M/s. Dilip A. Jain & Associates as an Internal Auditors for the Financial year 2017-18 under Section 138 of the Companies Act, 2013 and they have completed the Internal Audit as per the scope as defined by the Audit Committee.
Secretarial Auditor:
The Company has appointed Mr. G.B.B. Babuji, Company Secretary in Whole Time Practice, to conduct Secretarial Audit for the financial year 2017-18 as required by Section 204 of the Companies Act, 2013 and rules made thereunder. The Company provided all assistance and facilities to the Secretarial Auditors for conducting their audit. The Secretarial Audit Report for the financial year ended 31st March, 2018 is annexed herewith marked as Annexure - III.
Cost Auditor:
The Companyâs revenue from exports, in foreign exchange, around 85% per cent of Companyâs total revenue. Pursuant to Rule 4 of the Companies (Cost Records and Audit) Rules, 2014 of Companies Act, 2013 as amended from time to time, Cost Audit is not applicable to the Company for the financial year 2017-18.
11. AUDITORâS QUALIFICATION:
There are no qualifications in the reports of the Statutory Auditor and Secretarial Auditor.
There are no frauds reported in the reports of the Auditors as mentioned under sub-section (12) of Section 143 of the Act.
12. INDUSTRIAL RELATIONS:
The industrial relations with staff and workers during the year under review continue to be cordial.
13. CHANGE IN THE NATURE OF BUSINESS, IF ANY:
There is no change in the nature of business of your Company during the year under review.
14. DISCLOSURES:
i. Vigil Mechanism /Whistle Blower Policy:
The Vigil Mechanism of the Company which also incorporate a whistle blower policy in the terms of SEBI (Listing Obligations and Disclosure Requirements), 2015 deals with instances of fraud and mismanagement, if any. The Policy on vigil mechanism and whistle blower policy may be accessed on the Companyâs website at the link: https://www.bkt-tires.com/en/investors-desk/shareholding-info.
ii. Audit Committee:
The Audit Committee comprised of Four Independent Non-Executive Directors viz. Mr. Pannkaj Ghadiali (Chairman), Mr. Khurshed Doongaji, Mr. Ashok Saraf and Mr. Laxmidas Merchant. All the recommendations made by the Audit Committee were accepted by the Board.
iii. Number of Board Meeting:
The Board of Directors of the Company met five times in the year, the details of which are provided in the Corporate Governance Report.
iv. Particulars of loans given, investment made, guarantees given and securities provided:
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement (Please refer to Note No. 14, 5, 10, 47 & 50 to the Standalone Financial Statement).
v. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo:
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 are provided in Annexure - IV and forms an integral part of this report.
vii. Extract of Annual Return:
Extract of annual return of the Company is annexed herewith as Annexure - V to this report.
viii. Particulars of Employees and related disclosures:
The information required under Section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure - VI.
A statement comprising the names of top 10 employees in terms of remuneration drawn and every person employed throughout the year, who were in receipt of remuneration in terms of Rule 5(2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Report.
However, having regard to the provisions of the first proviso to Section 136 of the Act, the details are excluded in the report sent to members. Members who are interested in obtaining the particulars may write to the Company Secretary at registered/ corporate office of the Company. The aforesaid information is available for inspection 21 days before and up to the date of the ensuing AGM during the business hours on working days.
ix. Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013:
The Company has formulated and implemented a policy of prevention of sexual harassment at the workplace with mechanism of loading/redressal complaints. During the year under review, there were no complaints reported to the Board.
x. Business Responsibility Report:
As mandated by Regulations 34(2)(f) of Listing Regulations, 2015, Business Responsibility Report, of the Company for the year ended 31st March, 2018, describing the initiatives taken by the Company from an environmental, social and governance prospective, in the prescribed form is annexed as Annexure - VII.
xi. Compliance with the Institute of Company Secretaries of India (âICSIâ) Secretarial Standards:
The relevant Secretarial Standards issued by the ICSI related to the Board Meetings and General Meeting have been complied with by the Company.
No disclosure or reporting is required in respect of the following items as there were no transaction on these items during the year under review:
1. Details relating to deposit and unclaimed deposits or interest thereon.
2. Issue of equity shares with differential rights as to dividend or voting.
3. Issue of shares (including sweat equity shares) and Employee Stock Option Scheme of the Company under any scheme.
4. None of the managerial personnel i.e. Managing Director, Joint Managing Director and Whole-time Director of the Company are in receipt of remuneration / commission from Subsidiary Companies of the Company.
5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern and Companyâs operation in future.
15. CAUTIONARY STATEMENTS:
Certain statements in the âDirectorâs Report & Management Discussion and Analysisâ describing the Companyâs views about the Industry, expectations/ predictions, objectives etc., may be forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed in the Statement. Companyâs operations may inter-alia affect with the supply and demand stipulations, input prices and their availability, changes in Government regulations, taxes, exchange fluctuations and other factors such as Industrial relations and economic developments etc. Investors should bear the above in mind.
16. ACKNOWLEDGEMENT:
The Board of Directors would like to express their sincere appreciation for the assistance and co-operation received from the financial institutions, banks, Government authorities, customers, vendors and members during the year under review. The Boards of Directors also wish to place on record its deep sense of appreciation for the committed services by the Companyâs executives, staff and workers.
Last but not least, your Directors wish to place on record their warm appreciation to you for your continuous support and encouragement.
For and on behalf of the Board of Directors
Place : Mumbai, ARVIND PODDAR
Dated : 17th May, 2018 CHAIRMAN & MANAGING DIRECTOR
DIN:00089984
Mar 31, 2017
Dear Shareholders,
The Directors present the Annual Report of Balkrishna Industries Limited (the Company) along with the audited financial statements for the financial year ended 31st March, 2017. The consolidated performance of the Company and its subsidiaries has been referred to wherever required.
The Ministry of Corporate Affairs (MCA) on 16th February, 2015, notified that Indian Accounting Standards (Ind AS) are applicable to certain classes of companies from 1st April, 2016 with a transition date of 1st April, 2015. Ind As is applicable to the Company from 1st April, 2016.
The reconciliations and descriptions of the effect of the transition from previous GAAP to Ind AS have been set out in Note 38 in the notes to accounts in the standalone as well as consolidated financial statement.
1. FINANCIAL RESULTS:
(Rs. in Lakhs)
|
PARTICULARS |
Standalone |
Consolidated |
||
|
Current Year ended |
Previous Year ended |
Current Year ended |
Previous Year ended |
|
|
31.03.2017 |
31.03.2016 |
31.03.2017 |
31.03.2016 |
|
|
Revenue from Operations |
378830 |
327252 |
378384 |
328946 |
|
Other Income |
24911 |
14896 |
25363 |
17374 |
|
Total Income |
403741 |
342148 |
403747 |
346320 |
|
Gross Profit |
135953 |
94763 |
136260 |
95657 |
|
Less: Depreciation |
30383 |
28217 |
30400 |
28232 |
|
Profit before tax |
105570 |
66546 |
105860 |
67425 |
|
Less: Provision for tax |
||||
|
Current Tax |
29540 |
22970 |
29666 |
23193 |
|
Deferred Tax |
4516 |
(281) |
4509 |
(340) |
|
Profit after Tax |
71514 |
43857 |
71685 |
44572 |
2. INDUSTRY STRUCTURE AND DEVELOPMENT:
Your company is primarily into tyre industry and within it focuses on âOff Highway segmentâ which generally consist of agriculture tyres, industrial tyres, construction tyres, mining tyres, port tyres, lawn and garden tyres and all terain vehicle tyres (ATV).
This segment is known as âlarge varieties low volume segmentâ wherein any credible player needs to maintain large number of Stock Keeping Units (SKUs) to meet the diverse requirement of its customers. The major market for these kind of tyres are the developed countries, more particularly, Europe and USA.
While the sub segment (agriculture) is largely known as non-cyclical in nature, the other sub segment (industrial, construction and mining) is generally considered as cyclical and the performance of it is largely linked to overall economic outlook of the world.
Under this segment, there are primarily 3 channel partners;
1) Distributors (known as replacement segment)
2) Original equipment manufacturer (OEM)
3) Institutional players who maintains larger base of fleet.
The growth rate of these segments has been in the range of 3 ~ 4% and in last few years, no major capacity additions have taken place across the globe.
3. OPERATIONS :
Your Company mainly operates in one single segment i.e. âtyresâ with focus on manufacture of wide range of âOff-Highway Tyresâ(OHT), which are mainly used in Agricultural, Industrial & Construction, Earthmover & Port, Mining, Forestry, Lawn & Garden and All Terrain Vehicles (ATV). More than 80% of our revenue is generated through exports.
During the year under consideration on Standalone basis, your Company achieved a Net turnover of Rs. 378830 Lakhs as against Rs. 327252 Lakhs during previous financial year, Earnings before Interest, Depreciation and Tax (EBITDA) has increased to Rs. 138097 Lakhs from Rs. 98710 Lakhs during previous financial year and Net profit has increased to Rs. 71514 Lakhs from Rs. 43857 Lakhs during previous financial year.
During the year under consideration on Consolidated basis, your Company achieved Net turnover of Rs. 378384 Lakhs as against Rs. 328946 Lakhs during previous financial year, Earnings before Interest, Depreciation and Tax (EBIDTA) has increased to Rs. 138460 Lakhs from Rs. 99606 Lakhs during previous financial year and Net profit has increased to Rs. 105860 Lakhs from Rs. 67425 Lakhs during previous financial year.
4. EXPORT HOUSE STATUS:
Your Company enjoys the status of âFour Star Export Houseâ.
5. DIVIDEND:
The Directors have declared and paid Interim Dividends of 275% (Rs. 5.50 per equity share) and pleased to recommend Final Dividend of Rs. 2.50 per equity share (125%) for the year 2016-2017.
The Final Dividend if approved by the Shareholders, the total dividend payout for the year including tax will be Rs. 9307 Lakhs.
6. SHARE CAPITAL:
The paid up Share Capital of the Company as on 31st March, 2017 is Rs. 1933 Lakhs. During the year under review the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. As on 31st March, 2017, none of the Directors of the Company hold convertible instruments.
7. RESERVES:
The Company proposes to transfer Rs. 50000 Lakhs to General Reserves.
8. OUTLOOK FOR THE CURRENT YEAR 2017-2018:
The Companyâs earnings are mainly generated through exports. The overall business environment across the globe has been challenging in past few years, however, the previous year has been good due to revival in commodity cycle and overall good agricultural activities across the globe. Unfortunately, the momentum in revival of commodity cycle has not been of a sustained nature and therefore the business environment still looks challenging. However, the long term prospects of the Company are good and promising. Your Company continues to explore all the avenues to ensure growth of the business which includes, deeper penetration into existing market within India as well as outside India, extending relationship with OEMs and expanding product range. With all such efforts, your Company has aimed to achieve higher sales during the current year.
9. MATERIAL CHANGES AND COMMITMENTS:
No material changes and commitments affecting the financial position of your Company 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.
10. OPPORTUNITY & THREATS:
Opportunities:
Your company operates into a segment predominantly known as âlarge varieties -low volume segmentâ, which is not only capital intensive but also labour intensive. Your Company is fully geared up to take advantage of the peculiarities of the said segment and has developed a large base of SKUs to meet the diverse needs and applications.
Moreover, this segment is neither exposed to any technological obsolescence nor wild fluctuations in demand for its products.
The Company is continuously marching ahead to explore incremental opportunity in the form of developing âEarthmovers & mining tyres markets and taking advantage of the shift from bias to radial tyres, which is growing up continuously. In order to take advantage of this opportunity, the Company had first set up an all-steel OTR Radial tyre plant at its Chopanki location and further added such capacities by setting up a green field tyre plant at Bhuj to produce large size all steel OTR radial tyres besides other categories of tyres. Your Company is proud to be first Company in India to set up such plant. Your Company is continuously expanding its base into various sub-segments like agricultural, industrial, construction, mining, winter and solid tyres under both technologies - bias as well as radials.
Threats:
Like any other Company, your Company is also exposed to various threats like competition from small players, retention of employees, labor unrest, increase in raw material prices and other input costs etc.
