BOARD'S REPORT 2017-18
Your Directors are pleased to present the Thirty Fifth Annual Report,
together with the Company's audited financial statements for the financial year ended
March 31, 2018.
FINANCIAL RESULTS STANDALONE & CONSOLIDATED
The standalone and consolidated financial highlights of your Company
are as follows:
||( Rs in crores)
||Standalone Year ended
||Consolidated Year ended
||March 31, 2018
||March 31, 2017
||March 31, 2018
||March 31, 2017
|Profit before Finance cost and Depreciation
|Depreciation and amortisation expenses
|Profit from ordinary activities before share of Profit /
(Loss) of associates
|Profit/ (Loss) of associates
|Share in net Profit / (loss) of associates
|Gain on dilution of interest in an associate
|Profit from ordinary activities before tax
|Net Profit from ordinary activities after tax
|Other comprehensive income /(expense) (net of tax)
|Total comprehensive income for the period
|Net Profit / (Loss) attributable to
|a) Owners of the Company
|b) Non-controlling interest
|Other comprehensive income attributable to
|a) Owners of the Company
|b) Non-controlling interest
|Total comprehensive income attributable to
|a) Owners of the Company
|b) Non-controlling interest
|Balance of Profit brought forward
|- Interim - 2017-18
|- Final - 2016-17
|Corporate Dividend Tax
|Adjustment on account of change in controlling interest
|Transfer to Foreign Currency Translation Reserve
|Balance carried to Balance Sheet
|Earning per equity share on Net Profit from ordinary
activities after tax (face value Rs 2/- each) (In )
During FY 2017-18 under review, your Company clocked sales of 7,587,154
units over 6,664,240 units in the previous FY.
During FY 2017-18, revenue from operations was Rs 32,871.82 crores as
compared to Rs 30,871.59 crores in FY 2016-17, registering an increase of 6.48%.
Profit before tax (PBT) in FY 2017-18 was Rs 5,244.16 crores as
compared to Rs 4,658.46 crores in FY 2016-17, reflecting an increase of 12.57%. Profit
after tax (PAT) was Rs 3,697.36 crores as against Rs 3,377.12 crores in FY 2016-17,
an increase of 9.48 % over the previous year.
Earnings before Interest, Depreciation and Taxes (EBIDTA) stood at
17.38 % in FY 2017-18, as compared to 16.42% in FY 2016-17.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the provisions of the Companies Act, 2013 (the
Act') and Indian Accounting Standard (Ind AS)-110 on Consolidated Financial
Statements, read with Ind AS-28 on Investments in Associates and Joint Ventures, the
Audited Consolidated Financial Statements for the FY ended March 31, 2018 are provided in
this Annual Report.
CHANGES IN CAPITAL STRUCTURE
During the FY under review, 14,617 equity shares of Rs 2 each were
allotted on exercise of employee stock options by the employees of the Company.
Consequently, the issued and paid-up share capital of the Company as on March 31, 2018 was
Rs 399,422,910 divided into 199,711,455 equity shares of Rs 2 each.
The Company has not issued any equity shares with differential rights,
sweat equity shares or bonus shares. The Company has only one class of equity shares with
face value of Rs 2 each, ranking pari-passu.
Your Directors are pleased to recommend for your approval a final
dividend of Rs 40 per equity share (2000%) of face value of Rs 2 each, in addition
to an interim dividend of Rs 55 per equity share (2750%) declared in the month of February
2018, aggregating a total dividend payout of Rs 95 per equity share for FY 2017-18. In the
previous FY, total dividend payout of Rs 85 per equity share of the face value of Rs 2
each was made. Final dividend, if approved at the ensuing Annual General Meeting, shall be
paid to the eligible Members within the stipulated time period. Dividend Distribution
Policy of the Company as per the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 (Listing Regulations') is available at the following link:
en-in/about-us/key-policies/dividend-distribution-policy.html and is also provided as Annexure
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The management discussion and analysis report forms an integral part of
this report and gives details of the overall industry structure, economic developments,
performance and state of affairs of your Company's business in India and abroad, risk
management systems and other material developments during the FY under review.
