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Directors Report of Hindustan Composites Ltd.

Mar 31, 2017

To the Members, Hindustan Composites Limited,

The Directors are pleased to present the Fifty Third Annual Report together with the Standalone and Consolidated Audited Financial Statements for the year ended 31st March, 2017.

1. FINANCIAL RESULTS

The Company’s financial performance, for the year ended 31st March, 2017 is summarized below:

(Rs. in Crores)

Standalone

Consolidated

2016-17

2015-16

2016-17

2015-16

Revenue from Operations

181.62

168.20

181.62

168.20

Other Income

1.11

0.49

1.11

0.49

Profit before Interest, Depreciation and Taxes

39.91

30.69

38.24

28.64

Interest

0.20

0.22

0.20

0.22

Depreciation (Net)

7.71

6.53

7.71

6.53

Profit Before Tax

32.00

23.94

30.33

21.89

Provision for Tax

7.11

3.22

7.11

3.22

Profit After Tax

24.89

20.72

23.22

18.67

Other Comprehensive Income / Loss (Net of Tax)

33.96

10.73

33.96

10.73

Total Comprehensive Income

58.85

31.45

57.18

29.40

2. ADOPTION OF IND AS

The Company has adopted the Indian Accounting Standard (“Ind AS”) w.e.f. 1st April 2016 with a transition date of 1st April, 2015. The above Financial Statements have been prepared in accordance with the recognition and measurement principles stated therein and as prescribed under Section 133 of the Companies Act, 2013 read with the relevant rules issued there under and the other accounting principles generally accepted in India.

3. SHARE CAPITAL OF THE COMPANY

As at 31st March, 2017, the paid up equity share capital of your Company stood Rs. 4,92,30,000 (Rupees Four Crore Ninety Two Lakhs Thirty Thousand only) divided into 49,23,000 Equity shares of the face value of Rs. 10 (Rupee Ten) each.

The Company has obtained its shareholders’ approval for the following matters through postal ballot process, the results of which were declared on the 13th May, 2017:

1) Sub-division of existing 1 equity share having face value of Rs. 10 each fully paid-up into 2 equity shares having face value of Rs. 5 each;

2) Increase in Authorized Share Capital of the Company from Rs. 6 crore to Rs. 8 crore divided into 1.6 crore equity shares of Rs. 5 each and subsequent alteration of Capital Clause of Memorandum of Association to give effect to the sub-division of shares and increase in the authorized share capital;

3) Issue of 49,23,000 bonus equity shares in proportion of 1:2 (i.e. 1 new bonus equity share of Rs. 5 each for every 2 equity shares of Rs. 5 each held) (Post split face value per equity share);

After giving effect to the above, the issued, subscribed and paid up share capital of the company would be at Rs. 7,38,45,000 divide into 1,47,69,000 equity share of Rs. 5 each.

4. DIVIDEND

Your Directors have recommended a dividend of Rs. 0.50 per share, being 10% on the Company’s enhanced equity share capital after considering bonus issue, i.e. on 1,47,69,000 Equity Shares of Rs. 5 each fully paid up of the Company for the year ended 31st March, 2017. The Corporate Dividend Tax of Rs. 0.15 crore will be payable on the total dividend amount of Rs. 0.74 crore. The Dividend, if approved, will be paid to those members whose names appear on the Register of Members / List of Beneficiaries as on 12th September, 2017.

5. RESERVES

During the year under review Rs. 15 Crores were transferred to the General Reserve.

6. OVERVIEW OF ECONOMY AND PERFORMANCE OPERATIONS

The Company reported total revenue of Rs. 181.62 Crores, representing a growth of 8% over the previous year. The manufacturing turnover increased by 11% from Rs. 124.81 Crores to Rs. 139.38 Crores. This was achieved despite challenging market conditions both in the domestic and export segments.

Investment Income during the year was marginally lower at Rs. 41.19 Crores, as against Rs. 42.23 Crores in the previous year. This was mainly due to lower dividend income during the year.

The gross profit of the Company was substantially higher at Rs. 39.91 Crores from Rs. 30.69 Crores. After considering interest of Rs. 0.20 Crores and depreciation of Rs. 7.71 Crores, Profit Before Tax was Rs. 32 Crores and net profit after provision for tax of Rs. 7.11 Crores, was Rs. 24.89 Crores.

Other Comprehensive Income (OCI) (net of Tax) was Rs. 33.96 Crores, as against Rs. 10.73 Crores in the previous year. The total Comprehensive Income after tax during the year was Rs. 58.85 Crores, as against Rs. 31.45 Crores in the previous year.

The Indian economy performed well during 2016-17 with a GDP growth of about 6.8%, despite a temporary slow-down due to the demonetization of high value currency notes by the Indian Government in November 2016.

The Indian Automobile Industry produced a total of 25,316,044 vehicles including passenger vehicles, commercial vehicles, three wheelers, two wheelers and quadricycle in FY 2016-17, as against 24,016,599 in the previous year, registering a growth of 5.41% over the last year. The sale of Passenger vehicles grew by 9.23%, while the growth of Commercial vehicle was 4.16%.

With the Government’s decisive policy towards economic reforms and a thrust on infrastructure development, the Indian economy is poised for a decent growth in the coming years.

Based on the above positive scenario, the Company remains optimistic for a good demand outlook for its products even though there may be some immediate slowdown in the truck segment due to a switch-over from the BS-III to BS-IV emission norms and the implementation of proposed GST.

Our Company is geared-up to meet the expected increase in demand through continued investment in capacity expansion, introduction of new products and improvement in quality.

In the Investment segment, challenges will remain with declining interest rates and a volatile stock market. However, the Company will continue to deploy its funds judiciously, keeping capital protection in mind.

The Company participated at the Automechanika Fair at Frankfurt, Germany in September, 2016. This is the largest Exhibition for Aftermarket Auto Components in the world. The Company also participated in i-Auto Connect 2016, an International reverse Buyers / Sellers Meet organized by ACMA and the Ministry of Commerce, in Gurgaon on 6th September, 2016. The response of both the exhibitions was positive.

There was some improvement in the working of the Company’s joint venture ‘Compo-Advics (India) Pvt. Ltd.’. However, in view of highly competitive market conditions, the company was not able to reach the desired utilization of plant capacity.

There were no changes in the nature of business of the Company during the year under review. Similarly, there have been no material changes and commitments affecting the financial position of the Company between the end of the Company’s financial year to which the financial statements relate and up to the date of this report.

7. PRODUCTION RANGE

Your Company is engaged in the manufacture and marketing of fiber based Friction Materials, consisting of Brake Liners, Roll Linings, Clutch Facings, Disc Brake Pads used in Heavy and Light Trucks, Passenger Cars, 2 / 3 wheelers, off-road-vehicles and construction and mining equipment. Composition Brake Blocks for the Railways are also an important part of the Company’s product portfolio.

14. AUDIT COMMITTEE AND ITS COMPOSITION

As on 31st March, 2017, the Audit Committee comprised of Mr. Deepak Sethi, Mr. A. B. Vaidya, Mr. Raghu Mody and Lt. Gen. (Retd.) K. S. Brar.

Mr. Deepak Sethi is Chairman of Audit Committee of the Company. Mr. Amit Goenka, V. P. - Finance and Company Secretary of the Company, acts as Secretary of the Audit Committee.

The Audit Committee of the Company reviews the reports to be submitted to the Board of Directors with respect to auditing and accounting matters. It also supervises the Company’s internal control, financial reporting process and vigil mechanism.

15. MEETINGS OF THE BOARD

The Board met five times during the year, the details of which are given in the Corporate Governance Report. The intervening gap between the two consecutive meetings was within the period prescribed under the Companies Act, 2013.

16. DIRECTORS’ RESPONSIBILITY STATEMENT

Your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them and as required under Section 134 (5) of the Companies Act, 2013 state that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a going concern basis;

(e) the directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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

17. DEPOSITS

During the year under review, the Company has not accepted any deposits within the meaning of Section 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

18. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT 2013

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on arm’s length basis and are entered into based on considerations of various business exigencies, such as synergy in operations, their specializations etc. and to further the Company’s interests.