11. RISKS / CONCERNS AND RISK MITIGATION:
Fluctuation in Raw Material prices:
The Companyâs major raw material is Natural Rubber, which is an agricultural commodity and actively traded on the commodities exchanges. Its prices fluctuate significantly and have witnessed significant volatility in the past. During last two years, the raw material prices have been soft in the back drop of subdued business environment across the globe. Of late, it moved up and then softened again. Currently, it is moving in narrow range. So is the case with other raw materials.
In order to minimize such risks, the Company not only enters into medium-term contracts but also adopts the policy to âBuy and Stockâ large quantities during the lean period.
Since most of the raw materials are imported, the company is exposed to foreign currency risk. However, it enjoys natural hedge as most of its revenues are in foreign currency.
Labour Relations:
Since Companyâs manufacturing process is that of batch processing, it requires lot of skilled as well as un-skilled workers. Maintaining a huge work force is a big challenge.
In order to mitigate the said risk, the Company follows good HR practices to promote the welfare, safety of its workmen and improve the work environment. All workers are paid more than adequate remuneration for their work.
Retention of skilled manpower:
Like other players in the industry, the Company is also exposed to this risk, more particularly when there is shortage of skilled manpower in the industry.
The Company is able to manage the said risk by good HR practices and rewarding its employees handsomely.
Currency Fluctuation:
As stated earlier the company revenues are mainly generated through exports. The Company also imports lot of its raw materials and capital equipmentâs. Moreover, all its borrowings are in foreign currency and it is therefore exposed to risks due to currency fluctuations.
The Company follows the system of hedging its receivables (net off payables) well in advance by entering into Forward Contracts, thereby protecting itself from the fluctuations in currencies to a large extent.
12. INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
Your Company has aligned its current systems of internal financial control with the requirement of the Companies Act, 2013. Your Companyâs internal controls are commensurate with its size and the nature of its operations. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with the applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization, and ensuring compliance with corporate policies. The Companyâs management has assessed the effectiveness of the Companyâs internal control over financial reporting as of 31st March, 2017.
KPMG was appointed to assess the effectiveness of internal financial controls of the company during last financial year. Their assessment was based on an internal audit plan, which was reviewed in consultation with the Audit Committee.
The Audit Committee reviewed the reports submitted by the Management, KPMG, Internal Auditors and Statutory Auditors. Based on their evaluation (as defined in section 177 of the Companies Act, 2013 and Clause 18 of SEBI Regulations 2015), the Companyâs Audit Committee has concluded that, as of 31stMarch, 2017, the Companyâs internal financial controls were adequate and operating effectively.
13. HUMAN RESOURCES:
The Companyâs human resources continue to be its biggest asset. The team has remained as committed as ever and produced results that are considered significant. Quality, quick delivery and focus on resolving customer issues are the hallmark of the team performance. There is a strong focus on TEAM spirit, during the year, many events/training programs were conducted to develop personality and outlook of its employees. Employee relations continue to be cordial.
14. SUBSIDIARY COMPANIES:
The company has following 100% subsidiary companies:
BKT EXIM Limited, BKT Tyres Limited, Thristha Synthetics Limited, and Indirect subsidiary Companies i.e subsidiary companies of BKT EXIM Limited - BKT EUROPE S.R.L., BKT USA INC, BKT TIRES (CANADA) INC., BKT EXIM US, INC and subsidiary of BKT EXIM US, INC - BKT TIRES INC. The Policy determining material subsidiaries as approved may be accessed on the Companyâs website at the link http://www. bkt-tires. com/en/about-us/investors-desk/download?file_id=1801.
Your Directors had approved the Scheme of Amalgamation (âthe Schemeâ) of its wholly owned subsidiary BKT EXIM Limited (BKT EXIM) into it and their respective shareholders under Sections 391 to 394 of the Companies Act, 1956 at its meeting held on 18th May, 2016, subject to the approval of the Honorable High Court of Judicature at Bombay (âthe High Courtâ), National Company Law Tribunal (âNCLTâ) or such other competent authority.
The Company has filed petition in the Bombay High Court, which was transferred to NCLT and is still pending with it.
A statement containing the salient features of the financial position of subsidiary companies in Form AOC-1 attached as Annexure I.
15. DIRECTORSâ RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 134 (3)(c) and 134(5) of the Companies Act, 2013, your Directors to the best of their knowledge confirm that:
(i) that in the preparation of the annual accounts for the year ended 31st March, 2017, the applicable accounting standards have been followed and there are no material departures from the same;
(ii) the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2017 and of the Profit of the Company for that period;
(iii) the Directors have taken proper and sufficient care for maintenance of adequate accounting records in accordance with provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
(iv) the Directors have prepared the annual accounts of the Company on a âgoing concernâ basis;
(v) the Directors have laid down internal financial controls to be followed by the Company and the such internal financial controls are adequate and are operating effectively; and
(vi) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that systems are adequate and operating effectively.
16. CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:
All contracts /arrangements / transactions entered by the Company during the financial year with related parties were in ordinary course of business and on an armâs length basis. During the year, the Company has 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. The Policy on materiality of related party transactions and dealing with related party transactions are approved by the Board may be accessed on the Companyâs website at the link http://www. bkt-tires. com/en/about-us/investors-desk/ download?file id=1798. Members can refer Note no. 45 to the financial statement which set out related party disclosures.
The Board of Directors of the Company has approved the criteria for making the omnibus approval by the Audit Committee within the overall framework of the policy on related party transactions. Prior omnibus approval is obtained for related party transactions which are of repetitive nature and entered in the ordinary course of business and at armâs length. All related party transactions are placed before the Audit Committee for review and approval.
All related party transactions entered during the financial year were in ordinary course of the business and on armâs length basis. No material related party transactions were entered during the financial year by your Company. Accordingly, the disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC - 2 is not applicable to your Company.
17. CORPORATE SOCIAL RESPONSIBILITY:
The brief outline of the Corporate Social Responsibility (CSR) policy of the Company and the initiatives undertaken by the Company on CSR activities during the year are set out in Annexure II of this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The policy is available on the website of the Company at link: http://www. bkt-tires. com/en/about-us/ investors-desk/download?file_id=1796.
18. RISK MANAGEMENT:
The Company has framed a Risk Management Policy to identify and access the key business risk areas and a risk mitigation process. A detailed exercise is being carried out to ascertain the various risk which the company generally faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework.
19. DIRECTORS AND KEY MANAGERIAL PERSONNEL:
Mr. Ramesh Poddar, resigned w.e.f. 10th September, 2016 as Director from the Board of the Company and the same was considered and accepted by the Board with effect from 10th September, 2016. Your Directors place on record their appreciation of the guidance given and services rendered by Mr. Ramesh Poddar during his tenure as Director of the Company.
In accordance with provisions of the Companies Act, 2013 and Articles of Association of the Company, Mrs. Vijaylaxmi Poddar, Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible seeks re-appointment. The Board recommends her re-appointment.
As recommended by Nomination and Remuneration Committee the Board of Directors of the Company has re-appointed Mr. Vipul Shah as Whole Time Director designated as Director & Company Secretary of the Company for term of five years w.e.f. 11th February, 2017 to 10th February, 2022 subject to approval of members of the Company.
Brief resume of the Directors being re-appointed as required under SEBI (Listing Obligations and Disclosure Requirements), 2015 and Secretarial Standard 2 on General Meetings issued by The Institute of Company Secretaries of India is provided in the notice convening the Annual General Meeting of the Company.
The Company has received declaration from all Independent Directors of the Company confirming that they meet with the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015.
20. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION:
The Board has, on the recommendation of the Nomination and Remuneration Committee, laid down a Nomination and Remuneration Policy for selection and appointment of the Directors and Key Managerial personnel and their remuneration. The extract of Remuneration Policy is provided in the Corporate Governance Report forms part of Boardâs Report.
The Criteria for appointment and remuneration of Directors is as under:
(i) Criteria For Appointment Of Managing Directors / Whole Time Director / Director:
The Nomination and Remuneration Committee shall identify persons of integrity who possess relevant expertise and experience particularly in Tyre Industry, leadership qualities required for the position and shall take into consideration recommendation, if any, received from any member of the Board.
(ii) Criteria For Appointment Of Independent Director:
The Independent Director shall be of high integrity with relevant expertise and experience so as to have as diverse Board with Directors having expertise in the fields of manufacturing, marketing, finance, taxation, law, governance and general management.
21. PERFORMANCE 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 the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements), Regulations 2015 (âSEBI Listing Regulationsâ).
The performance of the board was evaluated by the board after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, etc. as provided by the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on 5th January, 2017.
The Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of 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 a separate meeting of independent directors, performance of non-independent directors and the board as a whole 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. Performance evaluation of independent directors was done by the entire board, excluding the independent director being evaluated.
22. AUDITORS:
Statutory Auditors:
Pursuant to the provisions of Section 139 of the Companies, 2013 and Rules made thereunder the terms of office of Messers Jayantilal Thakkar & Co., Chartered Accountants, as the Statutory Auditors of the Company will conclude from the close of ensuing Annual General Meeting of the Company.
The Board of Directors place on record its appreciation to the services rendered by Messers Jayantilal Thakkar & Co., Chartered Accountants of the Company.
Subject to approval of the members, the Board of Directors of the Company has recommended the appointment of M/s. N G Thakrar & Co., Chartered Accountants (Firm Registration Number 110907W) as the Statutory Auditors of the Company pursuant to Section 139 of the Companies Act, 2013.
The Board recommends the resolution in relation to appointment of Statutory Auditors, for the approval by the shareholders of the Company.
Secretarial Auditor:
The Board has appointed Mr. GBB Babuji, Company Secretary in Whole Time Practice, to conduct Secretarial Audit for the financial year 2016-17. The Secretarial Audit Report for the financial year ended 31st March, 2017 is annexed herewith marked as Annexure III.
Cost Auditor:
The Companyâs revenue from exports, in foreign exchange, exceeds seventy-five per cent of Companyâs total revenue, as per Rule 7 (i) of the Companies (Cost Records and Audit) Rules, 2014 Cost Audit is not applicable to the Company for the financial year 2016-17.
23. AUDITORâS QUALIFICATION:
There are no qualifications in the reports of the Statutory Auditors and Secretarial Auditors.
There are no frauds reported in the reports of the Auditors as mentioned under sub-section (12) of Section 143.
24. INDUSTRIAL RELATIONS:
The industrial relations with staff and workers during the year under review continue to be cordial.
25. CHANGE IN THE NATURE OF BUSINESS, IF ANY:
There is no change in the nature of business of your Company during the year under review.
26. DISCLOSURES:
i. Vigil Mechanism /Whistle Blower Policy:
The Vigil Mechanism of the Company which also incorporate a whistle blower policy in the terms of SEBI (Listing Obligations and Disclosure Requirements), 2015 deals with instances of fraud and mismanagement, if any. The Policy on vigil mechanism and whistle blower policy may be accessed on the Companyâs website at the link: http://www.bkt-tires.com/en/about-us/ investors-desk/download?file_id = 1797.
ii. Audit Committee:
The Audit Committee comprised of Two Independent Non-Executive Directors viz. Mr. Sachin Nath Chaturvedi (Chairman), Mr. Khurshed Doongaji and One Joint Managing Director Mr. Rajiv Poddar. All the recommendations made by the Audit Committee were accepted by the Board.
iii. Number of Board Meeting:
The Board of Directors of the Company met five times in the year, the details of which are provided in the Corporate Governance Report.
iv. Particulars of loans given, investment made, guarantees given and securities provided:
Particulars of loans given, investments made, guarantees given and securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the standalone financial statement (Please refer to Note No. 14, 5, 10, 49 & 52 to the Standalone Financial Statement.
v. Conservation of Energy, Technology Absorption and Foreign Exchange Earnings and outgo:
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 (3) of the Companies (Accounts) Rules, 2014 are provided in Annexure IV and forms an integral part of this report.
vi. Cash Flow and Consolidated Financial Statements:
As required under Regulation 34(2) of SEBI LODR, Cash Flow and Consolidated Financial Statements is annexed.
vii. Extract of Annual Return:
Extract of annual return of the Company is annexed herewith as Annexure V to this report.
viii. Particulars of Employees and related disclosures:
The information required under Section 197(12) of the Companies Act, 2013 read with Rules 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is attached as Annexure VI.