CHANGE IN NATURE OF BUSINESS
During FY 2017-18, there was no change in the nature of Company's
CAPACITY EXPANSION, NEW PROJECTS & STRATEGIC ALLIANCES
During FY 2017-18, construction of sixth manufacturing facility at
Sricity in Chittoor District in the state of Andhra Pradesh has commenced with a proposed
capacity of 1.8 million units per annum. Your Company will invest Rs 1,600 crores in
setting up this manufacturing facility. The plant is expected to be operational in FY
During FY 2017-18, the second overseas plant of your Company at Jessore
in Bangladesh started commercial production during the first quarter.
Your Company is constantly expanding the boundaries on innovation
both internal and external. It has been running internal idea generation contests
successfully involving employees for many years now. In FY 2017-18, your Company took
important steps to tap into the external innovation ecosystem. It piloted crowd
sourcing', where a few identified problems are thrown as challenges to the external
innovation ecosystem to solve.
Your Company continues its march to strengthen the reach of Global
Business. During FY 2017-18, your Company added two markets Trinidad & Tobago
and Guyana to grow the countries in which HMCL is present in, to 37. More
importantly, it strived to increase market share in the large markets across South Asia,
Africa & Middle East and Latin America in which the Company is already present. The
Company increased its despatches to Bangladesh by close to 200%, leveraging a 70% increase
in the industry and substantially growing the market share. Your Company also commissioned
a plant through a joint venture in Bangladesh.
Continuing with the past strategy, your Company works closely with
strong, allied distributor partners, offering differentiated financing, vehicle models and
after sales solutions. Your Company's focus is to enhance salesmen skills at the
dealerships, optimize the channel coverage and execute targeted brand building and
SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES
The Company has 6 subsidiaries including step down subsidiaries and 3
associate companies. The Company regularly monitors the performance of these companies.
The Company shall make available the annual accounts of the subsidiary
companies to any member of the Company who may be interested in obtaining the same. The
annual accounts of the subsidiary companies will also be kept open for inspection at the
Registered Office of the Company and respective subsidiary companies. Further, the annual
accounts of the subsidiaries are also available on the website of the Company viz.
www.heromotocorp.com. The consolidated financial statements presented by the Company
include the financial results of its subsidiary companies.
HMCL Netherlands B.V. (HNBV')
HNBV, a wholly owned subsidiary of your Company was incorporated in
Amsterdam as a private company with limited liability under the laws of The Netherlands
with the primary objective of promoting overseas investments. During FY 2017-18, HNBV has
invested in operating companies in Colombia and Bangladesh and has reported Nil revenue
(unadjusted) and a net loss of Rs 0.48 crores.
HMCL Colombia S.A.S. (HMCLC')
HMCLC was incorporated in Colombia as a joint venture between HNBV and
Woven Holdings LLC as a simplified stock corporation company. During the FY under review,
HNBV increased its holding to 68% equity in HMCLC and 32% equity is now held by Woven
Holdings LLC. The main business of HMCLC is to manufacture and sell two-wheelers in
Colombia. It has a manufacturing facility with a production capacity of 60,000 per annum.
During the year ended March 31, 2018, the Company has reported unadjusted revenue of Rs
123.17 crores and a net loss of Rs 60.58 crores.
HMCL Niloy Bangladesh Limited (HNBL')
HNBL was incorporated in Bangladesh as a joint venture between HNBV and
Niloy Motors Limited, Bangladesh as a limited liability company. HNBV currently holds 55%
equity in HNBL and 45% equity is held by Nitol Niloy Group, Bangladesh. HNBL has set up a
manufacturing plant at Jessore in Bangladesh and started commercial operations on June 01,
2017. The main business of HNBL is to manufacture and sell two-wheelers. During FY
2017-18, HNBL reported unadjusted revenue of Rs 541.80 crores and a net Profit of
Rs 77.16 crores.
HMCL (NA) Inc.