During the financial year 2016-17, the Company had entered into contracts / arrangements / transactions with related party, the details of which as referred to in Section 188(1) of the Companies Act, 2013 in the prescribed Form AOC-2 under Companies (Accounts) Rules, 2014 is appended as ‘Annexure C’.

The policy on related party transactions as approved by the Board of Directors has been uploaded on the website of the Company. The web link of the same is as under: http://www.hindcompo.com/investor-relations/documents/ related-party-transaction-policy.pdf

19. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The details of loans, guarantee or investment under Section 186 of the Companies Act, 2013 are given under Notes to Accounts on financial statements.

20. CORPORATE SOCIAL RESPONSIBILITY INITIATIVE

Pursuant to the provisions of Section 135 read with Companies (Corporate Social Responsibility) Rules, 2014, the Company has formed Corporate Social Responsibility Committee and a policy on Corporate Social Responsibility (CSR). As part of its initiatives under CSR, the Company has undertaken project in the area of eradicating hunger. This project is in accordance with Schedule VII of the Companies Act, 2013.

The details as per the provisions of Rule 8 of Companies (Corporate Social Responsibility) Rules, 2014 is annexed herewith as “Annexure D”.

21. WHISTLE BLOWER/ VIGIL MECHANISM POLICY

The Company has a Vigil Mechanism / Whistle Blower Policy to deal with instance of fraud and mismanagement, if any. The mechanism also provides for adequate safeguards against victimization of directors and employees who avail of the mechanism and also provide for direct access to the Chairman of the Audit Committee in the exceptional cases. The details of the Vigil Mechanism Policy is explained in the Corporate Governance Report and also posted on the website of the Company. We affirm that during the financial year 2016-17, no employee or director was denied access to the Audit Committee.

23. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. M Baldeva Associates, Company Secretaries, Thane to undertake Secretarial Audit of the Company for the year 2016-17. The Secretarial Audit Report is annexed herewith as ‘Annexure E’ and forming part of this report.

24. INTERNAL AUDIT

The Company has appointed M/s. Malpani & Associates, Chartered Accountants, Mumbai, as its Internal Auditor. The Internal Auditor monitors and evaluates the efficacy and adequacy of internal control system in the Company, its compliances with operating systems, accounting procedures and policies at all locations of the Company and reports the same on quarterly basis to the Audit Committee.

25. REMARKS ON QUALIFICATION BY STATUTORY AUDITORS AND SECRETARIAL AUDITORS

There is no qualification / observation/adverse remark in Statutory Auditor’ Report.

With respect to observation made by the Secretarial Auditors in their report, we would like to state that:

i) the Annual Audited Consolidated Financial Results for the year ended 31st March, 2016 were approved and submitted to Stock exchanges on 22nd July, 2016 which is beyond the stipulated time limit of 30th May, 2016 -The Institute of Chartered Accountants of India (ICAI) vide its FAQs published on 24th June, 2016 clarified that a company, which does not have subsidiary but has Joint venture or associate, is also required to prepare the Consolidated Financial Statements as required under the provision of Section 129(3) of the Companies Act, 2013 for the financial year ended 31st March 2016. Accordingly the Company prepared and submitted the Consolidated Financial Statements on the basis of audited financial statements of the Company and its Joint Venture viz. Compo Advics (India) Pvt. Ltd. on 22nd July 2016; and

ii) the delay in filing of some forms with Registrar of Companies were due to oversight.

26. CORPORATE GOVERNANCE REPORT

Pursuant to Regulation 34(3) and Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 the following have been made a part of the Annual Report and are attached to this report:

- Corporate Governance Report

- Auditors’ Certificate regarding compliance of conditions of Corporate Governance

27. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE

There was no significant or material order passed by any regulator or court or tribunal, which impacts the going concern status of the Company or will have bearing on company''s operations in future.

28. INTERNAL FINANCIAL CONTROL WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has in place proper and adequate internal control systems commensurate with the nature of its business, size and complexity of its business operations. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, compliance with policies, procedures, applicable laws and regulations and that all assets and resources are acquired economically used efficiently and adequately protected.

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

Details regarding Conservation of energy, technology absorption, foreign exchange earnings and outgo is given in “Annexure F” annexed herewith.

30. INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has constituted an internal complaint committee under Section 4 of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year there was no complaint filed before the said Committee.

31. DISCLOSURES PURSUANT TO REGULATION 14 OF SEBI (SHARE BASED EMPLOYEE BENEFITS) REGULATIONS, 2014

A. Details related to GEBS

a) Date of Shareholders’ approval:

Approved by the shareholders of the Company in the 51stAnnual General Meeting held on 18th September, 2015.

b) Kind of benefits to be granted under the Scheme:

Providing assistance to meet medical expenses, providing assistance/reimbursement to meet cost of tuition and other fees and expenses in connection with providing higher education/and professional courses, providing assistance to meet marriage expenses, to sponsor holidays trips and get-togethers and such other benefits as more particularly described in object clause of the Trust Deed.

c) Beneficiaries of the Scheme:

Such persons who are in permanent employment of the company for at least 5 years and are designated as Officers and Managers and their spouse, parents and children, who for the time being is nominated to be a beneficiary, as may be determined by the Nomination and Remuneration Committee from time to time, but shall not include directors or promoters of the company.

d) Total assets of the Scheme:

Rs. 109,513,340 as per the audited balance sheet of the Trust as on 31st March, 2017.

e) Quantum of holding in own shares / listed holding company shares (both absolute and in percentage):

223,963 (4.55%) Equity Shares of Rs. 10 each of the Company.

f) Whether scheme is in compliance of regulation 26(2)/27(3) of the regulations, as applicable: No.

g) Variation in terms of Scheme: Not Applicable

B. Details related to Trust

i. General information on all schemes

Sr.

No.

Particulars

Details

1

Name of the Trust

Carnation Welfare Trust

2

Details of the Trustee(s)

Mr. Snehal N. Muzoomdar

Practicing Chartered Accountant Address: 52, Walchand Terraces, Tardeo Air Conditioned Market,

Mumbai - 400034

IDBI Trusteeship Services Limited

Private Trust Address: Asian Building, 17,

R. Kamani Marg, Ballard Estate, Mumbai-400001.

3

Amount of loan disbursed by the Company/ any company in the group, during the year

Nil

4

Amount of loan outstanding (repayable to the company/ any company in the group) as at the end of the year

Rs. 93,000,000

5

Amount of loan, if any, taken from any other source for which company / any company in the group has provided any security or guarantee

Nil

6

Any other contribution made to the Trust during the year

Nil

i. Brief details of transaction in shares by the Trust

Sr.

No.

Particulars

Details

A

Number of shares held at the beginning of the year

234,899

B

Number of shares acquired during the year through (i) primary issuance (ii) secondary acquisition, also as a percentage of paid up equity capital as at the end of the previous financial year, along with information on weighted average cost of acquisition per share;

Nil

C

Number of shares transferred to the employees / sold along with the purpose thereof;

10,936 (share sold for repayment of loan)

D

Number of shares held at the end of the year

223,963

iii. In case of secondary acquisition of shares by the Trust

Number of shares

As a percentage of paid-up equity capital as at the end of the year immediately preceding the year in which shareholders’ approval was obtained

Held at the beginning of the year

234,899 (4.77%)

Acquired during the year

Nil

Sold during the year

10,936(0.22%)

Transferred to the employees during the year

Nil

Held at the end of the year

223,963 (4.55%)

32. DISCLOSURE PURSUANT TO SECTION 67 OF THE COMPANIES ACT, 2013 READ WITH RULE 16(4) of THE COMPANIES (SHARE CAPITAL AND DEBENTURES) RULES, 2014:

Your Company has created a ‘General Employee Benefits Scheme (GEBS)’ under an irrevocable Trust named as “Carnation Welfare Trust” on 20th June, 2011 for the benefit of its existing and future permanent employees, except directors and promoters. The Scheme is established for the general welfare of the beneficiaries i.e. permanent employees of the Company. Under the Scheme, the Trust has purchased 2,34,899 Equity Shares of the Company from secondary market for a total consideration of Rs.11,29,56,669. As no shares are allotted or transferred to any employee or option to purchase of these shares is given to any employee under this Scheme, no voting rights are directly exercised by employees of the Company on these shares. The trustees of the Trust are entitled to exercise vote on these shares, however as required under Regulation 3(5) of the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014, they have not exercised any voting right on these shares on resolutions transacted at the 52nd Annual General Meeting held on 8th September 2016.