A statement comprising the names of top 10 employees in terms of remuneration drawn and every person employed throughout the year, who were in receipt of remuneration in terms of Rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, are provided in the Report.
However, having regard to the provisions of the first proviso to Section 136 of the Act, the details are excluded in the report sent to members. Members who are interested in obtaining the particulars may write to the Company Secretary at registered/corporate office of the Company. The aforesaid information is available for inspection 21 days before and up to the date of the ensuing Annual General Meeting during the business hours on working days.
ix. Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013:
The Company has formulated and implemented a policy of prevention of sexual harassment at the workplace with mechanism of loading/redressal complaints. During the year under review, no complaints were reported to the Board.
x. Business Responsibility Report:
As required under SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, Business Responsibility Report describing the initiatives taken by the Company from an environmental, social and governance prospective, in the prescribed form is annexed as Annexure VII.
No disclosure or reporting is required in respect of the following items as there were no transaction on these items during the year under review:
1. Details relating to deposit and unclaimed deposits or interest thereon.
2. Issue of equity shares with differential rights as to dividend or voting.
3. Issue of shares (including sweat equity shares) and Employee Stock Option Scheme of the Company under any scheme.
4. Neither the Managing / Joint Managing Director nor the Whole-time Director of the Company receive any remuneration or commission from any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern and Companyâs operation in future.
27. CAUTIONARY STATEMENTS:
Certain statements in the âManagement Discussion and Analysisâ describing the Companyâs views about the Industry, expectations/ predictions, objectives etc., may be forward looking within the meaning of applicable laws and regulations. Actual results may differ materially from those expressed in the Statement. Companyâs operations may inter-alia affect with the supply and demand stipulations, input prices and their availability, changes in Government regulations, taxes, exchange fluctuations and other factors such as Industrial relations and economic developments etc. Investors should bear the above in mind.
28. APPRECIATION:
Your Company is grateful to its valued customers for their continuous co-operation and patronizing its products. A word of appreciation is also extended to its Financial Institutions and Banks for their continuous co-operation and assistance in meeting the financial requirements of the Company. Your Company would also like to thank its shareholders, employees, vendors and other service providers for their valuable services to the Company.
Last but not least, your Directors wish to place on record their warm appreciation to you for your continuous support and encouragement.
For and on behalf of the Board of Directors
Place : Mumbai, ARVIND PODDAR
Dated : 25th May, 2017 CHAIRMAN & MANAGING DIRECTOR
Mar 31, 2015
Dear Members,
The Directors are pleased to present the 53rd Annual Report and
Company''s Audited Statement of Accounts for the year ended 31st March
2015.
(Rs. in Crores)
Current Year ended Previous Year ended
31.03.2015 31.03.2014
Revenue from Operations 3833.83 3615.17
and other Operating
Income
Less : Excise Duty 53.93 38.46
Recovered on Sales
Add : Other Income 279.80 13.84
Total Revenue 4059.70 3590.55
Gross Profit 967.75 882.66
Less: Depreciation and 240.20 164.96
Amortization
Profit before Tax 727.55 717.70
Less: Provision for
Taxation
Current Tax 215.10 157.00
Deferred Tax (Net) 23.64 238.74 72.33 229.33
Profit after Tax 488.81 488.37
Balance brought 142.43 76.59
forward from last year
PROFIT AVAILABLE FOR 631.24 564.96
APPROPRIATIONS:
Transfer to General 50.00 400.00
Reserve
Proposed Final 23.20 19.33
Dividend
Tax on Final Dividend 4.63 3.20
Add : Income Tax of 9.47 NIL
Earlier Years
Balance Carried forward 562.88 142.43
to balance sheet
OPERATIONS:
Your Company mainly operates in one single segment i.e. "tyres" with
focus on manufacture of wide range of "Off-Highway Specialty Tyres".
These specialty tyres are meant for Agricultural, Industrial, Material
Handling, Construction, Earth moving (OTR), Forestry, Lawn & Garden
Equipment and All Terrain Vehicles (ATV). More than 85% of our revenue
is generated through exports. However, during the year under
consideration, consequent to scheme of arrangement under section 391 to
394 of the Company''s Act 1956, separately explained in detail in this
report, the operations of the company for the part of the year also
included activities relating to its erstwhile paper subsidiary.
Therefore, the above referred figures for the current year are not
comparable with that of previous year.
During the year under consideration, the Company''s Total Revenue from
its tyre operations has increased from Rs. 3,591 Crores to Rs. 3,919
Crores after taking into account exchange difference attributable to
exports. The profit before interest, depreciation and tax (PBIDT)
attributable to tyre business of the company for the year under
consideration has increased to Rs. 1,014 Crores from Rs. 908 Crores
during previous year.
BHUJ PROJECT:
The work on Bhuj Project is substantially completed and company has
already commenced partial production over there during previous year
itself. As on 31st March, 2015, the Company has incurred capital
expenditure of approximately Rs. 2,606 Crores.
Your Company enjoys the status of "PREMIER TRADING HOUSE".
DIVIDEND:
Your Directors are pleased to recommend Dividend of Rs. 2.40 per Equity
Share (120%) for the year, with a total payout of Rs. 27.83 Crores,
including Tax on Dividend.
SHARE CAPITAL:
The paid up Share Capital of the Company as on 31st March, 2015 was
Rs.19.33 Crores. During the year under review the Company has not
issued shares with differential voting rights nor granted stock options
nor sweat equity. As on 31st March, 2015, none of the Directors of the
Company hold convertible instruments.
RESERVES :
The Company proposes to transfer Rs. 50.00 Crores to Reserves.
SCHEME OF ARRANGEMENT :
The Scheme of arrangement ("the Scheme") between Balkrishna Industries
Limited (BIL), Balkrishna Paper Mills Limited (BPML) and Nirvikara
Paper Mill Limited (NPML) under the provisions of section 391 to 394 of
the Companies Act, 1956 was approved by the Hon''ble High Court of
Bombay vide Order dated 19th December 2014. Pursuant to the Scheme (i)
BPML amalgamated with the Company with effect from the Appointed Date,
i.e., 1st April 2013 and (ii) the Paper Division undertaking of the
Company along with investment in Balkrishna Synthetics Limited demerged
in to Nirvikara Paper Mill Limited (NPML) with effect from the
Effective Date, i.e., 10th February 2015. In accordance with the
Scheme, an aggregate of 1,07,39,844 equity shares of Rs. 10 each of
NPML have been issued to the equity shareholders of the Company in the
ratio of 1 equity share of NPML for every 9 equity shares held in the
Company and the shares of NPML held by the Company have been cancelled.
Accordingly, Balkrishna Synthetics Limited and NPML have ceased to be
subsidiaries of the Company.
OUTLOOK FOR THE CURRENT YEAR 2015-2016:
The Company''s earnings are mainly generated through exports to various
countries across the globe. Due to recessionary trends prevailing
across the globe, the business environment is tough and challenging.
However, your company will continue to make sustained efforts towards
growth.
The long-term prospects of the company are definitely positive and the
company continues to expand its product range by widening its products
offerings and venturing in to new geographies.
OPPORTUNITY & THREATS:
OPPORTUNITIES:
Your company operates into a segment predominantly known as "large
varieties -low volume segment", which is not only capital intensive but
also labour intensive. Your Company is fully geared up to take
advantage of the peculiarities of the said segment and has developed a
large base of SKUs to meet the diverse needs and applications.
Moreover, this segment is neither exposed to any technological
obsolescence nor wild fluctuations in demand for its products.
The Company has incremental opportunity to develop "Earth Moving Tyres"
(OTR) markets and take advantage of the shift from bias to radial
tires, which are growing up rapidly. In order to take advantage of this
opportunity, the company has already set up an all-steel OTR Radial
tyre plant at its Chopanki location and proud to be first company in
India to set up such plant. Your company is in the process of expanding
its base into its various sub-segments like agricultural, industrial,
construction, mining, winter and solid tyres under both technologies -
bias as well as radials.
THREATS:
Like any other Company, your Company is also exposed to various threats
like competition from small players, retention of employees, labor
unrest, increase in raw material prices and other input costs etc.
RISKS / CONCERNS AND RISK MITIGATION:
Fluctuation in Raw Material prices: The Company''s major raw material is
Natural Rubber, which is an agricultural commodity and actively traded
on the commodities exchanges. Its prices fluctuate significantly and
have witnessed significant volatility in the past. Recently there has
been a softening in the prices of natural rubber and other raw
materials which are expected to continue for some more time in the back
drop of subdued business environment across the globe.
In order to minimize such risks, the Company not only enters into
medium-term contracts but also adopts the policy to "Buy and Stock"
large quantities during the lean period.
Since most of the raw materials are imported, the company is exposed to
foreign currency risk. However, it enjoys natural hedge as most of its
revenues are in foreign currency.
Labour Relations: Since Company''s manufacturing process is that of
batch processing, it requires lot of skilled as well as un-skilled
workers. Maintaining a huge work force is a big challenge.
In order to mitigate the said risk, the Company follows good HR
practices to promote the welfare, safety of its workmen and improve the
work environment. All workers are paid more than adequate remuneration
for their work.
Retention of skilled manpower: Like other players in the industry, the
Company is also exposed to this risk, more particularly when there is
shortage of skilled manpower in the industry.
The Company is able to manage the said risk by good HR practices and
rewarding its employees handsomely.
Currency fluctuation: As stated earlier the company revenues are mainly
generated through exports. The Company also imports lot of its raw
materials and capital equipment''s. Moreover, all its borrowings are in
foreign currency and it is therefore exposed to risks due to currency
fluctuations.
The Company follows the system of hedging its receivables (net off
payables) well in advance by entering into Forward Contracts, thereby
protecting itself from the fluctuations in currencies.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
The Company has adequate system of internal controls to ensure that all
the assets are safeguarded and are productive. Necessary checks and
balances are in place to ensure that transactions are adequately
authorized and reported correctly. The Internal Auditors of the Company
conduct Audits of various departments to ensure that the necessary
controls are in place. The Audit Committee of the Board reviews these
and the Company, when needed, takes corrective actions.
HUMAN RESOURCES:
The Company''s human resources continue to be its biggest asset. The
team has remained as committed as ever and produced results that are
considered significant. Quality, quick delivery and focus on resolving
customer issues are the hallmark of the team performance. There is a
strong focus on TEAM spirit, during the year, many events/training
programs were conducted to develop personality and outlook of its
employees. Employee relations continue to be cordial.
SUBSIDIARY COMPANIES:
The company has following 100% subsidiary companies:
BKT Tyres Limited, Thristha Synthetics Limited, BKT EXIM Limited and
Indirect subsidiary Companies i.e subsidiary companies of BKT EXIM
Limited; i.e. BKT EUROPE S.R.L., BKT USA INC and BKT TIRES (CANADA)
INC. During the year BKT EXIM Limited. has invested in wholly owned
subsidiary namely BKT EXIM US, INC and BKT EXIM US, INC has
incorporated wholly owned subsidiary namely BKT TIRES INC. A report on
the performance and financial position of each of the subsidiaries is
provided under ''Details of Subsidiaries'' forming part of the Annual
Report. The Policy determining material subsidiaries as approved may be
accessed on the Company''s website at the link
http://www.bkt-tires.com/en/about-us/investors-desk/download?file_
id=1801. During the year Balkrishna Paper Mills Ltd. is merged with
Company, Nirvikara Paper Mills Ltd. and Balkrishna Synthetics Ltd. are
ceased to be subsidiary Company as per the Scheme of Arrangement
approved by the by Hon''ble High Court of Bombay on 19th December, 2014.
CONSOLIDATED FINANCIAL STATEMENT:
As required under the Listing Agreement with the Stock Exchanges, a
Consolidated Financial Statement of the Company and all its
subsidiaries is attached. The Consolidated Financial Statement has been
prepared in accordance with Accounting Standard AS-21 issued by the
Institute of Chartered Accountants of India, and form part of the
Annual Report and Accounts.