HMCL (NA) Inc., a wholly owned subsidiary of your Company, was
incorporated as a Corporation pursuant to the General Corporation Law of the State of
Delaware, United States of America. HMCL (NA) Inc., has invested in Erik Buell Racing,
Inc. (EBR'), a Delaware Corporation by subscribing to 49.2% of its equity share
capital. During the period ended March 31, 2018, HMCL (NA) Inc. has reported Nil revenue
(unadjusted) and a net loss of Rs 0.01 crores.
HMCL Americas Inc. (HMCLA')
HMCLA, a wholly owned subsidiary of your Company, was incorporated as a
Corporation pursuant to the General Corporation Law of the State of Delaware, United
States of America with the primary objective to pursue various global businesses. During
the year ended March 31, 2018, HMCLA has reported Nil revenue (unadjusted) and a net loss
of Rs 0.12 crores.
HMC MM Auto Limited (HMCMMA')
Your Company has a joint venture with Magneti Marelli S.p.A Italy,
named HMC MM Auto Limited in India, which is set up for the purpose of carrying out
manufacturing, assembly, sale and distribution of two wheeler fuel injection systems and
parts. Your Company holds 60% of the equity share capital in HMCMMA. During FY 2017-18,
HMCMMA has reported unadjusted revenue of Rs 34.64 crores and a net loss of Rs 8.17
Associate Companies Hero FinCorp Ltd. (HFCL')
HFCL, an associate of your Company, was incorporated in the year 1991.
Your Company holds 41.03% in the equity share capital of HFCL. HFCL is a non-banking
finance company engaged in providing financial services, including two-wheeler financing
and providing credit to Company's vendors and suppliers. Over the years, it has added
several new products and customers in its portfolio, like SME and commercial loans, loan
against property etc.
During FY 2017-18, HFCL's Profit attributable to the Company is Rs
Ather Energy Private Ltd. (AEL')
AEL is a private limited company, focused on developing, designing and
selling premium electric two-wheelers. During FY 2017-18, AEL's loss attributable to
the Company is Rs 11.84 crores.
Erik Buell Racing, Inc. (EBR')
Your Company through its subsidiary, HMCL (NA) Inc., has invested in
Erik Buell Racing, Inc. (EBR'), a Delaware Corporation by subscribing to 49.2%
of its equity share capital. EBR has ceased its operations and entered into Assignment for
the Benefit of Creditors under Chapter 128 of the Wisconsin Statutes (Chapter 128
A statement containing salient features of financial statement of
subsidiaries and associate companies forms part of the financials.
The Board of Directors of your Company (the Board') has
approved a policy for determining Material Subsidiaries. At present, your Company does not
have a Material Subsidiary. The Policy on Material Subsidiaries can be viewed on the
Company's website, www.heromotocorp.com at the following link:
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In terms of the applicable provisions of the Act and the Articles of
Association of the Company, Mr. Suman Kant Munjal, Director of the Company retires by
rotation at the ensuing Annual General Meeting and being eligible, has offered himself for
re-appointment. Brief resume and other details of Mr. Suman Kant Munjal, who is proposed
to be re-appointed as a Director of your Company, have been furnished in the Explanatory
Statement to the Notice of the ensuing Annual General Meeting.
Key Managerial Personnel (KMP)
Mr. Pawan Munjal, Chairman, Managing Director & CEO, Mr. Niranjan
Gupta, Chief Financial Officer and Ms. Neerja Sharma, Company Secretary are the KMP of
your Company in accordance with the provisions of Section 2(51), 203 of the Companies Act,
2013 read with Companies (Appointment and Remuneration of Managerial Personnel) Rules,
Declarations from Independent Directors
Your Company has received declarations from all the Independent
Directors confirming that they meet the criteria of independence as prescribed in the Act
and the Listing Regulations.
In the opinion of the Board, Independent Directors fulfill the
conditions specified in the Act, Rules made thereunder and Listing Regulations and are
independent of the management.
During FY 2017-18, five meetings of the Board of Directors were held.