33. CAUTIONARY STATEMENT

The statements in the Directors’ Report and Management Discussion and Analysis cannot be construed as holding out any forecasts, projections, expectations, invitations, offers, etc. within the meaning of applicable securities, laws and regulations. This Report basically seeks to furnish information, as laid down within the different headings to meet the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

34. APPRECIATIONS

The Directors would also like to place on record their sincere appreciation for the continued co-operation, guidance, support and assistance extended during the year under report by our bankers, customers, suppliers and Government agencies. The Board of Directors wishes to express its appreciation for the valuable contribution made by the employees at all levels during the year under report.

By order of the Board of Directors

Place: Mumbai Raghu Mody

Date: 23''d May 2017 Chairman


Mar 31, 2015

Dear Members,

The Directors are pleased to present the Fifty First Annual Report together with the Audited Financial Statements for the year ended 31st March, 2015.

1. FINANCIAL RESULTS

The Company's financial performance, for the year ended 31st March, 2015 is summarised below:

(Rs. in crores)

Particulars 2014-15 2013-14

Net Sales and Income from 150.25 137.75

Investments

Other Operating Income 1.81 0.68

Profit before Interest, Depreciation 35.93 28.25

and Other Income

Interest 0.16 0.74

Depreciation (Net) 6.46 7.03

Profit before Other Income 29.31 20.48

Other Income 0.27 1.14

Profit Before Tax 29.58 21.62

Provision for Tax 3.78 4.42

Profit After Tax 25.80 17.20

2. DIVIDEND

Your Directors have recommended a dividend of Rs. 1 per share, being 10% of the paid-up equity capital of the Company for the year ended 31st March, 2015. The Corporate Dividend Tax of Rs. 0.10 crore will be payable on the total dividend amount of Rs. 0.49 crore. The Dividend, if approved will be paid to those members whose names appears on the Register of Members / list of Beneficiaries as on 18th September, 2015.

3. RESERVES

During the year under review, Rs. 25 crore was transferred to the General Reserve.

4. OVERVIEW OF ECONOMY & PERFORMANCE OPERATIONS

After witnessing a low GDP growth in 2013-14, the year 2014-15 saw a moderate improvement in the economic climate. A new majority government at the Centre was formed after the historic general elections in May, 2014. There were high expectations that a strong Government, not constrained, by coalition politics, will usher in significant reforms that can accelerate the growth in the medium terms. However, despite positive sentiments, the year 2014-15 saw lackluster momentum in the investment cycle. The economy continued to battle with severe challenges from subdued demand and contraction of industrial production.

Against the above back-drop growth in demand for our products in Automotive, Railway and Industrial segment remained sluggish throughout the year.

Despite these constraints and a challenging environment, the Company posted improved results with higher sales and increased investment income. The turnover of the company increased by 4% to Rs. 110.25 crores from Rs. 106.26 crores in the previous year. It was achieved with a focused approach on its Export & Domestic aftermarket business.

Investment income during the year was substantially higher at Rs. 40.01 crores, as against Rs. 31.49 crores for the previous year. This was achieved with judicious deployment of funds in high yielding assets.

The gross profit of the Company increased by 27% from Rs. 28.25 crores to Rs. 35.93 crores. After considering interest of Rs. 0.16 crores, depreciation of Rs. 6.46 crores and Other Income of Rs. 0.27 crores, the Profit Before Tax was Rs. 29.58 crores and net Profit after providing Tax of Rs. 3.78 crores was Rs. 25.80 crores.

Looking ahead, an effective implementation of the economic agenda will hold the key to the nation's progress. The Government's new initiative of 'Make in India' should bring back the investment cycle and the year 2015-16 may prove to be a year in transition before the economy accelerates on a fast track growth. Our Company is capable of meeting the growing customer demands with capacity expansion and the introduction of new products.

In the Investment segment, there will be some pressure mainly because of declining interest rates and NPA challenges. The Company will continue to deploy its funds judiciously in high yielding assets but capital protection will be high on our agenda.

The Company participated at the Automechanika Fair at Frankfurt, Germany in September, 2014, thus improving its exposure to new products and global markets.

The Company entered into a Long Term Settlement with the workmen at its Bhandara plant for a period of 3 years, effective from August, 2014.

The Company's Joint Venture "Compo ADVICS India Pvt. Ltd." has commenced commercial production of disc brake pads for Passenger Vehicles effective from 22nd September, 2014 at Bhalgaon, Aurangabad. There were a few teething problems related to manufacturing, which are being appropriately handled.

There were no changes in the nature of business of the Company during the year also there were no material changes and commitments affecting the financial position of the Company which have occurred between the end of the financial year of the Company to which the financial statements relate, up to the date of this report.

5. SHARE CAPITAL OF THE COMPANY

The paid-up equity share capital of your Company is Rs. 4,92,30,000/- (Rupees Four crore Ninety Two Lakhs Thirty Thousand only) divided into 49,23,000 Equity Shares having face value of Rs. 10 (Rupee Ten) each.

6. PRODUCTION RANGE

Your Company is engaged in the manufacture & marketing of fiber based Friction Materials, consisting of Brake Liners, Roll Linings, Clutch Facings, Disc Brake Pads used in Heavy and Light Trucks, Passenger Cars, 2 / 3 wheelers, off-road-vehicles and construction & Mining equipment. Composition Brake Blocks for the Railways are also an important part of the Company's product portfolio.

8. SUBSIDIARY, JOINT VENTURES AND ASSOCIATE COMPANIES

Your Company has a Joint Venture Company namely "Compo Advics (India) Private Limited". The company had no subsidiary or associate company during the year under review.

Pursuant to the provisions of Section 129(3) of the Companies Act, 2013, a statement containing salient features of the financial statements of the Joint Venture Company in Form AOC 1 is attached to the financial statements of the Company.

9. EXTRACT OF ANNUAL RETURN

An extract of Annual Return in Form MGT 9 is annexed herewith as "Annexure A".

10. DIRECTORS AND KMP

a) Retirement by rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014 and Articles of Association of the Company, Mr. Raghu Mody (DIN: 00053329), Executive Chairman & Whole time Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment and your Board recommends his re-appointment.

b) Appointment

The Board of Directors of the Company has appointed Mrs. Sakshi Mody (DIN: 06518139) as an Additional (Non-executive) Director of the Company w.e.f. 2nd September, 2014 and holds office upto the date of ensuing Annual General Meeting and Mr. Deepak Sethi (DIN: 07165462) was appointed as an Additional Independent Director of the Company w.e.f. 23rd April, 2015 for a period of 5 years, subject to approval of shareholders at the ensuing Annual General Meeting. The Company has received notices along with requisite deposit from a member of the Company under Section 160 of Companies Act, 2013 proposing their candidature for the office of Director of the Company. Your Board recommends their appointment.

c) Cessation

The Board records its appreciation for the valuable contribution made by Mr. Brijmohan Rai Bahl, the Independent Director of the Company, who passed away on 24th January, 2015, after a brief illness.

d) Declaration from Independent Directors

The Company has received declaration from all the Independent Directors of the Company confirming that they have met the criteria of independence as prescribed both under Section 149(6) of the Companies Act, 2013 and under Clause 49 of the Listing Agreement entered into with the Stock Exchanges.

e) Annual Performance and Board Evaluation

Pursuant to the provisions of the Companies Act, 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual performance evaluation of its own performance, the directors individually as well as the evaluation of the working of its Audit and Nomination & Remuneration Committees. The Board has devised questionnaire to evaluate the performances of each of executive and non-executive and Independent Directors. Such questions are prepared considering the business of the Company and the expectations that the Board have from each of the Directors. The evaluation framework for assessing the performance of Directors comprises of the following key areas:

i. Attendance of Board Meetings and Board Committee Meetings;

ii. Quality of contribution to Board deliberations;

iii. Strategic perspectives or inputs regarding future growth of Company and its performance;

iv. Providing perspectives and feedback and going beyond information provided by the management.