DIRECTOR RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 134 (3)(c ) of the Companies
Act, 2013, your Directors hereby confirmed that:
(i) that in the preparation of the annul accounts for the year ended
31st March, 2015, the applicable accounting standards read with
requirements set out under Schedule III to the Companies Act, 2013,
have been followed and there are no material departures from the same;
(ii) the Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at 31st March, 2015 and of the Profit of the Company
for the year ended as on that date;
(iii) the Directors have taken proper and sufficient care for
maintenance of adequate accounting records in accordance with
provisions of the Companies Act, 2013, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(iv) the Directors have prepared the annual accounts of the Company on
a "going concern" basis;
(v) the Directors have laid down internal financial controls to be
followed by the Company and the such internal financial controls are
adequate and are operating effectively; and
(vi) the Directors have devised proper systems to ensure compliance
with the provisions of all applicable laws and that systems are
adequate and operating effectively.
CORPORATE GOVERNANCE :
Pursuant to Clause 49 of the Listing Agreement with Stock Exchanges,
Corporate Governance Report forms an integral part of Annual Report.
The requisite certificate from Auditor of the Company confirming
compliance with the condition of Corporate Governance is attached to
the Report on Corporate Governance.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES:
All contracts /arrangements / transactions entered by the Company
during the financial year with related parties were in ordinary course
of business and on an arm''s length basis. During the year, the Company
has not entered into any contracts /arrangements / transactions with
related parties which could be considered materials in accordance with
the policy of the Company on materiality of related party transactions.
The Policy on materiality of related party transactions and dealing
with related party transactions are approved by the Board may be
accessed on the Company''s website at the link
http://www.bkt-tires.com/en/about-us/investors-desk/download?file_
id=1798. Members can refer Note no. 42 to the financial statement which
set out related party disclosures.
CORPORATE SOCIAL RESPONSIBILITY:
The Corporate Social Responsibility Committee has formulated and
recommended to the Board, a Corporate Social Responsibility Policy (CSR
Policy) indicating the activities to be undertaken by the Company,
which is approved by the Board.
During the year, the Company has spent Rs.11.01 Crores ( 2%) of the
average net profits of last three years) on CSR activities.
The Annual Report on CSR activities is annexed herewith as Annexure I.
RISK MANAGEMENT:
The Company has framed a Risk Management Policy to identify and access
the key business risk areas and a risk mitigation process. A detailed
excise is being carried out that the organization faces such as
strategic, financial, credit, market, liquidity, security, property,
IT, legal, regulatory, reputational and other risks. The Board
periodically reviews the risks and suggests steps to be taken to
control and mitigate the same through a properly defined framework.
DIRECTORS:
In accordance with provisions of the Act and Articles of Association of
the Company, Smt. Vijaylaxmi A Poddar, Director of the Company, retire
by rotation at the ensuing Annual General Meeting and being eligible
have offered themselves for re-appointment. Necessary resolution for
her re-appointment is placed before the shareholders for approval. Your
Directors commend the resolution.
Brief resume of the Director being re-appointed as required under
Clause 49 of the Listing Agreement is provided in the Annexure to the
notice convening the Annual General Meeting of the Company.
The Company has received declaration from all Independent Directors of
the Company confirming that they meet with the criteria of independence
as laid down under Section 149 (6) of the Companies Act, 2013 and
Clause 49 of the Listing Agreement with the Stock Exchanges.
During the under review, the members has approved appointment of
Independent Directors viz., Shri Sachin Nath Chaturvedi, Shri Khurshed
Doongaji, Shri Ashok Saraf, Shri Sanjay Asher and Shri Laxmidas
Merchant, as Independent Directors for a period of 5 years w.e.f. 13th
September, 2014.
Shri Subhash Chand B Mantri, the Independent Director has resigned from
the Board of Directors of the Company w.e.f. 15th May, 2014.
CRITERIA FOR APPOINTMENT OF INDEPENDENT DIRECTORS:
The Independent Directors shall be of high integrity with relevant
expertise and experience so as to have as diverse Board with Directors
having expertise in the fields of manufacturing, marketing, finance,
taxation, Law, governance and general management.
CRITERIA FOR APPOINTMENT OF MANAGING DIRECTOR / WHOLE TIME DIRECTORS:
The Nomination and Remuneration Committee shall identify persons of
integrity who possess relevant expertise and experience particularly in
Tyre Industry, leadership qualities required for the position and shall
take into consideration recommendation, if any, received from any
member of the Board.
REMUNERATION POLICY:
The Company follows a policy on remuneration of Directors and Senior
Management employees, details of the same are given in the Corporate
Governance Report.
PERFORMANCE EVALUATION:
In accordance with the provisions of the Companies Act, 2013 and Clause
49 of the Listing Agreement the Nomination and Remuneration Committee
has laid down the criteria for evaluation of individual Directors, the
Board as a whole. Based on the criteria the exercise of evaluation was
carried out through as structured process covering various aspects of
the Board functioning such as composition of Board and Committees,
experience and expertise, performance of specific duties and
obligation, governance and compliance issues attendance, contribution
at meeting etc.,
The performance evaluation of the Chairman and the Non Independent
Directors was carried out by the Independent Directors at a separately
convened meeting which the performance of the Board as a whole
evaluated was reviewed. The performance of the Independent Directors
was carried out by the entire Board (Excluding the Director being
evaluated).
The Directors expressed their satisfaction with the evaluation.
FAMILIARISATION PROGRAMMES FOR BOARD MEMBERS:
On appointment, the concerned Director is issued a Letter of
Appointment setting out in detail, the terms of appointment, duties,
responsibilities and expected time commitments. Each newly appointed
Independent Director is taken through a formal induction program
including the presentation from the Managing Director on the Company''s
manufacturing, marketing, finance and other important aspects.
The Company Secretary briefs the Director about their legal and
regulatory responsibilities as a Director. The induction for
Independent Director include interactive sessions with Executive
Directors, Business and Functional Heads, visit to the manufacturing
site etc. On the matters of specialized nature, the Company engages
outside experts/consultants for presentation and discussion with the
Board members.
The details of such familirisation programme have been displayed on the
company''s website link: http://www.bkt-tires.com/en/about-us/
investors-desk/download?file id=1802.
AUDITORS:
Statutory Auditors:
Messers Jayantilal Thakkar & Co., Chartered Accountants, the Statutory
Auditors of the Company, hold office till the conclusion of the ensuing
Annual General Meeting and are eligible for re-appointment and who have
furnished certificates of their eligibility for re- appointment as
required under Companies Act, 2013.
Secretarial Auditor:
The Board has appointed Mr. GBB Babuji, Company Secretary in Whole time
Practice, to conduct Secretarial Audit for the financial year 2014-15.
The Secretarial Audit Report for the financial year ended 31st March,
2015 is annexed herewith marked as Annexure II.
Cost Auditor:
The Company revenue from exports, in foreign exchange, exceeds seventy
five per cent of Companies total revenue, as per Rule 7 (i) of the
Companies (Cost Records and Audit) Rules, 2014 Cost Audit is not
applicable to the Company for the financial year 2014-15.
INDUSTRIAL RELATIONS:
The industrial relations with staff and workers during the year under
review continue to be cordial.
DISCLOSURES:
1. Vigil Mechanism
The Vigil Mechanism of the Company, which also incorporate a whistle
blower policy in the terms of Listing Agreements deals with instances
of fraud and mismanagement, if any. The Policy on vigil mechanism and
whistle blower policy may be accessed on the Company''s website at the
link: http://www.bkt-tires.com/en/about-us/investors-desk/downioad?fiie
id=1797.
2. Audit Committee
The Audit Committee was reconstituted w.e.f. 15th May, 2014 comprised
of Two Independent Non-Executive Directors viz. Shri Sachin Nath B.
Chaturvedi (Chairman), Shri Khurshed M Doongaji and Joint Managing
Director Shri Rajiv A Poddar. All the recommendations made by the Audit
Committee were accepted by the Board.
3. Number of Board Meeting
The Board of Directors of the Company met four times in the year, the
details of which are provided in the Corporate Governance Report.
4. Particulars of loans given, investment made, guarantees given and
securities provided
Particulars of loans given, investments made, guarantees given and
securities provided along with the purpose for which the loan or
guarantee or security is proposed to be utilized by the recipient are
provided in the standalone financial statement (Please refer to Note
No. 14, 17, 21 and 32 to the Standalone Financial Statement).
5. Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and outgo
The particulars relating to conservation of energy, technology
absorption, foreign exchange earnings and outgo, as required to be
disclosed under the Act, are provided in Annexure III to this report.
6. Extract of Annual Return
Extract of annual return of the Company is annexed herewith as Annexure
IV to this report.
7. Particulars of Employees and related disclosures
Pursuant to the provisions of Section 197(12) of the Companies Act,
2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, and in terms of
provisions of the Section 136 (1) of the Act, the Annual Report
excluding the aforesaid information is being sent to the members of the
Company. The said information is available for inspection at Corporate
Office of the Company during the working hours and any member
interested in obtaining such information may write to the Company
Secretary.
8. 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.
No disclosure or reporting is required in respect of the following
items as there were no transaction on these items during the year under
review:
1. Details of relating to deposit and unclaimed deposits or interest
thereon.
2. Issue of equity shares with differential rights as to dividend or
voting.
3. Issue of shares (including sweat equity shares) and Employee Stock
Option Scheme of the Company under any scheme.
4. Neither the Managing / Joint Managing Director nor the Whole-time
Directors of the Company receive any remuneration or commission from
any of its subsidiaries.
5. No significant or material orders were passed by the Regulators or
Courts or Tribunals which impact the going concern and Company''s
operation in future.
CAUTIONARY STATEMENTS:
Certain statements in the "Management Discussion and Analysis"
describing the Company''s views about the Industry, expectations/
predictions, objectives etc., may be forward looking within the meaning
of applicable laws and regulations. Actual results may differ
materially from those expressed in the Statement. Company''s operations
may inter-alia affect with the supply and demand stipulations, input
prices and their availability, changes in Government regulations,
taxes, exchange fluctuations and other factors such as Industrial
relations and economic developments etc. Investors should bear the
above in mind.
APPRECIATION:
Your Company is grateful to its valued customers for their continuous
co-operation and patronizing its products. A word of appreciation is
also extended to its Financial Institutions and Banks for their
continuous co-operation and assistance in meeting the financial
requirements of the Company. Your company would also like to thank its
shareholders, employees, vendors and other service providers for their
valuable services to the company.
Last but not least, your Directors wish to place on record their warm
appreciation to you for your continuous support and encouragement.
For and on behalf of the Board of Directors
Mumbai, ARVIND M PODDAR
Dated : 14th May, 2015 CHAIRMAN & MANAGING DIRECTOR
Mar 31, 2014
Dear Shareholders,
The Directors are pleased to present the 52nd Annual Report and
Audited Statement of Accounts for the year ended 31st March 2014.
(Rs. in Crores)
Current Year ended Previous Year ended
31.03.2014 31.03.2013
Income from Operations
and other Operating Income 3615.17 3220.20
Less: Excise Duty
Recovered on Sales 38.46 29.63
Total Income from
Operations (Net) 3576.71 3190.57
Gross Profit 882.66 642.91
Less: Depreciation and
Amortization 164.96 107.71
Profit before Tax 717.70 535.20
Less: Provision
for Taxation
Current Tax 157.00 142.10
Deferred Tax 72.33 229.33 37.27 179.37
Profit after Tax 488.37 355.83
Balance brought
forward from last
year 76.59 87.72
PROFIT AVAILABLE
FOR APPROPRIATIONS: 564.96 443.55
Transfer to
General Reserve 400.00 350.00
Proposed Final
Dividend 19.33 14.50
Tax on Final Dividend 3.20 2.46
Balance Carried
forward to balance sheet 142.43 76.59
OPERATIONS:
Your Company mainly operates in one single segment i.e. "tyres" with
focus on manufacture of wide range of "Off-Highway Specialty Tyres".