For details of these Board meetings, please refer to the section on Corporate Governance
of this Annual Report.
ANNUAL EVALUATION OF THE BOARD, ITS COMMITTEES AND INDIVIDUAL DIRECTORS
A formal evaluation of the performance of the Board, it's
Committees, the Chairman and the individual Directors was carried out for FY 2017-18. Led
by the Nomination & Remuneration Committee (NRC'), the evaluation was
carried out using individual questionnaires covering, amongst others, composition of
Board, conduct as per Company values & beliefs, contribution towards development of
strategy & business plan, risk management, receipt of regular inputs and information,
codes & policies for strengthening governance, functioning, performance &
structure of Board Committees, skill set, knowledge & expertise of Directors,
preparation & contribution at Board meetings, leadership etc.
As part of the evaluation process, the performance of Non-Independent
Directors, the Chairman and the Board was conducted by the Independent Directors. The
performance evaluation of the respective Committees and that of Independent and
Non-Independent Directors was done by the Board excluding the Director being evaluated.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors make the following statement in terms of Section 134 of
the Act, which is to the best of their knowledge and belief and according to the
information and explanations obtained by them:
1. that in the preparation of the annual accounts for the financial
year ended March 31, 2018, the applicable accounting standards were followed, along with
proper explanation relating to material departures;
2. that appropriate accounting policies were selected and applied consistently and
judgments and estimates that are reasonable and prudent were made so as to give a true and
fair view of the state of affairs as at March 31, 2018 and of the Profit and loss of your
Company for the financial year ended March 31, 2018;
3. that proper and sufficient care has been taken for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 2013 for
safeguarding the assets of your Company and for preventing and detecting fraud and other
4. that the annual accounts for the financial year ended March 31, 2018 have been
prepared on a going concern basis;
5. that the Directors have laid down Internal Financial Controls which were followed by
the Company and that such Internal Financial Controls are adequate and are operating
6. that the Directors have devised proper systems to ensure compliance with the
provisions of all applicable laws and that such systems are adequate and operating
Pursuant to provisions of the Act, the Nomination and Remuneration
Committee (NRC') of your Board has formulated a Remuneration Policy for the
appointment and determination of remuneration of the Directors, Key Managerial Personnel,
Senior Management and other employees of your Company. The NRC has also developed the
criteria for determining the qualifications, positive attributes and independence of
Directors and for making payments to Executive and Non-Executive Directors of the Company.
The NRC takes into consideration the best remuneration practices in the
industry while fixing appropriate remuneration packages and for administering the
long-term incentive plans, such as ESOPs, RSUs etc. Further, the compensation package of
the Directors, Key Managerial Personnel, Senior Management and other employees is designed
based on the set of principles enumerated in the said policy.
Your Directors afirm that the remuneration paid to the Directors, Key
Managerial Personnel, Senior Management and other employees is as per the Remuneration
Policy of your Company.
The Remuneration details of the Directors, Chief Financial Officer and
Company Secretary, along with details of ratio of remuneration of each Director to the
median remuneration of employees of the Company for the FY under review are provided as Annexure
The Remuneration Policy of your Company can be viewed at the
https://www.heromotocorp.com/en-in/about-us/key-policies/remuneration-policy.html and is
also provided as Annexure - III.
EMPLOYEES' INCENTIVE SCHEME
In terms of the SEBI (Share Based Employee Benefits) Regulations, 2014,
as amended from time to time (SEBI Regulations'), the NRC of your Board,
inter-alia, administers and monitors the Employees' Incentive Scheme, 2014 of your
Company and the Employees' Stock Option Plans framed thereunder.
Further, the NRC has, at its meeting held on October 31, 2017 granted
29,800 stock options under ESOP Plan 2017 to the eligible employees at an exercise option
price of Rs 2,818 per option. In addition, the NRC also approved grant of 15,769
Restricted Stock Units under RSU Plan, 2017 to the eligible employees at the face value of
Rs 2 per unit.