The details of the programmes for familiarization of Independent Directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company at the link: http://www.hindcompo.com/investor- relations/documents/familiarisation-programes- for- independent-directors.pdf

f) Key Managerial Personnels (KMP)

The details of Key Managerial Personnel of the Company are as follows:

1. Mr. Raghu Mody Executive Chairman

2. Mr. Varunn Mody Executive Director, Treasury and Strategy

3. Mr. P. K. Managing Director Choudhary

4. Mr. Sunil Kumar Chief Financial Officer Jindal

5. Mr. Amit Goenka V.P. Finance and Company Secretary

Mr. Sunil Kumar Jindal, was appointed as Chief Financial officer of the Company w.e.f. May 29, 2014.

11. MANAGERIAL REMUNERATION AND OTHER DETAILS:

The necessary details / disclosures of Ratio of Remuneration to each Director to the median employee's remuneration and other details pursuant to the Section 197(12) of the Companies Act, 2013 and as per Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as "Annexure B".

12. POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION

The Board has, on the recommendation of the Nomination & Remuneration Committee framed a policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy is stated in the Corporate Governance Report.

13. AUDIT COMMITTEE AND ITS COMPOSITION

As on 31st March, 2015, the Audit Committee comprised of Mr. A. B. Vaidya, Mr. Raghu Mody and Lt. Gen. (Retd.) K. S. Brar.

Mr. A. B. Vaidya is the Chairman of Audit Committee of the Company. Mr. Amit Goenka, V. P. - Finance and Company Secretary of the Company, acts as Secretary of the Audit Committee.

The Audit Committee of the Company reviews the reports to be submitted with the Board of Directors with respect to auditing and accounting matters. It also supervises the Company's internal control, financial reporting process and vigil machanism.

14. MEETINGS OF THE BOARD

The Board met five times during the year, the details of which are given in the Corporate Governance Report. The intervening gap between the two consecutive meetings was within the period prescribed under the Companies Act, 2013.

15. DIRECTORS' RESPONSIBILITY STATEMENT

Your Directors, to the best of their knowledge and belief and according to the information and explanations obtained by them and as required under Section 134 (5) of the Companies Act, 2013 state that:

(a) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) the directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit of the company for that period;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a going concern basis;

(e) the directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

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

16. DEPOSITS

During the year under review, the Company has not accepted any deposits within the meaning of Section 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

17. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO IN SECTION 188(1) OF THE COMPANIES ACT 2013

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. Hence the Company is not required to disclose details of the related party transactions in Form AOC-2 pursuant to clause (h) of sub-section (3) of Section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014.

The policy on Related Party Transactions as approved by the Board of Directors has been uploaded on the website of the Company. The web link of the same is as under: http://www.hindcompo.com/investor-relations/documents/ related-party-transaction-policy.pdf

18. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186

The details of loans, guarantee or investment under Section 186 of the Companies Act, 2013 is given under Notes to Accounts of financial statements.

19. CORPORATE SOCIAL RESPONSIBILITY INITIATIVE

Pursuant to the provisions of Section 135 read with Companies (Corporate Social Responsibility) Rules, 2014, the Company has formed Corporate Social Responsibility Committee and a Policy on Corporate Social Responsibility (CSR) has also been formulated by them. As part of its initiatives under CSR, the Company has undertaken project in the area of education. This project is in accordance with Schedule VII of the Companies Act, 2013.

The details as per the provisions of Rule 8 of Companies (Corporate Social Responsibility) Rules, 2014 is annexed herewith as "Annexure C".

20. WHISTLE BLOWER/ VIGIL MECHANISM POLICY

The Company has a Vigil Mechanism / Whistle Blower Policy to deal with instances of fraud and mismanagement, if any. The mechanism also provides for adequate safeguards against victimization of directors and employees who avail the mechanism and also provide for direct access to the Chairman of the Audit Committee in the exceptional cases. The details of the Vigil Mechanism Policy is explained in the Corporate Governance Report and also posted on the website of the Company. We affirm that during the financial year 2014-15, no employee or director was denied access to the Audit Committee.

21. STATUTORY AUDITORS

M/s. Lodha & Company, Chartered Accountants (Firm Registration No. 301051E), Mumbai, the Statutory Auditors of the Company hold office until the conclusion of the ensuing Annual General Meeting and are eligible for re-appointment. The Company has received a letter from them to the effect that they are willing to continue as Statutory Auditors and if re-appointed, their re- appointment would be within the limits prescribed under Section 139 of the Companies Act, 2013 and they are not disqualified from being appointed as Auditors.

Your Directors recommend the re-appointment of M/s. Lodha & Company, Chartered Accountants, Mumbai, as Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting upto the conclusion of next Annual General Meeting of the Company and to audit financial statements for the financial year 2015-16.

22. COST AUDITORS

The Company has appointed M/s. M. R. Pandit & Co., Cost Accountant, Aurangabad, as Cost Auditors of the Company to conduct audit of cost records for the financial year 2015- 16, at a remuneration of Rs. 65,000/- p.a. subject to approval of the shareholders of the Company. However, as per the provisions of Companies (Cost Records and Audit) Rules, 2014 notified on 30th June, 2014, the Company is not required to appoint Cost Auditors any more.

23. SECRETARIAL AUDIT REPORT

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the Company has appointed M/s. Manish Ghia & Associates, Company Secretaries to undertake Secretarial Audit of the Company. The Secretarial Audit Report is annexed herewith as "Annexure D" and forming part of this report.

24. INTERNAL AUDIT

The Company has appointed M/s. Malpani & Associates, Chartered Accountants, Mumbai, as its Internal Auditor. The Internal Auditor monitors and evaluates the effectiveness and adequacy of internal control system in the Company, its compliances with operating systems, accounting procedures and policies at all locations of the Company and reports the same on quarterly basis to the Audit Committee.

25. REMARKS ON QUALIFICATION BY STATUTORY AUDITORS AND SECRETARIAL AUDITORS

There was no qualification / adverse remark in both Statutory and Secretarial Audit Report.

26. CORPORATE GOVERNANCE REPORT

Pursuant to Clause 49 of the Listing Agreement entered into with the stock exchange, the following have been made a part of the Annual Report and are attached to this report:

* Corporate Governance Report

* Auditors' Certificate regarding compliance of conditions of Corporate Governance

27. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:

There was no significant or material order passed by any regulator, court or tribunal, which impacts the going concern status of the Company or will have bearing on Company's operations in future.

28. INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS

The Company has in place proper and adequate internal control systems commensurate with the nature of its business, size and complexity of its business operations. Internal control systems comprising of policies and procedures are designed to ensure reliability of financial reporting, compliance with policies, procedures, applicable laws and regulations and that all assets and resources are acquired economically, used efficiently and are adequately protected.

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

Details regarding Conservation of energy, technology absorption, foreign exchange earnings and outgo is given in "Annexure E" annexed herewith.

30. INFORMATION UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE

The Company has constituted an internal complaint committee under Section 4 of The Sexual Harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year no complaint was filed before the said committee.

31. CAUTIONARY STATEMENT

The statements in the Directors' Report and Management Discussion and Analysis cannot be construed as holding out any forecasts, projections, expectations, invitations, offers, etc. within the meaning of applicable securities, laws and regulations. This Report basically seeks to furnish information, as laid down within the different headings to meet the Listing Agreement requirements.

32. APPRECIATIONS

The Directors would also like to place on record their sincere appreciation for the continued co-operation, guidance, support and assistance extended during the year under report by our bankers, customers, suppliers and Government agencies. The Board of Directors wishes to express its appreciation for the valuable Contribution made by the employees at all levels during the year under report.

For and on behalf of the Board of Directors

Raghu Mody Chairman

Place : Mumbai Date : 7th May, 2015


Mar 31, 2014

The Directors have pleasure in presenting the Fiftieth Annual Report together with Financial Statements of the Company for the financial year ended 31st March 2014.