These specialty tyres are meant for Agricultural, Industrial, Material
Handling, Construction, Earth moving (OTR), Forestry, Lawn & Garden
Equipment and All Terrain Vehicles (ATV). More than 85% of our revenue
is generated through exports.
During the year under consideration, the Company''s revenue from its
operations has grown over 12%. The Net Turnover and other Income of the
company has increased from Rs. 3,191 Crores to Rs. 3,577 Crores.
The Gross Profit of the Company for the year under consideration has
increased from Rs. 643 Crores to Rs. 883 Crores and correspondingly,
the profit after tax has increased to Rs. 488 Crores as compared to Rs.
356 Crores in the previous year.
Your Company enjoys the status of "PREMIER TRADING HOUSE".
DIVIDEND:
Your Directors are pleased to recommend Dividend of Rs. 2/- per Equity
Share (100%) for the year, with a total payout of Rs. 22.53 Crores,
including Tax on Dividend.
BHUJ PROJECT:
The Bhuj Project is in advanced stage of implementations, and as at
March end 2014, the Company has incurred capital expenditure of
approximately Rs. 2,240 Crores. Partial production has already
commenced and the plant is expected of be fully operative by March,
2015.
SCHEME OF ARRANGEMENT:
"A Scheme of Arrangement (''the Scheme'') has been filed with the Hon''ble
High Court of Bombay, pursuant to the provisions of section 391 to 394
of the Companies Act, 1956 which envisages (i) the amalgamation of
Balkrishna Paper Mills Limited, a wholly owned subsidiary of the
Company, with the Company w.e.f. 1st April, 2013 being the appointed
date for amalgamation and (ii) demerger of the Paper Division
Undertaking of the Company into Nirvikara Paper Mills Limited, a wholly
owned subsidiary of the Company along with transfer of Investment of
Balkrishna Synthetics Limited, with appointed date for the demerger
being the date of filing the order of the Hon''ble High Court
sanctioning the Scheme, with the Registrar of Companies, i.e. the
Effective Date. The scheme shall be given effect to in the books with
effect from the respective appointed date, upon receipt of the
necessary approvals."
OUTLOOK FOR THE CURRENT YEAR 2014-2015:
The Company''s earnings are mainly generated from exports to European
Countries and USA. Due to recessionary trends continuing to prevail in
the global market, the business environment has become competitive and
difficult, however the company is optimistic about maintaining
reasonable growth rates with profits match during fiscal 2014-15.
Whilst prices of rubber have declined in the international market and
other input costs have risen marginally, however Company expects to
maintain reasonable growth levels during the current year.
The long-term prospects of the company are definitely positive and the
company continues to expand its product range by widening its products
offerings and venturing in to new geographies.
OPPORTUNITY & THREATS:
OPPORTUNITIES:
The segment in which your company operates is predominantly known as
"large varieties -low volume segment". Although it is considered both
as capital and labour intensive. Your Company is fully geared up to
take advantage of the peculiarities of the said segment and has
developed a large base of SKUs to meet the diverse needs and
applications.
Moreover, this segment is neither exposed to any technological
obsolescence nor wild fluctuations in demand for its products.
The Company has incremental opportunity to develop "Earth Moving Tyres"
(OTR) markets and take advantage of the shift from bias to radial
tyres, which is growing up rapidly. To adhere this, the company has
already set up an all-steel OTR Radial tyre plant at its Chopanki
location and it is the first company in India to set up such plant.
Your company is in the process of expanding its base into its various
sub-segments like agricultural, industrial, construction, mining,
winter and solid tyres under both technologies  bias as well as
radials.
THREATS:
Like any other Company, your Company is also exposed to various threats
like competition from small players, retention of employees, labour
unrest, increase in raw material prices and other input costs etc.
RISKS / CONCERNS AND RISK MITIGATION:
Fluctuation in Raw Material prices: The Company''s major raw material is
Natural Rubber, which is an agricultural commodity and actively traded
on the commodities exchanges. Its prices fluctuate significantly and
have moved up considerably in the past. Recently there has been a
softening in the prices of natural rubber and other raw materials which
is expected to continue for some more time. Whilst lower prices of raw
materials may improve its profit margin it could be partly vitiated as
the company would need to pass on the benefits to its customers.
In order to minimize such risks, the Company not only enters into
medium-term contracts but also adopts the policy to "Buy and Stock"
large quantities during the lean period.
Since most of the raw materials are imported, the company is exposed to
foreign currency risk. However, it will be offset against the revenues
of the company which are also in foreign currency. The increase in
utility and other administrative costs may also marginally affect the
profitability of the company adversely. However, there are chances of
its off set through benefits of scale which is on card.
Labour Relations: Since Company''s manufacturing process is that of
batch processing, it requires lot of skilled as well as un-skilled
workers. Maintaining a huge work force is a big challenge.
In order to mitigate the said risk, the Company follows good HR
practices to promote the welfare, safety of its workers and improve the
overall work environment. All workers are paid more than adequate
remuneration for their work.
Retention of skilled manpower: Like other players in the industry, the
Company is also exposed to this risk, more particularly when there is
shortage of skilled manpower in the industry.
The Company is able to manage the said risk by good HR practices and
rewarding its employees handsomely.
Currency fluctuation: As stated earlier the company revenues are mainly
generated through exports.
The Company also imports lot of its raw materials and capital
equipments. Moreover, all its borrowings are in foreign currency and it
is therefore exposed to risks due to currency fluctuations.
The Company follows the system of hedging its receivables (net off
payables) well in advance by entering into Forward Contracts, thereby
protecting itself from the fluctuations in currencies.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
The Company has adequate system of internal controls to ensure that all
the assets are safeguarded and are productive. Necessary checks and
balances are in place to ensure that transactions are adequately
authorized and reported correctly. The Internal Auditors of the Company
conduct Audits of various departments to ensure that the necessary
controls are in place. The Audit Committee of the Board reviews these
and the Company, when needed, takes corrective actions.
HUMAN RESOURCES:
The Company''s human resources continue to be its biggest asset. The
team has remained as committed as ever and produced results that are
considered significant. Quality, quick delivery and focus on resolving
customer issues are the hallmark of the team performance. There is a
strong focus on TEAM spirit. During the year, many events/training
programs were conducted to develop personality and outlook of its
employees. Employee relations continue to be cordial.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE
During the current year, your Directors have constituted the Corporate
Social Responsibility Committee comprising of Smt. Vijaylaxmi A Poddar
as the Chairperson and Shri Arvind M Poddar, Shri Rajiv A Poddar and
Shri Sachin Nath Chaturvedi as other Members.
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.
SUBSIDIARY COMPANIES:
The company has following 100% subsidiary companies:
Balkrishna Paper Mills Limited, Balkrishna Synthetics Limited, BKT
Tyres Limited, Nirvikara Paper Mills Limited, Thristha Synthetics
Limited, BKT Exim Limited and Indirect subsidiary Companies i.e
subsidiary companies of BKT Exim Limited; i.e. BKT EUROPE S.R.L., BKT
(USA) INC and BKT TIRES (CANADA) INC. BKT EXIM Limited has dissolved
BKT (EUROPE) Limited in December, 2013.
As required under the Listing Agreement with the Stock Exchanges, a
Consolidated Financial Statement of the Company and all its
subsidiaries is attached. The Consolidated Financial Statement has been
prepared in accordance with Accounting Standard AS-21 issued by the
Institute of Chartered Accountants of India, and form part of the
Annual Report and Accounts.
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Profit and
Loss Account and other documents of the subsidiary companies are not
being attached with the Balance Sheet of the Company. The Company will
make available the Annual Accounts of the subsidiary Companies and the
related information to any member of the Company who may be interested
in obtaining the same. These documents will also be available for
inspection by any members at the Corporate Office of the Company and
that of respective subsidiary companies.
The financial data of the Subsidiaries have been furnished under
''Details of Subsidiaries'' forming part of the Annual Report.
DIRECTORS:
Shri Subhash Chand B Mantri, the Independent Director has resigned from
the Board of Directors of the Company w.e.f. 15th May, 2014. Shri
Subhash Chand B Mantri has put in his sincere and dedicated efforts
into the Company. Your directors take on record their sincere
appreciation for the valuable services rendered by him during his
tenure on the Board of Directors of the Company.
Pursuant to the provisions of Section 152(6)(c) of the Companies Act,
2013, Mr. Vipul Shah, Director is liable to retire by rotation and
being eligible offer himself for reappointment.
Pursuant to the provisions of Section 150(2) read with Section 149(10)
of the Companies Act, 2013, shareholders'' approval is sought for the
appointment of Shri Sachin Nath Chaturvedi, Shri Khurshed Doongaji,
Shri Ashok Saraf, Shri Sanjay Asher and Shri Laxmidas Merchant, as
Independent Directors of the Company for a term of five consecutive
years, at the ensuing annual general meeting.
CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion and Analysis, Corporate Governance
Report and Auditor''s Certificate regarding Compliance of the same are
made a part of this Annual Report.
FIXED DEPOSITS:
There are no deposits as on 31st March 2014.
INDUSTRIAL RELATIONS:
The industrial relations with staff and workers during the year under
review continue to be cordial.
PARTICULARS OF EMPLOYEES:
In terms of the provision of Section 217 (2AA) of the Companies Act,
1956 read with the Companies (Particulars of Employees) Rules, 1975 as
amended, the names and other particulars of the employees are set out
in the annexure to the Directors'' Report. However, having regard to the
provisions of Section 219(1)(b)(iv) of the said Act, the Annual Report
excluding the aforesaid information is being sent to all the members of
the Company. Any members interested in obtaining such particulars may
write to the Company Secretary at the Corporate Office of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNING AND OUTGO:
Information pursuant to Section 217 (1) (e) of the Companies Act, 1956,
read with the Companies (Disclosure of particulars in the Report of
Board of Directors) Rules, 1988, is given in the Annexure-I to the
report.
RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibility Statement, it is
hereby confirmed that:
(i) In the preparation of the accounts for the year ended 31st March,
2014, the applicable accounting standards read with requirements set
out under Schedule VI to the Companies Act, 1956, have been followed
and there are no material departures from the same;
(ii) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company as at 31st March, 2014 and of the Profit of the Company
for the year ended as on that date;
(iii) The Directors have taken proper and sufficient care for
maintenance of adequate accounting records in accordance with
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities; and
(iv) The Directors have prepared the annual accounts of the Company on
a "going concern" basis.
AUDITORS:
Messers Jayantilal Thakkar & Co., Chartered Accountants, the Statutory
Auditors of the Company, hold office till the conclusion of the ensuing
Annual General Meeting and are eligible for re-appointment and who have
furnished certificates of their eligibility for re-appointment as
required under Companies Act, 2013.
CAUTIONARY STATEMENTS:
Certain statements in the "Management Discussion and Analysis"
describing the Company''s views about the Industry,
expectations/predictions, objectives etc., may be forward looking
within the meaning of applicable laws and regulations. Actual results
may differ materially from those expressed in the Statement. Company''s
operations may inter-alia affect with the supply and demand
stipulations, input prices and their availability, changes in
Government regulations, taxes, exchange fluctuations and other factors
such as Industrial relations and economic developments etc. Investors
should bear the above in mind.
APPRECIATION:
Your Company is grateful to its valued customers for their continuous
co-operation and patronizing its products. A word of appreciation is
also extended to its Financial Institutions, Banks and State
Governments of Maharashtra, Rajasthan and Gujarat for their continuous
co-operation and assistance in meeting the financial requirements of
the Company. Your company would also like to thank its shareholders,
employees, vendors and other service providers for their valuable
services to the company.
Last but not least, your Directors wish to place on record their warm
appreciation to you for your continuous support and encouragement.
For and on behalf of
the Board of Directors
ARVIND PODDAR
CHAIRMAN & MANAGING DIRECTOR
Mumbai,
Dated : 2nd August,2014
Mar 31, 2013
Dear Shareholders,
The Directors are pleased to present the 51st Annual Report and Audited
Statement of Accounts for the year ended 31st March, 2013.