Applicable disclosures as stipulated under the SEBI Regulations with
regard to the Employees' Stock Option Scheme are provided as Annexure - IV to
this Report and is available on the Company's website, www.heromotocorp.com and can
be viewed at the following link: https://www.heromotocorp.com/en-in/esop.php.
Your Company has received a certificate from M/s B S R & Co. LLP,
Statutory Auditors (Firm Registration No. 101248W/W-100022) that the Employees'
Incentive Scheme, 2014 for grant of stock options has been implemented in accordance with
the SEBI Regulations and the resolution passed by the Members in their general meeting.
The certificate would be placed at the ensuing Annual General Meeting for inspection by
Your Company is committed to benchmarking itself with global standards
of Corporate Governance. It has put in place an effective Corporate Governance system
which ensures that provisions of the Act and Listing Regulations are duly complied with,
not only in form but also in substance.
The Board has also evolved and adopted a Code of Conduct based on the
principles of good Corporate Governance and best management practices that are followed
globally. The Code is available on your Company's website, www.heromotocorp.com
and can be viewed at the following link: https://www.heromotocorp.com/en-in/about-us/code-of-conduct.html.
In terms of Listing Regulations, a report on Corporate Governance along
with the certificate from M/s Sanjay Grover & Associates, Company Secretaries (Firm
Registration No. P2001DE052900) confirming compliance of the conditions of Corporate
Governance is annexed hereto and forms part of this Annual Report as Annexure - V and
Annexure - VI respectively.
TRANSFER TO GENERAL RESERVE
During the FY under review, no amount has been transferred to General
Reserve of the Company.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND
During the FY under review, your Company has transferred unpaid/
unclaimed dividend amounting to Rs 13.43 crores for FY 2009-10 along with the relevant
shares to the Investor Education and Protection Fund (IEPF) of the Central Government of
MATERIAL CHANGES AND COMMITMENTS
No material change and/or commitment affecting the financial position
of your Company has occurred between April 1, 2018 and the date of signing of this Report.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
During FY 2017-18, your Company has not given any loan or guarantee
pursuant to provisions of Section 186 of the Act. Details of investments made in terms of
Section 186 of the Act are as under:
||( Rs in crores)
||Principal Amount (Shares)
||Principal Amount (Bonds/Debentures)
* HMC MM Auto Limited - Rs 3.00 crores, HMCL(NA) Inc. - Nil, HMCL
Netherlands BV - Rs 70.44 crores, HMCL Americas Inc - Nil, Hero FinCorp Limited - Rs 70.03
crores, Ather Energy Private Limited - Rs 20.06 crores
** Maturity of bonds and amortization
Your Company has neither accepted nor renewed any deposits during FY
2017-18 in terms of Chapter V of the Act.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
During FY 2017-18, all contracts/arrangements/transactions entered into
by your Company with related parties under Section 188(1) of the Act were in the ordinary
course of business and on an arm's length basis. During FY 2017-18, your Company has
not entered into any contract/arrangement/transaction with related parties which could be
considered material' in accordance with its Policy on Materiality of Related
Party Transactions. Thus, there are no transactions required to be reported in Form AOC-2.
Further, during FY 2017-18, there were no materially significant
related party transactions entered into by your Company with the Promoters, Directors, Key
Managerial Personnel or other designated persons which might have potential conflict with
the interest of the Company at large.
All related party transactions are placed before the Audit Committee
for its approval. There was no related party transaction requiring approval of the Board.
During FY under review, the Audit Committee has approved transactions through the omnibus
mode in accordance with the provisions of the Act and Listing Regulations. Related party
transactions were disclosed to the Board on regular basis as per Ind AS-24. Details
of related party transactions as per Ind AS-24 may be referred to in Note 36 of the
Standalone Financial Statements.
The policy on related party transactions is available on the
Company's website, www.heromotocorp.com and can be viewed at the following link:
RISK MANAGEMENT FRAMEWORK
Your Company follows an exhaustive risk identification exercise, backed
by targeted risk mitigation plan. It enables your Company to identify the risks in advance
and galvanize the appropriate stakeholders from the Company to blunt them.