1. FINANCIAL RESULTS

(in Lacs)

Particulars Year Year ended ended 31st 31st March March 2014 2013

Net Sales and Income 13,774.02 11,699.41 from Investments

Other Operating Income 68.78 19.65

Profit before Interest, Depr- 2,825.31 1,835.73 eciation, exceptional item and other income

Interest (74.15) (28.53)

Depreciation (Net) (703.29) (615.23)

Profit before Other Income and 2,047.87 1,191.97

Tax

Other Income 113.95 24.48

Profit Before Tax 2,161.82 1,216.45

Provision for Tax 441.93 196.42

Profit After Ta x 1,719.89 1,020.03

2. DIVIDEND

The Directors are pleased to recommend a dividend of Rs. 2/- per share, being 20% of the paid-up equity capital of the company for the year ended 31st March, 2014. It includes a special Golden Jubilee Dividend of 10%. The Corporate Dividend Tax of Rs. 16.73 Lacs will be payable on the total dividend amount of Rs. 98.46 Lacs.

3. PERFORMANCE

During the year 2013-2014, the Company posted improved results with higher sales and increased investment income. The turnover of the company increased by 14% to Rs. 106.25 Crores from Rs. 93.01 Crores in the previous year. This growth was achieved despite significant slow-down in the Automotive Sector and was possible with a focused approach on its Export and domestic Aftermarket business. Investment income during the year was much higher at Rs. 31.49 Crores, as against Rs. 23.98 Crores. This was achieved with judicious deployment of funds in high yielding assets.

The gross profit of the Company was increased by 54% from Rs. 18.35 Crores to Rs. 28.25 Crores. After considering interest of Rs. 0.74 Crores, depreciation of Rs. 7.03 Crores and Other Income of Rs. 1.14 Crores, the Proft before Tax was Rs. 21.62 Crores and net Profit after providing Tax of Rs. 4.42 Crores was Rs. 17.20 Crores. The profitability of manufacturing segment was improved mainly due to various cost control measures taken at both the Plants.

During the year under review, overall economy remained subdued and there was sharp reduction in demand from Automotive Sector. This has resulted into low order-book from OEM customers, particularly Commercial Vehicle segment. However, this was compensated by higher sale in domestic Aftermarket & Export business. With the recent Political stability at the Centre, we foresee better future for Indian economy, which in turn will boost the demand in both Automobile and Auto Component sector. We also foresee stability in the financial market, which should improve the yield on our Investment.

The Company participated at the Auto Expo 2014 at Pragati Maidan, New Delhi in February, 2014. This is the largest Exhibition for Automobile Show in Asia. The response from Domestic as well as International customers was encouraging.

The Company has entered into a Joint Venture Agreement with ADVICS North India Private Limited, an Affiliate of ADVICS Company Limited, Japan and formed a new Company namely Compo ADVICS (India) Private Limited, which was incorporated on 28th November, 2013. This new Joint Venture Company will manufacture Disc Brake Pads for Passenger Vehicle at a green field site at Bhalgaon, Aurangabad. Our Company holds 49% Shares, its associate holds 2% Shares and ADVICS North India Private Limited holds 49% Shares.

4. PUBLIC DEPOSITS

There were no deposits at the beginning of the year and the Company did not accept any deposits from the public during the year within the meaning of Section 58A and 58AA of the Companies Act, 1956.

5. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

Particulars as required under Section 217(1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption are given in an Annexure I to this Report.

6. INFORMATION UNDER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has constituted an Internal Complaint Committee under Section 4 of the Sexual Harassment of women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year, no complaint was made before the Committee.

7. PARTICULARS OF EMPLOYEES

The particulars required pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, are given in Annexure II to this report.

However, in terms of the provisions of Section 219(1)(b) (iv) of the Companies Act, 1956, the Directors'' Report (excluding Annexure II) is being sent to all the shareholders of the Company. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the registered offce of the Company.

8. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange earnings from exports amounted to Rs. 859 Lacs (previous year Rs. 731 Lacs) of FOB value whilst the outgo for Raw Materials and Capital Goods amounted to Rs. 734 Lacs (previous year Rs. 743 Lacs).

9. DIRECTORS

The Board of Directors of the Company re-appointed Mr. Raghu Mody, as Executive Chairman of the Company for a further period of 3 years, effective from 1st October, 2014 to 30th September, 2017.

The Board of Directors at its meeting held on 29th May, 2014 re-designated Mr. Varunn Mody from "Executive Director – Treasury" to "Executive Director-Treasury and Business Development". In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Companies (Management & Administration) Rules, 2014 and Articles of Association of the Company, Mr. Varunn Mody, Executive Director of the Company, retires by rotation and being eligible, offers himself for re-appointment.

In terms of the provisions of Section 149 and 152 of the Companies Act, 2013 read with Companies (Management & Administration) Rules, 2014 which became effective from 1st April, 2014, an Independent Director of a Company can be appointed for a term of 5 consecutive years and shall not be liable to retire by rotation.

To comply with above provisions, it is proposed to appoint Mr. K. M. Robinson, Mr. Brijmohan Rai Bahl, Lt. Gen. (Retd.) K.S. Brar and Mr. A. B. Vaidya as Independent Directors of the Company to hold offce as such upto 31st March, 2019, who shall not be liable to retire by rotation.

The Company has received declarations from all the Independent Directors of the Company confrming that they meet the criteria of independence as prescribed under sub- section (6) of Section 149 of the Companies Act, 2013 and Clause 49 of the Listing Agreement entered with the Stock Exchanges. Your Board recommends for their appointment as Independent Directors of the Company in terms of the provisions of the Companies Act, 2013.

Brief resume of the Directors proposed to be appointed/ re-appointed as stipulated under Clause 49 of the Listing Agreement entered with the BSE Limited and National Stock Exchange of India Limited are given in the Notice convening 50th Annual General Meeting.

10. AUDITORS

M/s Lodha & Company, Chartered Accountants, Mumbai, the Statutory Auditors of your Company hold offce upto the conclusion of the ensuing Annual General Meeting

and are eligible for re-appointment. The Company has received a letter from them to the effect that they are willing to continue as Statutory Auditors and if re-appointed, their re-appointment would be within the limits prescribed under Section 139 of the Companies Act, 2013.

Your Directors recommend the re-appointment of M/s Lodha & Company, Chartered Accountants, Mumbai as Statutory Auditors of the Company to hold office from the conclusion of the ensuing Annual General Meeting up to the conclusion of next Annual General Meeting of the Company and to audit financial statements for the financial year 2014- 2015.

11. COST AUDITORS

Pursuant to the provisions of Section 233B of the Companies Act, 1956 and in terms of of Circular No. F. No. 52/26/CAB- 2010 dated 30th June, 2011 and 52/26/CAB-2010 dated 24th January, 2012 issued by the Ministry of Corporate Affairs, Cost Audit Branch, the Company, with the prior approval of the Central Government has appointed M/s. M. R. Pandit & Co., Aurangabad as Cost Auditors of the Company for audit of the cost accounting records of the financial year 2013-2014.

As per the provisions of Section 148 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014 the Board of Directors of the Company has appointed M/s. M. R. Pandit & Co., Aurangabad as Cost Auditors of the Company to conduct the cost Audit for the financial year 2014-2015, on a remuneration of Rs. 65,000/- (Rupees Sixty Five Thousand only) plus service tax and out of pocket expenses. The approval of Shareholders is sought for payment of remuneration to said Cost Auditors.

12. CORPORATE GOVERNANCE

As required under Clause 49 of the Listing Agreement entered into with various Stock Exchanges, the Corporate Governance Report, including Management Discussion and Analysis Report alongwith the Certifcate of Compliance from the Auditors, are attached and forms part of this Report.

13. DIRECTORS'' RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 217 (2AA) of the Companies Act, 1956 the Board of Directors of the Company hereby confirms that –

(i) The applicable Accounting Standards have been followed and proper explanations relating to material departures have been given wherever necessary;

(ii) The Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended 31st March, 2014 and of the profit of the Company for that period;

(iii) The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act 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 on a going concern basis.

14. LISTING OF SECURITIES

The Equity Shares of the Company are listed at BSE Limited and National Stock Exchange of India Limited. The Company has paid the Annual listing fees for the year 2014-2015 to the said Stock Exchanges and custodian fees to the National Securities Depository Limited and Central Depository Services (India) Limited.

The Equity Shares of the Company were also listed at The Calcutta Stock Exchange Association Limited, but in view of no active trading of shares and disproportionate to the listing fees payable by the Company to the said Stock Exchange, the Company decided to delist the same from the Calcutta Stock Exchange Association Limited. Upon making application for delisting of the equity shares, the said Stock Exchange, vide its delisting approval letter CSE/ LD/8173/2013 dated 23rd August, 2013, delisted the equity shares of the Company from the Stock Exchange w.e.f. 27th August, 2013.