(Rs. In Crores)
Current Year ended Previous Year ended
31.03.2013 31.03.2012
Income from Operations
and other Operating Income 3220.20 2844.57
Less: Excise Duty
Recovered on Sales 29.63 24.61
Total Income from
Operations (Net) 3190.57 2819.96
Gross Profit 642.91 481.36
Less: Depreciation and
Amortization 107.71 83.14
Profit before Tax 535.20 398.22
Less: Provision for Taxation
Current Tax 142.10 124.10
Deferred Tax (Net) 37.27 179.37 5.60 129.70
Profit after Tax 355.83 268.52
(Less)/Add: Adjustments
relating to earlier years
Excess/(Short) Provision
of Taxation NIL (3.35)
Profit after adjustment
relating to earlier years 355.83 265.17
Balance brought forward
from last year 87.72 389.31
PROFIT AVAILABLE FOR
APPROPRIATIONS: 443.55 654.48
Transfer to General Reserve 350 549.91
Proposed Final Dividend 14.50 14.50
Tax on Final Dividend 2.46 2.35
Balance Carried forward
to balance sheet 76.59 87.72
OPERATIONS:
Your Company mainly operates in one single segment i.e. " tyres" with
focus on manufacture of wide range of "Off-Highway Specialty tyres".
These specialty tyres are meant for Agricultural, Industrial, Material
Handling, Construction, Earthmoving (OTR), Forestry, Lawn & Garden
Equipments and All Terrain Vehicles (ATV). Around 90% of our revenue is
generated through exports.
During the year under consideration, the revenue of your Company from
its operations has grown by 13%. The Net Turnover and other Income of
the company has increased from Rs. 2,820 Crores to Rs. 3,190 Crores.
The Gross Profit of the Company for the year under consideration has
increased from Rs. 481 Crores to Rs. 643 Crores and correspondingly,
the profit after tax has increased to Rs.356 Crores as compare to
Rs.269 Crores in the previous year.
Your Company continues to enjoy the status of "STAR TRADING HOUSE".
DIVIDEND:
Your Directors are pleased to recommend Dividend of Rs.1.50 (75%) for
the year, with a total payout of Rs. 16.96 Crores, including Tax on
Dividend.
CAPITAL EXPENDITURE:
During the year, the company has carried out a modernization scheme at
its existing plants by adding balancing equipments, with a view to
remove debottlenecking and marginally improve its production capacity.
The capex cost amounted to Rs.145 Crores.
The company has so far incurred capital expenditure of Rs. 912 Crores
(approx.) towards its major upcoming green field tyre project at Bhuj
Gujarat.
SUBSIDIARY COMPANIES:
The company has following 100% subsidiary companies:
Balkrishna Paper Mills Limited, Balkrishna Synthetics Limited, BKT
Tyres Limited, BKT Exim Limited and Indirect subsidiary Companies i.e
subsidiary companies of BKT Exim Limited; i.e. BKT (EUROPE) LTD., BKT
EUROPE S.R.L. and BKT (USA) INC.
As required under the Listing Agreement with the Stock Exchanges, a
Consolidated Financial Statement of the Company and all its
subsidiaries is attached. The Consolidated Financial Statement has been
prepared in accordance with Accounting Standard AS-21 issued by the
Institute of Chartered Accountants of India, and form part of the
Annual Report and Accounts.
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Profit and
Loss Account and other documents of the subsidiary companies are not
being attached with the Balance Sheet of the Company. The Company will
make available the Annual Accounts of the subsidiary Companies and the
related information to any member of the Company who may be interested
in obtaining the same. These documents will also be available for
inspection by any members at the Corporate Office of the Company and
that of respective subsidiary companies.
The financial data of the Subsidiaries have been furnished under
''Details of Subsidiaries'' forming part of the Annual Report.
DIRECTORS:
Shri Ashok Saraf, Shri Laxmidas Merchant, Shri Rajiv Poddar and Shri
Subhash Chand Mantri retire by rotation and being eligible, offer
themselves for re-appointment.
Necessary resolutions for their re-appointment are placed before the
Shareholders. Your Directors commend the resolutions.
CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion and Analysis, Corporate Governance
Report and Auditor''s Certificate regarding Compliance of the same are
made a part of this Annual Report.
FIXED DEPOSITS:
There are no deposits as on 31st March 2013.
INDUSTRIAL RELATIONS:
Industrial relations with staff and workers continue to be cordial.
PARTICULARS OF EMPLOYEES:
In terms of the provision 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 the employees are set out
in the annexure to the Directors'' Report.
However, having regard to the provisions of Section 219(1)(b)(iv) of
the said Act, the Annual Report excluding the aforesaid information is
being sent to all the members of the Company. Any members interested in
obtaining such particulars may write to the Company Secretary at the
Corporate Office of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNING AND OUTGO:
Information pursuant to Section 217 (1) (e) of the Companies Act, 1956,
read with the Companies (Disclosure of particulars in the Report of
Board of Directors) Rules, 1988, is given in the Annexure-I to the
report.
RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to Directors'' Responsibility Statement, it is
hereby confirmed that:
(i) In the preparation of the accounts for the financial year ended
31st March, 2013, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
(ii) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the Profit of
the Company for the year under review;
(iii) The Directors have taken proper and sufficient care for
maintenance of adequate accounting records in accordance with
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(iv) The Directors have prepared the accounts for the financial year
ended 31st March, 2013 on a "going concern'''' basis.
AUDITORS:
The members are requested to appoint Auditors and fix their
remuneration. Messers Jayantilal Thakkar & Co., Chartered Accountants,
the retiring Auditors have furnished certificates of their eligibility
for re-appointment as required under Companies Act, 1956.
CAUTIONARY STATEMENTS:
Certain statements in the "Management Discussion and Analysis"
describing the Company''s views about the Industry,
expectations/predictions, objectives etc., may be forward looking
within the meaning of applicable laws and regulations. Actual results
may differ materially from those expressed in the Statement. Company''s
operations may inter-alia be affected with the supply and demand
stipulations, input prices and their availability, changes in
Government regulations, taxes, exchange fluctuations and other factors
such as Industrial relations and economic developments etc. Investors
should bear the above in mind.
APPRECIATION:
Your Company is grateful to its valued customers for their continuous
co-operation and patronizing its products. A word of appreciation is
also extended to Financial Institutions and Banks for their continuous
co-operation and assistance in meeting the financial requirements of
the Company. Your company would also like to thank its shareholders,
employees, vendors and other service providers for their valuable
services to the company.
Last but not least, your Directors wish to place on record their warm
appreciation to you for your continuous support and encouragement.
For and on behalf of the Board of Directors
ARVIND PODDAR
Chairman & Managing Director
Place : Mumbai,
Dated : 1st August, 2013
Mar 31, 2012
The Directors are pleased to present the 50th Annual Report and
Audited Statement of Accounts for the year ended 31st March 2012.
(Rs. In Crores)
Current
Year ended Previous
Year ended
31.03.2012 31.03.2011
Income from Operations
and other Operating Income 2844.57 1953.12
Less: Excise Duty
Recovered on Sales 24.61 18.98
Total Income from
Operations (Net) 2819.96 1934.14
Gross Profit 481.36 349.38
Less: Depreciation
and Amortisation 83.14 74.44
Profit before Tax 398.22 274.94
Less: Provision for Taxation
Current Tax 124.10 87.20
Deferred Tax (Net) 5.60 129.70 2.18 89.38
Profit after Tax 268.52 185.56
(Less)/Add: Adjustments
relating to earlier years
Excess/(Short) Provision of
Taxation (3.35) 0.10
Profit after adjustment
relating to earlier years 265.17 185.66
Balance brought forward
from last year 389.31 237.93
PROFIT AVAILABLE FOR
APPROPRIATIONS: 654.48 423.59
Transfer to General Reserve 549.91 18.56
Proposed Final Dividend 14.50 13.53
Tax on Final Dividend 2.35 2.19
Balance Carried forward to
balance sheet 87.72 389.31
OPERATIONS:
Your Company mainly operates in one segment i.e. "tyres" with a focus
on manufacture of wide range of "Off-Highway Specialty Tyres". These
specialty tyres are meant for Agricultural, Industrial, Material
Handling, Construction, Earthmoving (OTR), Forestry, Lawn & Garden
Equipments and All Terrain Vehicles (ATV). Around 90% of our revenue is
generated through exports.
During the year under consideration your Company has witnessed a good
surge in its top line which was grown by 46%. The Net Turnover and
other Income of the company increased from Rs.1,934 Crores to Rs.2,820
Crores in the year under consideration.
The Gross Profit of the Company for the year under consideration has
increased from Rs.349 Crores to Rs. 481 Crores and correspondingly, the
profit after tax has increased to Rs.269 Crores as compare to Rs.186
Crores in the previous year.
Your Company continues to enjoy the status of "STAR TRADING HOUSE".
DIVIDEND:
Your Directors are pleased to recommend a higher Dividend of Rs.1.50
(75%) for the year, with a total payout of Rs. 16.85 Crores, including
Tax on Dividend.
CAPITAL EXPENDITURE
During the year, the company has incurred capital expenditure of Rs.150
Crores (approx.) on account of increase in small production capacity at
all the three plants through de-bottlenecking and regular maintenance
capax at all three plants.
The company also incurred capital expenditure of Rs. 531 Crores
(approx.) in connection with its upcoming green field tyre project at
Bhuj in the State of Gujarat which is progressing as per schedule.
OUTLOOK FOR THE CURRENT YEAR 2012-2013:
Though the company is seeing continuity in demand of its products in
the current financial year in line with that of previous year, the fear
of slow down, particularly in Europe & America, is looming large over
the company which are the major markets for the company. The said
demand is coming from across the geographies. While the replacement
demand is constant, the demand from OEM segment is showing some sign of
moderation.
The raw material prices and other input costs have started softening in
the current financial year as compared to previous year. If the
softening in raw material prices and other inputs costs continues, the
margins of the company in the current financial year is expected to be
better than that of previous year.
The company continues to expand its base through developing new product
lines, venturing into new geographies and deeper penetration into
existing markets to ensure its sustainable growth.
OPPORTUNITY & THREATS:
OPPORTUNITIES:
The segment in which your company operates is predominantly known as
"large varieties - low volume" - a segment that restricts optimal
capacity utilization. It is a capital intensive as well as labour
intensive proposition, making it un-attractive for fresh investments by
major players. Your Company is fully geared up to take advantage of the
peculiarities of the said segment and has developed a large base of
SKUs to meet the diverse needs and applications.
Moreover, the segment is not exposed to any technological obsolescence
and wild fluctuations in demand of its products.
The Company has incremental opportunity to develop the "Earth Moving
Tyres" (OTR) markets and take advantage of the shift from bias to
radial tyres, which is picking up rapidly. In this pursuit, the company
has already set up an all-steel OTR Radial tyre plant at its Chopanki
location and thereby become the first company in India to set up such
plant. Your company is in the process of expanding its base into its
various sub-segments like agricultural, industrial, construction,
mining, winter and solid tyres under both the technology - bias as well
as radials.
THREATS:
Like any other Company, your Company is also exposed to various threats
like competition from small players, retention of employees, labor
unrest, increase in raw material prices and other input costs etc.
RISKS / CONCERNS AND RISK MITIGATION:
Fluctuation in Raw Material prices: The Company's major raw material is
Natural Rubber, which is an agricultural commodity and actively traded
on the commodities exchanges. Its prices fluctuate significantly and
have moved up considerably in the past. Currently there has been a
softening in the prices of natural rubber and other raw materials. The
softening in prices is likely to continue for some more time. The
softening in raw material prices may help the company to improve its
margin; however, it may be offset as the company may have to pass on
the benefits to the customers.
Since most of the raw materials used by company are imported, the
softening in raw material prices will also be negated by depreciating
INR against USD. The increase in utility cost and other administrative
costs may also marginally affect the profitability of the company
adversely.
In order to minimize such risks, the Company not only enters into
medium-term contracts but also adopts the policy of "Buy and Stock"
large quantities during the lean period.
Labour Relations: Since the nature of Company's manufacturing process
is that of batch processing, it requires lot of skilled as well as
un-skilled workers. Maintaining a huge work force is a big challenge.
In order to mitigate the said risk, the Company follows good HR
practices and spends a lot of money and Management's time for their
welfare, safety and to improve the quality of work environment. All
workers are paid more than adequate remuneration for their work.