FY 2017-18 saw a few new risks driven by the dynamic nature of the
external environment. A few illustrative ones included the following:
a) Gearing up post demonetization
b) Preparing for the GST transition
Your Company deployed internal teams for creating and executing risk
mitigation strategies. It also took advice from external agencies and engaged with the
Company's stakeholders such as the suppliers and dealers. You will be pleased to
learn that your Company was one of the very first ones to completely transition to the GST
regime. For other identified risks, the Company took a number of measures including but
not limited to, revisiting policies, developing new distribution models and expanding the
risk realm to current non-competitors.
This FY, your Company also updated a Risk Management Framework. This
framework is aimed at standardizing the risk management exercise across the organization.
The Board continues to review the risk management practices at your Company and provides
Your Company has constituted a Risk Management Committee to oversee the
risk management efforts under the Chairmanship of Mr. M. Damodaran, Independent
Director. The details of the Committee alongwith its charter are set out in the Corporate
Governance Report, forming part of this Report. The Board periodically reviews the
Company's risks and their mitigation plans.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY
Your Company is committed to the highest standards of ethical, moral
and legal business conduct. Accordingly, the Board of Directors has formulated a Vigil
Mechanism/Whistle Blower Policy which provides a robust framework for dealing with genuine
concerns & grievances. Your Company has an ethics hotline managed by a third party
which can be used by employees, Directors, vendors, suppliers, dealers etc. to report any
violations to the Code of Conduct. Specifically, employees can raise concerns regarding
any discrimination, harassment, victimisation, any other unfair practice being adopted
against them or any instances of fraud by or against your Company. During FY under review,
14 complaints were received and processed. Out of these, 12 complaints have been
investigated & acted upon and remaining 2 are under investigation.
During FY 2017-18, no individual was denied access to the Audit
Committee for reporting concerns, if any.
The Vigil Mechanism/Whistle Blower Policy of the Company is available
on the Company's website, www.heromotocorp.com and can be viewed at the following
CORPORATE SOCIAL RESPONSIBILITY
Your Company has constituted a Corporate Social Responsibility (CSR)
Committee which functions under direct supervision of Mr. Pawan Munjal, Chairman,
Managing Director & CEO of HMCL, who is also the Chairman of the CSR Committee. Other
members of the Committee are Gen. (Retd.) V. P. Malik and Mr. Pradeep Dinodia, who are
Non-Executive and Independent Directors of your Company.
Your Company has implemented the CSR Policy, duly formulated and
recommended by the CSR Committee to the Board. The CSR policy lays down CSR activities to
be undertaken by your Company. The CSR activities undertaken by your Company are based on
the approved CSR Policy, which is available on the Company's website,
www.heromotocorp.com and can be viewed at the following link:
The CSR Policy of your Company, as adopted by the Board, broadly covers
the following focus areas:
a) To direct HMCL's CSR Programmes, inter-alia, towards achieving
one or more of the following - enhancing environmental and natural capital; supporting
rural development; promoting education including skill development; providing preventive
healthcare, providing sanitation and drinking water; creating livelihoods for people,
especially those from disadvantaged sections of society, in rural and urban India and
preserving and promoting sports;
b) To develop the required capability and self-reliance of
beneficiaries at the grass roots, in the belief that these are pre-requisites for
social and economic development;
c) To engage in afirmative action/interventions such as skill building
and vocational training, to enhance employability and generate livelihoods for persons
including from disadvantaged sections of society;
d) To pursue CSR Programmes primarily in areas that fall within the
economic vicinity of the Company's operations, to enable close supervision and ensure
maximum development impact;
e) To carry out CSR Programmes in relevant local areas to fulfil commitments arising
from requests by government/ regulatory authorities and to earmark amounts of monies and
to spend such monies through such administrative bodies of the government and/or directly
by way of developmental works in the local areas around which the Company operates;
f ) To carry out activities at the time of natural calamity or engage in Disaster
g) To contribute to the Prime Minister's National Relief Fund or any other fund
set up by the Central Government for socio-economic development and relief and welfare of
the Scheduled Caste, the Scheduled Tribes, Other Backward Classes, minorities and women;
h) To contribute or provide funds to technology incubators located within academic
institutions which are approved by the Central Government;
i) To contribute to any fund setup by the Central Government or State Government(s)
including Chief Minister's Relief Fund, which may be recognised as CSR activity;
j) To promote sustainability in partnership with industry associations, like the
Confederation of Indian Industry (CII), PHD, FICCI, etc. in order to have a multiplier
During the FY under review, your Company spent Rs 84.34 crores on its
CSR activities, which amounts to 2.04% of the average net Profits of previous three
financial years. The CSR initiatives undertaken by your Company along with other details
form part of the Annual Report on CSR activities for FY 2017-18, which is annexed as
Annexure - VIII.