15. ACKNOWLEDGEMENT

The Directors gratefully acknowledges the support and co- operation given by all its customers, suppliers, employees, shareholders and bankers and look forward to their continued support.

By order of the Board of Directors

Varunn Mody P.K. Choudhary

Executive Director Managing Director

Treasury & Business Development

Place: Mumbai

Date : 29th May, 2014


Mar 31, 2013

The Directors present their Forty Ninth Annual Report together with the Audited Accounts for the year ended 31st March, 2013.

1. FINANCIAL RESULTS

(Rupees in Lacs)

Year ended Year ended 31st March, 31st March, 2013 2012

Net Sales and Income from Investments 11,699 11,902

Other Operating Income 44 40

Profit before Interest, Depreciation and exceptional item 1,860 3,025

Interest (29) (157)

Depreciation (Net) (615) (455)

Profit before Exceptional items and tax 1,216 2,413

Profit on sale of Fixed Assets - 347

Profit Before Tax 1,216 2,760

Provision for Tax 196 668

Profit After Tax 1,020 2,092

2. DIVIDEND

The Directors are pleased to recommend a dividend of Re. 1 per share, being 10% of the paid-up equity capital of the Company for the year ended 31st March, 2013. The Corporate Dividend Tax of Rs. 10 Lacs will be payable on the total dividend amount of Rs. 49 Lacs.

3. PERFORMANCE

The Company''s turnover increased by 10% to Rs. 93.01 Crores, from Rs. 84.27 Crores in the previous year. This growth was achieved despite significant slow-down in the Automotive Sector and was possible with a focused approach on its Railway and Institutional business.

Investment income during the year was lower at Rs. 23.98 Crores, as against Rs. 34.74 Crores. This was mainly due to prevailing conditions of lower interest rates and the Company''s cautious approach towards safer investment opportunities.

The gross profit of the Company was Rs. 18.60 Crores, as against Rs. 30.25 Crores. After considering interest and depreciation, profit before tax was Rs. 12.16 Crores and net profit after providing for tax was Rs. 10.20 Crores.

Although, the Company increased its turnover in its manufacturing division, operating margins continued to remain under severe pressure due to its limited ability in obtaining price increases commensurate with increases in raw material and fuel costs, in view of depressed economic conditions in the Automotive sector.

The year witnessed an unprecedented decline in demand from the Indian Automotive sector, more particularly for commercial vehicles, largely linked to the general economic slow-down. This resulted in a sharp reduction in volumes from the OEM''s and to lesser extent from the aftermarket, leading to lower profitability. This was partly compensated by higher Railway & Institutional business through tenders, at competitive prices. Although, there are signs of economic stability due to recent Government Policy initiatives, the forecast remains uncertain due to the prevailing political uncertainty.

In order to successfully meet this challenge, the Company has embarked aggressively to introduce products in new segments and will continue to emphasis on higher productivity with prudent cost control measures.

Due to the prevailing uncertainties in financial markets, the Company will continue to adopt a cautious and prudent investment approach for its available funds prioritising safety over high interest revenues.

During the year, the Company entered into a Long Term Settlement with the Workmen in its Paithan Plant for a period of 3 years effective from 1st December, 2012.

The Company participated at the Automechanika Fair at Frankfurt, Germany in September, 2012, thus improving its exposure to new products and global markets.

4. RECOGNITION

The Ministry of Commerce and Industry has awarded status of "Export House" to the Company for 5 years w.e.f. 1stApril, 2012.

5. PUBLIC DEPOSITS

There were no deposits at the beginning of the year and the Company did not accept any deposits from the public during the year.

6. PARTICULARS OF EMPLOYEES

The particulars required pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, are given in Annexure II to this report.

However, in terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors'' Report (excluding Annexure II) is being sent to all the shareholders of the Company. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the registered office of the Company.

7. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

Particulars required under Section 217 (1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption are given in an Annexure I to this Report.

8. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange earnings from exports amounted to Rs. 731 Lacs, on FOB value whilst the outgo for Raw Materials, Capital Goods and Spares amounted to Rs. 743 Lacs.

9. DIRECTORS

Mr. A. B. Vaidya and Lt. Gen (Retd.) K. S. Brar will retire by rotation and being eligible, offer themselves for re- appointment.

Mr. P. K. Choudhary was re-appointed as Managing Director for a period from 18th March, 2013 to 30th June, 2016.

10. AUDITORS

M/s Lodha & Co., the Auditors of your Company who hold office until the conclusion of the forthcoming Annual General Meeting, being eligible, offer themselves for re- appointment.

11. COST AUDITOR

Pursuant to the provisions of Section 233B of the Companies Act, 1956 and in terms of order no. 53/26/CAB-2010 dated 24th January, 2012 issued by Central Government, the Company with the prior approval of Central Government has appointed M/s M. R. Pandit & Co., Aurangabad as Cost Auditors of the Company for audit of the cost accounting records for the financial year 2012-13.

12. CORPORATE GOVERNANCE

As required by the Listing Agreement, the Corporate Governance Report, including Management Discussion and Analysis Report, alongwith the Certificate of Compliance from the Auditors, is attached and forms part of this Report.

13. DIRECTORS'' RESPONSIBILITY STATEMENT

On the basis of information placed before them, the Directors state that -

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) appropriate accounting policies have been selected and applied consistently and they have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(iii) proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

(iv) the annual accounts have been prepared on a going concern basis.

14. ACKNOWLEDGEMENT

The Directors gratefully acknowledge the support and co- operation given by all its customers, suppliers, employees, shareholders and bankers and look forward to their continued support.

By order of the Board of Directors

Raghu Mody

Executive Chairman

Place: Mumbai

Date : 10th May, 2013


Mar 31, 2012

1. FINANCIAL RESULTS

(Rupees in Lacs)

Year ended Year ended Particulars 31st March, 31st March, 2012 2011

Net Sales and Income from Investments 11902 12394

Other Operating Income 40 87

Profit before Interest, Depreciation & Amortization exp. and exceptional item 3025 2985

Interest (157) (136)

Depreciation and Amortization expenses(Net) (455) (444)

Profit before Exceptional items and tax 2413 2405

Exceptional items 347 228

Profit Before Tax 2760 2633

Provision for Taxes (668) (628)

Profit After Tax 2092 2005

Profit available for appropriation 2601 2123

Appropriations

Proposed Dividend 98 98

Corporate Dividend Tax 16 16

Transfer to General Reserve 1500 1500

Surplus carried to Balance Sheet 987 509

2. DIVIDEND

The Directors are pleased to recommend a dividend of Rs. 21- per share being 20% of the Paid-Up Equity Capital of the Company [previous year Rs. 21- (20%) per share] for the year ended 31st March, 2012. The Corporate Dividend Tax of Rs. 16 Lacs (previous year Rs. 16 Lacs) will be payable on the total dividend amount of Rs. 98 Lacs (previous year Rs. 98 Lacs).

3. PERFORMANCE

During the year 2011-12, the Company could achieve turnover of Rs. 84.28 Crores, as against Rs. 95.72 Crores. The decline in turnover was mainly because of the discontinuation of the Jointing / Textile business, consequent to the sale of its Jalna Unit in March, 2011.

Investment income during the year increased from Rs. 28.22 Crores to Rs. 34.74 Crores. This was achieved with judicious deployment of funds in high yielding assets.

The gross profit of the Company increased to Rs. 30.25 Crores from Rs. 29.80 Crores. There was a one time profit of Rs. 3.47 Crores on the sale of a residential property. After considering Interest of Rs. 1.57 Crores, depreciation of Rs. 4.55 Crores and exceptional profit of Rs. 3.47 Crores, the profit before tax was Rs. 27.60 Crores. The net profit after providing tax of Rs. 6.68 Crores was Rs. 20.92 Crores

Profitability of the manufacturing segment was adversely affected on account of major cost escalation in raw material and other inputs, which could not be passed on to customers due to fixed annual rate contracts with a few of the Government / Institutional customers and on account of competitive market conditions.