Retention of skilled manpower: Like other players in the industry, the
Company is also exposed to this risk, more particularly when there is
shortage of skilled manpower in the industry.
The Company is able to manage the said risk by good HR practices and
rewarding its employees handsomely.
Currency fluctuation: Since approximately 90% of the Company's revenues
are generated through exports and the Company also imports lot of its
raw materials and capital equipments. Moreover, all its borrowings are
in foreign currency. It is therefore exposed to risks due to currency
fluctuations.
The Company follows the system of hedging its receivables and major
payments well in advance by entering into Forward Contracts, thereby
largely protects itself from fluctuations in currencies.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
The Company has adequate system of internal controls to ensure that all
the assets are safeguarded and are productive. Necessary checks and
balances are in place to ensure that transactions are adequately
authorized and reported correctly. The Internal Auditors of the Company
conduct Audits of various departments to ensure that the necessary
controls are in place. The Audit Committee of the Board reviews these
and the Company, when needed, takes corrective actions.
HUMAN RESOURCES:
The Company's human resources continue to be the biggest asset of the
Company. The team has remained as committed as ever and produced
results that are considered significant. Quality, quick delivery and
focus on resolving customer issues are the hallmark of the team
performance. There is a strong focus on TEAM spirit. During the year,
many events were conducted to develop the personality and outlook of
its employees. Employee relations continue to be cordial.
SUBSIDIARY COMPANIES:
The company has following 100% subsidiary companies:
Balkrishna Paper Mills Limited, Balkrishna Synthetics Limited, BKT
Tyres Limited , BKT Exim Limited and Indirect subsidiary Companies i.e
subsidiary companies of BKT Exim Limited; i.e. BKT (EUROPE) LTD., BKT
EUROPE S.R.L. and BKT (USA) INC.
As required under the Listing Agreement with the Stock Exchanges, a
Consolidated Financial Statement of the Company and all its
subsidiaries is attached. The Consolidated Financial Statement has been
prepared in accordance with Accounting Standard AS-21 issued by the
Institute of Chartered Accountants of India, and form part of the
Annual Report and Accounts.
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Profit and
Loss Account and other documents of the subsidiary companies are not
being attached with the Balance Sheet of the Company. The Company will
make available the Annual Accounts of the subsidiary Companies and the
related information to any member of the Company who may be interested
in obtaining the same. These documents will also be available for
inspection by any members at the Corporate Office of the Company and
that of respective subsidiary companies.
The financial data of the Subsidiaries Companies have been furnished
under 'Details of Subsidiaries' forming part of the Annual Report.
DIRECTORS:
Shri Dharaprasad Poddar, Chairman of the Company has resigned from the
Board of Directors of the Company w.e.f. 29th May, 2012 due to old age.
The board requested him to continue as Chairman Emeritus and he was
kind enough to accept the request of the board. The Board places on
record its deepest appreciation for the inspired leadership provided by
Shri Dharaprasad Poddar during his tenure as Chairman on the Board of
Directors of the Company.
Shri Basantkumar Bansal, Director (Finance) has resigned from the Board
of Directors of the Company w.e.f. 11th February, 2012, however he is
continuing his employment with the company as CFO designated as
Director (Finance). Shri Bansal has put in his sincere and dedicated
efforts into the Company. Your directors take on record their sincere
appreciation for the valuable services rendered by him during his
tenure on the Board of Directors of the Company.
Shri Anurag Poddar, Executive Director has resigned from the Board of
Directors of the Company w.e.f. 29th May, 2012. Shri Anurag Poddar has
put in his sincere and dedicated efforts into the Company. Your
directors take on record their sincere appreciation for the valuable
services rendered by him during his tenure with the Company.
Due to resignation of Shri Dharaprasad Poddar as a Chairman of the
Company, Shri Arvind Poddar, Vice Chairman & Managing Director has been
re-designated as Chairman & Managing Director of the Company w.e.f.
30th May, 2012.
Shri Vipul Shah has been inducted as an Additional Director and Whole
Time Director of the Company designated as Director & Company Secretary
w.e.f. 11th February, 2012 and holds office till the date of the
ensuing Annual General Meeting.
Smt. Vijaylaxmi Poddar has been inducted as an Additional Director and
Whole Time Director of the Company designated as Executive Director
w.e.f. 30th May, 2012 and holds office till the date of the ensuing
Annual General Meeting.
The Company has received notice from one of the Shareholder proposing
the name of Shri Vipul Shah and Smt. Vijaylaxmi Poddar, as the
Directors of the Company.
Shri Sanjay Asher, Shri Rameshkumar Poddar, Shri Khurshed Doongaji and
Shri Sachin Nath Chaturvedi retire by rotation and being eligible,
offer themselves for re-appointment.
Necessary resolutions for their appointment are placed before the
Shareholders. Your Directors commend the resolutions.
CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion and Analysis, Corporate Governance
Report and Auditor's Certificate regarding Compliance of the same are
made a part of this Annual Report.
FIXED DEPOSITS:
There are no deposits as on 31st March 2012.
INDUSTRIAL RELATIONS:
The industrial relations with staff and workers during the year under
review continue to be cordial.
PARTICULARS OF EMPLOYEES:
In terms of the provision 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 the employees are set out
in the annexure to the Directors' Report.
However, having regard to the provisions of Section 219(1)(b)(iv) of
the said Act, the Annual Report excluding the aforesaid information is
being sent to all the members of the Company. Any members interested in
obtaining such particulars may write to the Company Secretary at the
Corporate Office of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNING AND OUTGO:
Information pursuant to Section 217 (1) (e) of the Companies Act, 1956,
read with the Companies (Disclosure of particulars in the Report of
Board of Directors) Rules, 1988, is given in the Annexure-I to the
report.
RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to Directors' Responsibility Statement, it is
hereby confirmed that:
(i) In the preparation of the accounts for the financial year ended
31st March, 2012, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
(ii) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the Profit of
the Company for the year under review;
(iii) The Directors have taken proper and sufficient care for
maintenance of adequate accounting records in accordance with
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(iv) The Directors have prepared the accounts for the financial year
ended 31st March, 2012 on a "going concern" basis.
AUDITORS:
The members are requested to appoint Auditors and fix their
remuneration. Messers Jayantilal Thakkar & Co., Chartered Accountants,
the retiring Auditors and who have furnished certificates of their
eligibility for re-appointment as required under Companies Act, 1956.
CAUTIONARY STATEMENTS:
Certain statements in the "Management Discussion and Analysis"
describing the Company's views about the Industry,
expectations/predictions, objectives etc., may be forward looking
within the meaning of applicable laws and regulations. Actual results
may differ materially from those expressed in the Statement. Company's
operations may inter-alia affect with the supply and demand
stipulations, input prices and their availability, changes in
Government regulations, taxes, exchange fluctuations and other factors
such as Industrial relations and economic developments etc. Investors
should bear the above in mind.
APPRECIATION:
Your Company is grateful to its valued customers for their continuous
co-operation and patronizing its products. A word of appreciation is
also extended to its Financial Institutions and Banks for their
continuous co-operation and assistance in meeting the financial
requirements of the Company. Your company would also like to thank its
shareholders, employees, vendors and other service providers for their
valuable services to the company.
Last but not least, your Directors wish to place on record their warm
appreciation to you for your continuous support and encouragement.
For and on behalf of the Board of Directors
ARVIND PODDAR
Chairman & Managing Director
Mumbai,
Dated : 30th May, 2012
Mar 31, 2011
The Directors are pleased to present the 49th Annual Report and
Audited Statement of Accounts for the year ended 31 st March 2011.
FINANCIAL RESULTS:
(Rs. in Crores)
Current Year ended PreviousYear ended
31.03.2011 31.03.2010
Gross Turnover and Other Income 2032.11 1424.36
Less: Excise Duty Recovered on Sales 18.82 10.96
Net Turnover and Other Income 2013.29 1413.40
Gross Profit 349.44 377.55
Less: Depreciation and Amortisation 74.44 66.22
Profit before Tax 275.00 311.33
Less: Provision for Taxation
Current Tax 87.20 102.38
Deferred Tax (Net) 2.18 2.42
89.38 104.80
Profit after Tax 185.62 206.53
(Less)/Add Adjustments relating to
earlier years
Short Provision for (Expenses) (Net) (0.06) (0.16)
Excess Provision of Taxation 0.10 2.36
Profit after adjestment relating to
Earlier Years 185.66 208.73
Balance brought forward from last year 237.93 65.85
PROFIT AVAILABLE FOR APPROPRIATIONS: 423.59 274.58
APPROPRIATIONS:
Transfer to General Reserve 18.56 20.87
Interim Dividend NIL 13.53
Proposed Final Dividend 13.53 NIL
Tax on Dividend 2.19 2.25
34.28 36.65
Balance Carried Forward to Balance Sheet389.31 237.93
OPERATIONS:
Your Company mainly operates in one segment i.e. Ãtyresà with a focus
on manufacture of wide range of ÃOff-Highway Specialty TyresÃ. These
specialty tyres are meant for Agricultural, Industrial, Material
Handling, Construction, Earthmoving (OTR), Forestry, Lawn & Garden
Equipments and All Terrain Vehicles (ATV). Around 90% of our revenue is
generated through exports.
After a year of severe slowdown in F.Y.09 - 10, the company witnessed a
good surge in F.Y 10 - 11 that resulted in top line growth of above
42%. The Net Turnover and other Income of the company increased from
Rs.1,413 Crores to Rs.2,013 Crores in the year under consideration.
Due to unprecedented increase in raw material and other input costs,
the operating margin (EBIDTA) of the company for the year under review
declined to Rs.371 Crores from Rs.396 Crores in the previous year.
Correspondingly, the profit after tax also declined to Rs.186 Crores
during the year under consideration as compared to Rs.207 Crores in the
previous year.
Your Company continues to enjoy the status of ÃSTAR TRADING HOUSEÃ.
DIVIDEND:
Your Directors are pleased to recommend a Dividend of Rs. 1.40 per
share (70%) for the year, with a total payout of Rs. 15.72 Crores,
including Tax on Dividend.
CAPITAL EXPENDITURE
During the year, the company has incurred capital expenditure of Rs.131
Crs. on account of following major activities:
a) Setting up of raw material warehouse at Chopanki and finished goods
warehouse at Bhiwandi;
b) Setting up of new mould plant at Dombivli;
c) Increase in small production capacity at all the three plants
through de-bottlenecking.
d) Regular maintenance capex at all the three plants.
The company also incurred capital expenditure of Rs.94 Crs approx. in
connection with its upcoming green field tyre project at Bhuj in the
State of Gujarat which is progressing as per schedule.
SUBSIDIARY COMPANIES:
The company has following 100% subsidiary companies:
Balkrishna Paper Mills Limited, Balkrishna Synthetics Limited, BKT
Tyres Limited , BKT Exim Limited and Indirect subsidiary Companies i.e
subsidiary companies of BKT Exim Limited; i.e. BKT (EUROPE) Ltd., BKT
EUROPE S.R.L. and BKT (USA) INC.
As required under the Listing Agreement with the Stock Exchanges, a
Consolidated Financial Statement of the Company and all its
subsidiaries is attached. The Consolidated Financial Statement has been
prepared in accordance with Accounting Standard AS-21 issued by the
Institute of Chartered Accountants of India, and form part of the
Annual Report and Accounts.
In accordance with the general circular issued by the Ministry of
Corporate Affairs, Government of India, the Balance Sheet, Profit and
Loss Account and other documents of the subsidiary companies are not
being attached with the Balance Sheet of the Company. The Company will
make available the Annual Accounts of the subsidiary Companies and the
related information to any member of the Company who may be interested
in obtaining the same. These documents will also be available for
inspection by any members at the Corporate Office of the Company and
that of respective subsidiary companies.
The financial data of the Subsidiaries Companies have been furnished
under Details of Subsidiaries forming part of the Annual Report.
DIRECTORS:
Mr. Laxmidas Merchant, Mr. Anurag Poodar, Mr. Rajiv Poddar and Mr.