The Audit Committee of your Company comprises of the following
Non-Executive and Independent Directors:
|1. Mr. Pradeep Dinodia
|2. Mr. M. Damodaran
|3. Gen. (Retd.) V. P. Malik
|4. Dr. Pritam Singh
Further details on the Audit Committee and its terms of reference etc.
have been furnished in Corporate Governance Report which forms part of this Report as Annexure
During the FY under review, all recommendations of the Audit Committee
were accepted by the Board of Directors of the Company.
AUDITORS AND AUDITORS' REPORT
M/s BSR & Co. LLP, Chartered Accountants (Firm Registration No.
101248W/W-100022) were appointed at the previous AGM as the Statutory Auditors of the
Company until the conclusion of 39th Annual General Meeting of the Company.
They have audited the financial statements of the Company for the FY under review. The
observations of Statutory Auditors in their Report read with relevant Notes to Accounts
are self-explanatory and therefore, do not require further explanation. The Auditors'
Report does not contain any qualification, reservation or adverse remark. Further, there
were no frauds reported by the Statutory Auditors to the Audit Committee or the Board
under Section 143(12) of the Act.
The Board, on the recommendation of Audit Committee, has approved the
appointment of M/s Ramanath Iyer & Co., Cost Accountants, as Cost Auditors for the
financial year ending March 31, 2019. The Cost Auditors will submit their report
for the FY 2017-18 on or before the due date.
In accordance with the provisions of Section 148 of the Act read with
Companies (Audit & Auditors) Rules, 2014, since the remuneration payable to the Cost
Auditors is required to be ratified by the shareholders, the Board recommends the same for
approval by Members at the ensuing AGM.
M/s Sanjay Grover & Associates, Company Secretaries (Firm
Registration No. P2001DE052900) were appointed to conduct Secretarial Audit of your
Company during FY 2017-18.
The Secretarial Audit Report for the said FY is annexed herewith and
forms part of this Report as Annexure - IX. The Report does not contain any
qualification, reservation or adverse remark.
INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY
Your Company has a robust and well embedded system of internal
controls. This ensures that all assets are safeguarded and protected against loss from
unauthorised use or disposition and all financial transactions are authorised, recorded
and reported correctly.
An extensive risk based programme of internal audits and management
reviews provides assurance to the Board regarding the adequacy and efficacy of internal
controls. The internal audit plan is also aligned to the business objectives of the
Company. Comprehensive policies, guidelines and procedures are laid down for all business
processes. The internal control system has been designed to ensure that financial and
other records are reliable for preparing financial and other statements and for
maintaining accountability of assets.
INSIDER TRADING CODE
In compliance with the Securities and Exchange Board of India
(Prohibition of Insider Trading) Regulations, 2015 (the PIT Regulations') on
prevention of insider trading, your Company has a comprehensive Code of Conduct for
regulating, monitoring and reporting of trading by Insiders. The said Code lays down
guidelines, which advise Insiders on the procedures to be followed and disclosures to be
made in dealing with the shares of the Company and cautions them on consequences of
Your Company also has a Code of practices and procedures of fair
disclosures of unpublished price sensitive information. Both the aforesaid Codes are in
line with the PIT Regulations.