Although, the current economic scenario appears subdued due to high inflation, political uncertainty and the depreciating Rupee, the Company will continue to put its focus on upgradation of process technology, improvement in productivity and cost control measures. The Company will also provide necessary focus for growth in the OEM business.

The Company will continue to deploy its funds in a prudent and judicious manner in order to optimize the return on its investments, amongst various asset classes.

During the year, the Company entered into a Long Term ' Settlement with the Workmen in its Bhandara Plant for a period of 3 years effective from 1st August, 2011.

The Company participated at the Auto Expo 2012 at Pragati Maidan, New Delhi, in January, 2012. This is rated as the largest exhibition of its kind in Asia. The response from both domestic and international customers was encouraging.

4. PUBLIC DEPOSITS

There were no deposits at the beginning of the year and the Company did not accept any deposits from the public during the year.

5. PARTICULARS OF EMPLOYEES

In accordance with the provisions of Section 217(2A) read with Companies (Particulars of Employees) Rules, 1975, the names and other particulars of employees are to be set out in the Directors' Report as an addendum thereto. However, as per the provisions of Section 219(1 )(b)(iv) of the Companies Act, 1956, the Reports and accounts as set out therein are being sent to all members of the Company excluding the aforesaid information about the employees. Any member, who is interested in obtaining such particulars about employees, may write to the Company Secretary at the Registered Office and the same shall be made available.

6. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

Particulars required under Section 217(1)(e) of the Companies Act, 1956 relating to Conservation of Energy and Technology Absorption are given in an Annexure to this Report.

7. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange earnings from exports amounted to Rs. 770 Lacs (PY Rs. 929 Lacs) of FOB value whilst the outgo for raw materials, capital goods and spares amounted to Rs. 776 Lacs (PY Rs. 1178 Lacs).

8. DIRECTORS

The Board of Directors appointed Mr. Raghu Mody as an Executive Chairman for a period of 3 (three) years w.e.f. 1st October, 2011.

During the year under review, Mr. D.L. Lyon, Mr. V, Sarin and Mr. V.D. Ingle resigned from the Directorship w.e.f. 25th May, 2011. Further, Mr. V.B. Haribhakti ceased to be

Director of the Compnay w.e.f. 9thAugust, 2011, who was liable to retire by rotation and shown his unwillingness to be re-appointed. However, Mr. V. Sarin and Mr. V.D. Ingle continue in service of the Company as part of the Senior Management Team.

Your Directors have placed on record their appreciation for the services rendered to the Company by the outgoing Directors during their tenure.

Mr. Ramchandra Rao and Mr. Brijmohan Rai Bahl were appointed as Additional Directors of the Company w.e.f. 16thMay, 2012. Mr. Ramchandra Rao was also appointed as the Joint Managing Director w.e.f. 16thMay2012. Pursuant to the provisions of Section 260 of the Companies Act, 1956, they hold office upto the ensuing Annual General Meeting of the Company. The Company has received notices pursuant to Section 257 of the Companies Act, 1956 in writing alongwith necessary deposits, proposing their candidature for the office of Director of the Company.

Mr. K. M. Robinson and Mr. Varunn Mody will retire by rotation and being eligible, offer themselves for re-appointment.

Your Directors recommend the above appointment / re-appointment for your approval.

9. AUDITORS

M/s Lodha & Co..Chartered Accountants, Mumbai, the Statutory Auditors of your Company who holds office until the conclusion of the forthcoming Annual General Meeting, being eligible, offer themselves for re-appointment.

The Company has received a letter from them to the effect that they are willing to continue as Statutory Auditors and if re-appointed, their reappointment would be within the limits prescribed under Section 224(1 B) of the Companies Act, 1956.

10. CORPORATE GOVERNANCE

As required by the Listing Agreement, the Corporate Governance Report, including Management Discussion and Analysis Report, alongwith the Certificate of Compliance from the Auditors, is attached and forms part of this Report.

11. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to the provisions of Section 217(2AA) of the Companies Act, 1956, the Board of Directors of the Company hereby confirm that:

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) appropriate accounting policies have been selected and applied consistently and they have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for that period;

(iii) proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) the annual accounts have been prepared on a going concern basis.

(iv) the annual accounts have been prepared on a going concern basis.

12. ACKNOWLEDGEMENT

The Directors gratefully acknowledges the support and co- operation given by all its customers, suppliers, employees, shareholders and bankers and look forward to their continued support.

By order of the Board of Directors

Raghu Mody

Executive Chairman

Place: Mumbai

Date : 16th May, 2011


Mar 31, 2011

Dear Members,

The Directors present their Forty Seventh Annual Report together with the Audited Accounts for the year ended 31st March 2011.

1. FINANCIAL RESULTS

Rs./Lacs Rs./Lacs Year ended Year ended 31st March 31st March 2011 2010

Net Sales and other Operating/ Investment Income 12481 9539

Profit before Interest, Depreciation and Exceptional item 2980 1471

Interest (131) (193)

Depreciation (Net) (444) (382)

Profit before Exceptional items and tax 2405 896

Profit on sale of Fixed Assets 261 56703

Expenses on Buy-back of Shares (13) -

Employees separation/othercost (20) (309)

Profit before tax 2633 57290

Provision for Taxes 628 9769

Profit after taxation 2005 47521

Profit available for appropriation 2123 47562

Appropriations

Proposed Dividend 98 550

Corporate Dividend Tax 16 93

Transferto General Reserve 1500 46800

Surplus carried to Balance Sheet 509 119

2. DIVIDEND

The Directors are pleased to recommend a dividend of Rs. 2 per share being 20% of the paid-up equity capital of the company for the year ended 31s1 March 2011. Corporate Dividend Tax of Rs. 16 Lacs will be payable on the total dividend amount of Rs. 98 Lacs.

3. PERFORMANCE

During the year 2010-11, the Company posted improved results with higher sales and increased investment income.

The turnover of the Company increased by 6% to Rs. 95.72 Crores from Rs. 89.90 Crores in the previous year, despite the discontinuation of business from the Jalna Unit in the later part of the year. Investment and other Operating income of the Company also increased substantially to Rs. 29.09 Crores from Rs. 5.49 Crores.

The gross profit of the Company increased to Rs. 29.80 Crores from Rs. 14.71 Crores. There was one time profit of Rs. 2.61 Crores on the sale of Jalna fixed assets. After considering this and other extra-ordinary cost of Rs. 0.33 Crores, profit before tax was Rs. 26.33 Crores. Net profit after providing tax of Rs. 6.28 Crores, was Rs. 20.05 Crores.

Although, the Company's manufacturing turnover increased, the operating margin remained under pressure, primarily on account of major cost escalation in raw material and other inputs, which could not be passed on to customers due to annual rate contracts with a few of the Government / Institutional customers and competitive market conditions. Higher than normal expenses, necessited on account of the company's focus on Asbestos-free business, was an additional factor adversely impacting profitability.

Prudent and judicious investments made by the Company during the year have yielded better results on account of optimizing the investments in various asset classes.

As reported, in earlier years, the working of the Company's Jalna Unit has continued to under-perform and remained below expectations. Having exhausted all efforts to revive, the Unit was ultimately sold in March, 2011, after taking requisite approvals.

With the sale of the Jalna facility, the Company will now focus on its Automotive & Industrial Friction Material business. Simultaneously, the surplus funds in the Company continue to be judiciously deployed to maximise its returns in an efficient mannner.

The Company participated at the Automechanika Fair at Frankfurt, Germany in September, 2010, thus improving its exposure to new products and global markets.

Judicious and Prudent investments made by the Company during the year have yielded better results on account of optimizing the investments in various asset classes.

4. SHARE CAPITAL

Pursuant to the Board approval dated 24th January, 2011 and various other approvals, the Company successfully bought back 5,77,000 Nos. of its Equity Shares. Accordingly, the Share Capital of the Company reduced from Rs. 550 Lacs to Rs. 492 Lacs, divided into 49,23,000 Equity Shares of Rs. 10 each.

5. PUBLIC DEPOSITS

There were no deposits at the beginning of the year and the Company did not accept any deposits from the public during the year.

6. PARTICULARS OF EMPLOYEES

The particulars required pursuant to Section 217(2A) of the Companies Act, 1956 read with the Companies (Particulars of Employees) Rules, 1975 as amended, are given in Annexure II to this report.

