To The Members,
It is a great privilege for your Directors to present the 34th Annual Report on the business and operations together with Audited Balance Sheet and Statement of Profit & Loss of your Company for the year ended March 31, 2015.
Your Companys performance during the year as compared with the previous year is summarized below:
(Rs. in Million)
|Profit Before Taxation (PBT)||447.57||225.00|
|Provision for Taxation, Deferred Tax||127.10||74.81|
|Profit After Tax (PAT)||320.47||150.19|
|Balance of Profit brought forward||344.68||305.20|
|Balances Available for Appropriation||661.90||455.39|
|Proposed Equity Dividend||95.42||81.79|
|Corporate Dividend Tax||19.42||13.90|
|Transfer to General Reserve||31.52||15.02|
|Balance carried forward to Balance Sheet||515.54||344.68|
|Basic and Diluted earning per Share (EPS) Rs.||23.51||11.02|
In line with our focus on enhancing shareholder returns, the Board of Directors are pleased to recommend a Dividend of 70% (Rs. 7/ - per equity share) for the Financial Year 2014-15 (Rs. 6/- previous year). The total amount of Dividend proposed to be distributed and tax thereon aggregates to Rs. 114.84 Million. The Dividend payout ratio comes to 35.83 %.
A sum of Rs. 31.52 Million has been transferred to General Reserve of the Company. This reaffirms the inherent financial strength of your company.
India in last decade has grown into a large automotive market particularly for Japanese OEMs while the European and Americans have also entered for the long haul. India however due to the recent economic slowdown witnessed weak auto sales which impacted consumer as well as OEM sentiment. The India auto story is expected to be driven by four factors pent up demand, reducing food and fuel inflation, income growth due to improved business climate and lower penetration into households. The Indian automotive market is expected to witness ~15% CAGR FY14-17E on the back of the demand improvement. From auto component makers perspective besides, the aforementioned reasons would also lead to higher content per car and consumers up-trading to higher quality & safety and increased features.1
Auto sector to benefit greatly from "Make in India"! The Government has laid out a vision statement towards ushering India as a global manufacturing hub via the "Make in India" campaign. At present auto sectors contribution to GDP remains at ~7%, leads the manufacturing sector, and the sector would greatly benefit from this specialized focus.1
In this backdrop, your company registered a growth of 9.95% during the year under review, by achieving Sales Turnover of Rs. 5,240.44 Million (on Standalone Basis) as against Rs. 4,766.10 Million (On Standalone Basis) in the corresponding previous year.
The Profit before Tax stood at Rs. 447.57 Million (On Standalone Basis) as compared to Rs. 225.00 Million (On Standalone Basis) during the previous year.
On Consolidated Basis, your Company registered a growth of 9.75% during the year under review by achieving a Sales Turnover of Rs. 8371.67 Million as against Rs. 7,627.57 Million during the previous year.
On Consolidated Basis, your Company recorded a Profit before Tax of Rs. 677.78 Million during the year under review as compared to Rs. 429.09 Million during the previous year.
During the year Company is implementing Total Productive Maintenance (TPM) across all plants to create a culture and environment to continuously improve quality, cost and delivery parameters to meet and exceed customers expectations. TPM practice has become a necessity these days for improving the integrity of production and quality systems through the machines, equipment, processes and employees, which ultimately adds business value to the organization.
NEW PLANTS AND FACILITIES
During the year, a new Robotic plant of the Company was set up at Gut No. 53, Waluj, Aurangabad for manufacturing Chassis and fabrication parts etc. The plant has commenced manufacturing operations and supplies of Chassis to Bajaj Auto Limited in January, 2015.
A detailed discussion on business performance and future outlook is provided in the Chapter on Management Discussion & Analysis Report (MDA).
100% SUBSIDIARY - LUMAX DK AUTO INDUSTRIES LIMITED (LDK)
During the year under review, LDK has achieved net sales of Rs 2,448.25 Million as against Rs. 2,490.90 Million in the previous year. The profit after tax declined to Rs. 119.83 Million from Rs. 128.18 Million.
During the year, the Pantnagar facility has received the BAVA Kaizen Award for reduction in Customer Rejection, Optimum Resource and T2 Vendor Development, Quality Gold Award from Bajaj Auto Limited and Quality Circle Award from CII.
LUMAX MANNOH ALLIED TECHNOLOGIES LIMITED (LMAT)
During the year under review, LMAT has reported an impressive growth of 142% by recording net sales of Rs 618.17 Million as against Rs. 255.38 Million in the previous year. The profit after tax has also increased by 146% to Rs. 41.86 Million from Rs. 17.02 Million during the previous year.
During the year, the Company has transferred 1,566,233 no. of equity shares (equivalent to 45% equity holding) of LMAT to Mannoh Industrial Co., Ltd., Japan pursuant to Joint Venture and Share Purchase and Shareholders Agreement entered with the Company, Mannoh Industrial Co., Ltd., Japan, LDK and LMAT.
During the year, LMAT has received award for Technology Innovation from VE Commercial Vehicles Limited.
JOINT VENTURE COMPANIES
LUMAX CORNAGLIA AUTO TECHNOLOGIES PRIVATE LIMITED (LCAT)
During the year under review, LCAT has reported growth of 29.62% by recording net sales of Rs. 328.41 Million as against Rs. 253.36 Million in the previous year. The profit after tax has also increased by 53.56% to Rs. 20.70 Million from Rs. 13.49 Million during the previous year.