BUSINESS RESPONSIBILITY REPORT
As stipulated under the Listing Regulations, the Business
Responsibility Report (BRR') has been prepared and forms part of the Annual
Report as Annexure - X. The Report provides a detailed overview of initiatives
taken by your Company from environmental, social and governance perspectives.
The equity shares of your Company are presently listed on the BSE
Limited (BSE') and the National Stock Exchange of India Limited
As on March 31, 2018, total number of employees on the records of your
Company were 8,266 as against 8,069 in the previous FY.
Your Directors place on record their appreciation for the significant
contribution made by all employees, who through their competence, dedication, hard work,
co-operation and support have enabled the Company to cross new milestones on a continual
PARTICULARS OF EMPLOYEES
The statement of Disclosure of Remuneration under Section 197 of the
Act and Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel)
Rules, 2014 (Rules'), is appended as Annexure - II to the Report. The
information as per Rule 5(2) of the Rules forms part of this Report. However, as per first
proviso to Section 136(1) of the Act and second proviso of Rule 5(2) of the Rules, the
Report and Financial Statements are being sent to the Members of the Company excluding the
statement of particulars of employees under Rule 5(2) of the Rules. Any Member interested
in obtaining a copy of the said statement may write to the Company Secretary at the
Registered Office of the Company.
EXTRACT OF ANNUAL RETURN
In terms of Sections 92(3) and 134(3)(a) of the Act and Rules made
there under, extract of the Annual Return in Form No. MGT-9 is annexed to this Report as Annexure
COMPLIANCE WITH SECRETARIAL STANDARDS
The Company is fully compliant with the applicable Secretarial
Standards (SS) viz. SS-1 & SS-2 on Meetings of the Board of Directors and General
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS AND OUTGO
Information required under Section 134(3)(m) of the Act read with Rules
made thereunder is annexed to this report as Annexure - XII.
Your Directors state that there being no transactions with respect to
following items during FY under review, no disclosure or reporting is required in
respect of the same:
1. Deposits from the public falling within the ambit of Section 73 of the Companies
Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014.
2. Issue of equity shares with differential rights as to dividend, voting or otherwise.
3. Issue of shares (including sweat equity shares) to employees of your Company under
any scheme, save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-time Director of your 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 status and Company's operations in future.
6. Buy back of shares.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT THE WORKPLACE
(PREVENTION, PROHIBITION & REDRESSAL) ACT, 2013
Your Company has in place a policy on Prevention of Sexual Harassment
at workplace. This policy is in line with the requirements of The Sexual Harassment of
Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. All employees,
whether permanent, contractual, temporary and trainees are covered under this Policy.
As per the said Policy, an Internal Complaints Committee is also in
place to redress complaints received regarding sexual harassment. Following is the summary
of complaints received and disposed off during FY under review:
No. of complaints received: 2
No. of complaints disposed off: 2
AWARDS AND RECOGNITION
During FY under review, the Company has received multiple awards and recognition. Some
of them are listed below:
1. State Level Bhamashah Respect Certificate by the Rajasthan Government.
2. Best CSR Practices in private sector by CSR Leadership Summit & Awards.
3. Energy Efficient Award by CII.
4. International Fire and Security Exhibition and Conference (IFSEC) Award for
Excellence in Physical Security.
5. National Safety Award by Ministry of Labour & Employment.
6. Platinum Rating in GreenCo assessment (commensurate to world class manufacturing) by
The Board of Directors would like to express their sincere thanks to
the shareholders & investors of the Company for the trust reposed on the Company over
the past several years. Your Directors would also like to thank the central government,
state governments, financial institutions, banks, customers, employees, dealers, vendors
and ancillary undertakings for their co-operation and assistance. We would like to
reiterate our commitment to continue to build our organisation into a truly world class
enterprise in all respects.
||For and on behalf of the Board
|Date: May 2, 2018
|Place: New Delhi