However, in terms of the provisions of Section 219(1)(b)(iv) of the Companies Act, 1956, the Directors' Report (excluding Annexure II) is being sent to all the shareholders of the Company. Any shareholder interested in obtaining a copy of the said annexure may write to the Company Secretary at the registered office of the Company.

7. CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

Particulars required under Section 217 (1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption are given in an Annexure to this Report

8. FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange earnings from exports amounted to Rs. 954 Lacs, of FOB value whilst the outgo for raw materials, components and spares amounted to Rs. 1178 Lacs.

9. DIRECTORS

The Board of Directors appointed Mr. Varunn Mody as an Executive Director for a period of five years w.e.f. 17th January, 2011, re-appointed Mr. P. K. Choudhary, as Managing Director for a period of two years w.e.f. 18th March 2011,Mr. Vinay Sarin as Executive Director- Marketing for a period of 1 year w.e.f. 9th August 2010 and Mr. V. D. Ingle as Executive Director - Manufacturing, for a period of one year w.e.f. 1st April, 2011, subject to approval of the members of the company.

Lt. Gen. (Retd.) K.S. Brar & Mr. A.B. Vaidya, Directors, retire by rotation and, being eligible, offer themselves for re- • appointment.

Mr. V.B. Haribhakti, retire by rotation, but not offers himself for re-appointment.

Mr. V. D. Ingle, Mr. Vinay Sarin and Mr. D. L. Lyon Resigned from the Directorship of the Company w.e.f. 25* May 2011.

The Board places its gratitude towards them for valuable services extended by them during the tenure as a Director of the company.

10. AUDITORS

M/s Lodha & Co., the Auditors of your Company who hold office until the conclusion of the forthcoming Annual General Meeting, being eligible, offer themselves for re-appointment.

11. CORPORATE GOVERNANCE

As required by the Listing Agreement, the Corporate Governance Report, including Management Discussion and Analysis Report and the Certificate of Compliance from the Auditors, is attached and forms part of this Report.

12. DIRECTORS'RESPONSIBILITY STATEMENT

On the basis of information placed before them, the Directors state that

(i) in the preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(ii) appropriate accounting policies have been selected and applied consistently and they have made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;

(iii) proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) the annual accounts have been prepared on a going concern basis.

12. ACKNOWLEDGEMENT

The Directors gratefully acknowledges the support and co- operation given by all dealers, distributors, employees, shareholders and bankers and look forward to their continued support.

By order of the Board of Directors

Raghu Mody Chairman Place: Mumbai Date: 25th May 2011


Mar 31, 2010

The Directors present their Forty Sixth Annua! Report together with the Audited Accounts for the year ended 31st March 2010.

1. FINANCIAL RESULTS

Rs./Lacs Rs./Lacs

Year ended Year ended

31 st March 31st March

2010 2009

Net Sales 8990 7731

Other Income 549 306

Profit before Interest, Depreciation

and Exceptional item 1471 1124

Interest (193) (283)

Depreciation (Net) (382) (350)

Profit before Exceptional

items and tax 896 491

Profit on sale of Land &

Building at Ghatkopar 56703 _

Employees separation cost (309) (346)

Profit before tax 57290 145

Provision for Taxes 9769 104

Profit after taxation 47521 41

Profit available for appropriation 47562 41

Appropriations

Proposed Dividend 550 _

Corporate Dividend Tax 93 _

Transfer to General Reserve 46800 _

Surplus carried to Balance Sheet 119 41

2. DIVIDEND

The Directors are pleased to recommend a dividend of Rs. 10 per share being 100% of the paid-up equity capital of company, for the year ended 31st March, 2010. The Corporate Dividend Tax of Rs. 0.93 Crores will be payable on total dividend amount of Rs.5.50 Crores.

3. PERFORMANCE

The Companys performance for the year 2009-10 displayed higher sales and improved profitability.

Your Directors are pleased to state that during the year under review, the Company successfully sold its Land & Buildings at Ghatkopar with a realisation of Rs. 571 Crores. The entire consideration was received on 18th January, 2010, upon execution of necessary documents. This has laid to unlocking of large unutilised resources of the Company, which can hitherto be employed towards Companys expansion plan, to take advantage of the current business opportunties.

The turnover of the Company increased by 16% to Rs. 89.90 Crores from Rs. 77.31 Crores in the previous year. This growth was achieved with a focus on the Railway and Trade segments. The gross profit also increased to Rs. 14.71 Crores from Rs. 11.24 Crores. After considering interest and depreciation, the profit before exceptional items was much higher at Rs. 8.96 Crores, as against Rs. 4.91 Crores. There was a one time profit of Rs. 567.03 Crores on the sale of the Ghatkopar Land & Buildings. After considering this and cost towards employees separation of Rs. 3.09 Crores, the Profit before Tax was Rs. 572.90 Crores, as against Rs. 1.45 Crores. Profit after taxation was much higher at Rs. 475.21 Crores as against Rs. 0.41 Crores in the previous year.

With the achievement of planned production, the performance at the Companys Paithan Unit was satisfactory. The Management entered into a productivity linked agreement with the Union for a period of 3 years, during the year under review.

The Performance of the Bhandara Unit was also satisfactory with increased production of Clutch Facings and Industrial Brake Linings.

The Performance of the Jalna Unit was not upto the expectations, mainly due to stiff competition from the unorganized sector. Specific steps are being undertaken in order to increase the productivity and reduce the cost.

The Company participated in the "Auto Expo 2010" at Pragati Maidan, New Delhi, which is rated as the largest Automobile Exhibition in Asia. This would improve the Companys visibility to present and potential customers leading to increased business.

With the present improved economic business outlook specially in the Automotive & Industrial sectors, the Company is poised for future growth, in order to fully take advantage of new business opportunities. With the substantial funds now available, the Company is now exploring various avenues for business expansion. In the meanwhile, the surplus funds available with the Company are being judiciously employed to maximise returns in a prudent and efficient manner.

4. PUBLIC DEPOSITS

There were no deposits at the beginning of the year and the Company did not accept any deposits from the public during the year.

5. PERSONNEL

The information required under Section 217 (2A) of the Companies Act, 1956 is not given as none of the employee was in receipt of remuneration in excess of the limits specified there under.

6 CONSERVATION OF ENERGY & TECHNOLOGY ABSORPTION

Particulars required under Section 217 (1)(e) of the Companies Act, 1956 relating to conservation of energy and technology absorption are given in an Annexure to this Report

7 FOREIGN EXCHANGE EARNINGS AND OUTGO

Foreign Exchange earning from exports amounted to Rs 772 Lacs, on FOB value basis whilst the outgo for raw materials, components and spares amounted to Rs. 962 Lacs.

8. DIRECTORS

The Board of Directors re-appointed Mr. Vinay Sarin as Executive Director Marketing for a period of one year w.e.f. 9" August, 2009 and Mr. V. D. Ingle as Executive Director Manufacturing, for a period of one year w.e.f. 1st April, 2010, subject to approval at the forthcoming Annual General Meeting.

Mr. Raghu Mody and Mr. K. M. Robinson, Directors, retire by rotation and, being eligible, offer themselves for reappointment.

9. AUDITORS

M/s Lodha & Co., the Auditors of your Company who hold office until the conclusion of the forthcoming Annual General Meeting, being eligible, offer themselves for re-appointment.

10. CORPORATE GOVERNANCE

As required by the Listing Agreement, the Corporate Governance Report, including Management Discussion and Analysis Report and the Certificate of Compliance from the Auditors, is attached and forms part of this Report.

11. DIRECTORS RESPONSIBILITY STATEMENT

On the basis of information placed before them, the Directors state that

(i) in the preparation of the annual accounts, the applicable accounting standards had been followed alongwith proper explanation relating to material departures;

(ii) appropriate accounting policies have been selected and applied consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period;

(iii) proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

(iv) the annual accounts have been prepared on a going concern basis.

12. ACKNOWLEDGEMENT

The Directors gratefully acknowledges the support and co- operation given by all dealers, distributors, employees, shareholders and bankers and look forward to their continued support.

For and on behalf of the Board of Directors

Raghu Mody Chairman

Place: Mumbai Date :20th May, 2010

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