Subhash Chand Mantri retire by rotation and being eligible, offer
themselves for re-appointment
Necessary resolutions for their re-appointment are placed before the
Shareholders. Your Directors commend the resolutions.
CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion and Analysis, Corporate Governance
Report and Auditors Certificate regarding Compliance of the same are
made a part of this Annual Report.
FIXED DEPOSITS:
There are no deposits as on 31 st March 2011.
INDUSTRIAL RELATIONS:
The industrial relations with staff and workers during the year under
review continue to be cordial.
PARTICULARS OF EMPLOYEES:
In terms of the provision 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 the employees are set out
in the annexure to the Directors Report.
However, having regard to the provisions of Section 219(1)(b)(iv) of
the said Act, the Annual Report excluding the aforesaid information is
being sent to all the members of the Company. Any members interested in
obtaining such particulars may write to the Company Secretary at the
Corporate Office of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNING AND OUTGO:
Information pursuant to Section 217 (1) (e) of the Companies Act, 1956,
read with the Companies (Disclosure of particulars in the Report of
Board of Directors) Rules, 1988, is given in the Annexure-I to the
report.
Group
As required under Regulation 3(1)(e)(i) of the Securities and Exchange
Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997, persons constituting ÃGroupà (within the meaning as
defined in the Monopolies and Restrictive Trade Practices Act, 1969)
for the purposes of availing exemption from the applicability of the
provisions of Regulations 10 to 12 of the aforesaid SEBI Regulations
are given in Annexure II attached herewith and the said Annexure II
forms part of this Annual Report.
RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to Directors Responsibility Statement, it is
hereby confirmed that:
(i) In the preparation of the accounts for the financial year ended 31
st March, 2011, the applicable accounting standards have been followed
along with proper explanation relating to material departures;
(ii) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the Profit of
the Company for the year under review;
(iii) The Directors have taken proper and sufficient care for
maintenance of adequate accounting records in accordance with
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(iv) The Directors have prepared the accounts for the financial year
ended 31st March, 2011 on a Ãgoing concernà basis.
AUDITORS:
The members are requested to appoint Auditors and fix their
remuneration. Messers Jayantilal Thakkar & Co., Chartered Accountants,
the retiring Auditors and who have furnished certificates of their
eligibility for re-appointment as required under Companies Act, 1956.
APPRECIATION:
Your Company is grateful to its valued customers for their continuous
co-operation and patronizing its products. A word of appreciation is
also extended to its Financial Institutions and Banks for their
continuous co-operation and assistance in meeting the financial
requirements of the Company. Your company would also like to thank its
shareholders, employees, vendors and other service providers for their
valuable services to the company.
Last but not least, your Directors wish to place on record their warm
appreciation to you for your continuous support and encouragement.
For and on behalf of the Board of Directors
Mumbai, DHARAPRASAD PODDAR
Dated : 20th May, 2011 Chairman
Mar 31, 2010
The Directors are pleased to present the 48th Annual Report and
Audited Statement of Accounts for the year ended 31st March 2010.
FINANCIAL RESULTS:
(Rs. in crores)
Current Year Previous Year
ended 31.03.10 ended 31.03.09
Gross Turnover and
Other Income 1424.36 1266.23
Less: Excise Duty
Recovered on Sales 10.96 8.98
Net Turnover and Other
Income 1413.40 1257.25
Gross Profit 377.55 164.40
Less: Depreciation and
Amortisation 66.22 56.52
Profit before Tax 311.33 107.88
Less: Provision for Taxation
Current Tax 102.38 27.40
Deferred Tax (Net) 2.42 9.44
Fringe Benefit Tax NIL 1.10
104.80 37.94
Profit after Tax 206.53 69.94
(Less)/Add : Adjustments
relating to earlier years (0.16) 0.60
Add: Excess Provision of
Taxes Current Tax of
earlier years 2.36 NIL
Profit before Extra
Ordinary Item 208.73 70.54
Less : Extra ordinary Item NIL (0.25)
Profit after Extra ordinary Item 208.73 70.29
Balance brought forward from
last year 65.85 58.59
PROFIT AVAILABLE FOR
APPROPRIATIONS: 274.58 128.88
APPROPRIATIONS:
Transfer to General Reserve 20.87 49.46
Interim Dividend 13.53 NIL
Proposed Final Dividend NIL 11.60
Tax on Dividend 2.25 1.97
36.65 63.03
Balance Carried Forward
to Balance Sheet 237.93 65.85
OPERATIONS:
Your Company mainly operates in one segment i.e. Ãtyresà with a focus
on manufacture of wide range of ÃOff-Highway TyresÃ. These specialty
tyres are meant for Agricultural, Industrial, Material Handling,
Construction, Earthmoving (OTR), Forestry, Lawn & Garden Equipments and
All Terrain Vehicles (ATV). More than 90% of our revenue is generated
through exports.
In spite of severe global economic slowdown during the last financial
year, your Company has registered an overall growth of over 12% in its
revenue compared to previous year i.e. Net Turnover and other Income
from Rs.1,257 Crs. to Rs.1,413 Crs.
In terms of gross margin, the year under review is considered to be one
of the best years for the Company, mainly due to the lower input cost
and better foreign exchange realization. The gross profit has
increased from Rs.164 Crs. to Rs.378 Crs. Ã a phenomenal growth of over
130%. The Company enjoyed the benefits of low input cost for the first
half of the financial year, after which it has started firming up.
Your Company continues to enjoy the status of ÃSTAR TRADING HOUSEÃ.
DIVIDEND:
Your Directors have declared Interim Dividend of 70% as against 60%
during previous year. Total payout on account of Interim Dividend and
tax thereon has been Rs. 15.78 Crs. during the year.
The Board has decided to treat said Interim Dividend as Final Dividend
for the financial year 2009-10.
CAPITAL EXPENDITURE
During the year, with a view to streamline the manufacturing process
and improve overall efficiency at its all the locations, the Company
has incurred Capital Expenditure of Rs. 133 Crs. This covers investment
in new premises for the CompanyÃs corporate office.
To meet the growing demand for ÃBKTÃ tyres and to be in line with
CompanyÃs vision to become a key player worldwide in the field of
ÃOff-Highway Tyresà your Company has decided to set up a Green Field
plant near sea-port at Bhuj in the state of Gujarat. This will be the
fourth Tyre manufacturing facility of your Company. The Plant will be
set up in various phases. For the 1st Phase the capital expenditure is
estimated to be Rs.900 Crs. and is likely to be commissioned by
December 2012.
In order, to meet the growing demand the Company also plans to incur
capital expenditure of Rs.150 Crs. during 2010-11.
SUBSIDIARY COMPANIES:
The company has following subsidiary companies:
Balkrishna Paper Mills Limited (100%), Balkrishna Synthetics Limited
(100%), BKT Tyres Limited (80%), BKT Exim Limited (100%), and Indirect
subsidiary Companies i.e subsidiary Companies of BKT Exim Limited; i.e.
BKT (EUROPE) Ltd., BKT EUROPE S.R.L. and BKT (USA) INC.
As required under the Listing Agreement with the Stock Exchanges, a
Consolidated Financial Statement of the Company and all its
subsidiaries is attached. The Consolidated Financial Statement has been
prepared in accordance with Accounting Standard AS-21 issued by the
Institute of Chartered Accountants of India, and form part of the
Annual Report and Accounts.
The Company has been granted exemption for the year ended 31st March,
2010 by the Ministry of Corporate Affairs from attaching to its Balance
Sheet, the individual Annual Reports of its subsidiary companies. As per
the terms of the Exemption Letter, a statement containing brief financial
details of the CompanyÃs subsidiaries for the year ended 31st March, 2010
is includedin the Annual Report. However, these documents will be submitted
to any shareholder wishing to have a copy on receipt of such request. These
documents will also be available for inspection by any shareholder at
the Head Office of the Company. However as directed by the Central
Government, the financial data of the Subsidiaries Companies have been
furnished under ÃDetails of Subsidiariesà forming part of the Annual
Report.
DIRECTORS:
Shri Rakesh N. Garodia, Director resigned from the Board of Directors
w.e.f. 29th May, 2010. Shri Garodia was member of the Board since 2003.
Shri Garodia has extended sincere and dedicated service into the
Company. Your Directors take on record their sincere appreciation for
the valuable services rendered by him during his tenure with the
Company.Shri Sanjay K. Asher has been inducted as an Additional Director
w.e.f.29th May, 2010. The Company has received notice from one of the
Shareholder proposing the name of Shri Sanjay K. Asher as the Director
of the Company.
Shri Sachin Nath B. Chaturvedi, Shri Khurshed M. Doongaji, Shri Ashok
M. Saraf and Shri Basantkumar G. Bansal retire by rotation and being
eligible, offer themselves for re- appointment.
Necessary resolutions for their re-appointment are placed before the
Shareholders. Your Directors commend the resolutions.
CORPORATE GOVERNANCE:
Pursuant to Clause 49 of the Listing Agreement with the Stock
Exchanges, Management Discussion and Analysis, Corporate Governance
Report and AuditorÃs Certificate regarding Compliance of the same are
made a part of this Annual Report.
FIXED DEPOSITS:
There are no deposits as on 31st March 2010.
INDUSTRIAL RELATIONS:
The industrial relations with staff and workers during the year under
review continue to be cordial.
PARTICULARS OF EMPLOYEES:
In terms of the provision 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 the employees are set out
in the annexure to the Directorsà Report.
However, having regard to the provisions of Section 219(1)(b)(iv) of
the said Act, the Annual Report excluding the aforesaid information is
being sent to all the members of the Company. Any member interested in
obtaining such particulars may write to the Company Secretary at the
Corporate Office of the Company.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION
AND FOREIGN EXCHANGE EARNING AND OUTGO:Information pursuant to Section
217 (1) (e) of the Companies Act, 1956,
read with the Companies (Disclosure of particulars in the Report of
Board of Directors) Rules, 1988, is given in the Annexure-I to the
report.
Group
As required under Regulation 3(1)(e)(i) of the Securities and Exchange
Board of India (Substantial Acquisition of Shares and Takeovers)
Regulations, 1997, persons constituting ÃGroupà (within the meaning as
defined in the Monopolies and Restrictive Trade Practices Act, 1969)
for the purposes of availing exemption from the applicability of the
provisions of Regulations 10 to 12 of the aforesaid SEBI Regulations
are given in Annexure - II attached herewith and the said Annexure
ÃIIÃ forms part of this Annual Report.
RESPONSIBILITY STATEMENT:
Pursuant to the requirement under Section 217 (2AA) of the Companies
Act, 1956, with respect to Directorsà Responsibility Statement, it is
hereby confirmed that:
(i) In the preparation of the accounts for the financial year ended
31st March, 2010, the applicable accounting standards have been
followed along with proper explanation relating to material departures;
(ii) The Directors have selected such accounting policies and applied
them consistently and made judgments and estimates that were reasonable
and prudent so as to give a true and fair view of the state of affairs
of the Company at the end of the financial year and of the Profit of
the Company for the year under review;
(iii) The Directors have taken proper and sufficient care for
maintenance of adequate accounting records in accordance with
provisions of the Companies Act, 1956, for safeguarding the assets of
the Company and for preventing and detecting fraud and other
irregularities;
(iv) The Directors have prepared the accounts for the financial year
ended 31st March, 2010 on a Ãgoing concernà basis.
AUDITORS:
The members are requested to appoint Auditors and fix their
remuneration. Messers Jayantilal Thakkar & Co., Chartered Accountants,
the retiring Auditors have furnished certificates of their eligibility
for re-appointment as required under Companies Act, 1956.
APPRECIATION:
Your Company is grateful to its valued customers for their continuous
co-operation and patronising its products. A word of appreciation is
also extended to its Financial Institutions and Banks for their
continuous co-operation and assistance in meeting the financial
requirements of the Company. Your company would also like to thank its
Shareholders, employees, vendors and other service providers for their
valuable services to the company.
Last but not least, your Directors wish to place on record their warm
appreciation to you for your continuous support and encouragement.
For and on behalf of the Board of Directors
Mumbai, DHARAPRASAD PODDAR
Dated : 16th July, 2010 Chairman
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