Presently, LCAT is supplying Air Intake System (AIS) to leading automobile manufactures in India viz. Tata, Fiat, Volkswagen, Skoda & General Motors and during the year it has received orders for development of AIS for 2 new model platforms of Tata to be launched in the next 2 years. In addition, 2 new model launches for Tata are expected to be launched in Q2 & Q3 of FY 2015-16. New Enquiries have also been received from VW & FIAT and efforts are also being put in the right direction for developing new customers like Ford & Renault Nissan.
The manufacturing facility at Chakan Industrial Area, Pune has started pilot supplies of Exhaust System to Tata Motors for its Nano AMT model. LCAT is also a nominated source for the Pelican model of Tata and commercial production for the same will start from March/ April, 2016.
LCAT has now evolved as a full service provider for Automotive Air Intake & Exhaust Systems. Further to complement its Vision, LCAT has initiated development of local engineering capability with the support of the Technology partner.
LUMAX GILL-AUSTEM AUTO TECHNOLOGIES PRIVATE LIMITED (LGAT)
During the year under review, LGAT submitted samples to its customer, Lear India, for testing and approval. The overall testing process is expected to be completed by Q2 of the financial year 2015-16 and LGAT will start commercial production accordingly by Q3/Q4 of the financial year 2015-16.
During the year under review, LGAT increased its authorized share capital to Rs. 5 crores and both the Joint Venture Partners have infused equity amounting to Rs. 21.88 Million each in the ratio of 50:50.
DIRECTORS & KEY MANAGERIAL PERSONNEL
In accordance with the provisions of the Companies Act, 2013 and Articles of Association of the Company, Mr. Deepak Jain, Director is retiring by rotation at the ensuing Annual General Meeting and being eligible, offers himself for re-appointment.
The Board has appointed Mrs. Usha Jain as an additional director, in the category of Women Director, w.e.f. August 08, 2014, for the time being, on the Board of the Company subject to her regular appointment in the Annual General Meeting.
Mrs. Usha Jain, aged 68 years, is a Science Graduate and has more than 25 years of rich experience and knowledge in Automotive Sector.
In accordance with the Articles of Association of the Company and the Companies Act, 2013, Mrs. Usha Jain holds office till the ensuing Annual General Meeting. The Company has received a Notice in respect of Mrs. Usha Jain, from a member under Section 160 of the Companies Act, 2013 proposing her appointment as Director of the Company, liable to retire by rotation.
The Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013.
Your Directors recommend the re-appointment/ appointment of the above Directors at the ensuing Annual General Meeting.
The Board, on recommendation of Audit Committee, has appointed Mr. Ashish Dubey, Finance Head as Chief Financial Officer (CFO) of the company w.e.f. May 29, 2014. Mr. Ashish Dubey, aged 48 years, is a MBA (Finance) from National Institute of Management (NIM), Pune, having about 23 years of rich experience and knowledge in the field of Accounts and Finance.
The Board has appointed Mr. Pratik Dhuri as the Company Secretary of the Company w.e.f. April 7, 2014. Mr. Pratik Dhuri is an Associate member of the Institute of Company Secretaries of India.
EXTRACTS OF ANNUAL RETURN
In accordance with the requirement of Section 92 of Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014, the extract of the annual return in Form MGT 9 is annexed as Annexure - A.
NUMBER OF BOARD MEETINGS
The Board of Directors met 4 (Four) times in the Financial year 2014-15. The details of the board meetings and the attendance of the Directors are provided in the Corporate Governance Report.
DIRECTORS RESPONSIBILITY STATEMENT
As required under Section 134(5) of the Companies Act, 2013, the Directors state:
(i) that in the preparation of the Annual Accounts for the Financial Year ended 31st March, 2015, the applicable Accounting Standards have been followed along with proper explanation relating to material departures in the Auditor Report and Notes to Accounts;
(ii) that 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 and loss of the company for that period;
(iii) that the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
(iv) that the Directors have prepared the Annual Accounts on a "going concern" basis.
(v) the directors had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.
(vi) the directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
The Company follows a policy on remuneration of Directors and Senior Management Employees. The Policy is approved by the Nomination & Remuneration Committee and the Board. The Remuneration Policy is stated in the Corporate Governance Report.
During the year under review, the Company has not accepted any Deposit under Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
The members in their meeting held on July 23, 2014 had appointed M/s S.R. Batliboi & Co. LLP, Chartered Accountants, as Statutory Auditors of the Company for a period of 5 consecutive years in terms of the provisions of Section 139 of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014, to hold the office of auditors till the conclusion of the sixth consecutive Annual General Meeting of the Company to be held in the year 2019, subject to ratification by the Members at every Annual General Meeting. Your Directors recommends for ratification of their appointment in the ensuing Annual General Meeting.
During the year, all the recommendations of the Audit Committee were accepted by the Board. Hence there is no need for disclosure of the same in this Report
The Board has re-appointed M/s Jitender, Navneet & Co. as the Cost Auditors of the Company in accordance with Section 148 and other applicable provisions, if any, of the Companies Act, 2013, for the audit of the cost accounts of the Company for the Financial Year 2014-15. The Cost Audit Report for the Financial year 2013-14 has been filed with the Central Government.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. Milind Kasodekar, Practicing Company Secretary, Partner, MRM Associates, Pune as the Secretarial Auditor of the Company to undertake the Secretarial Audit for the financial year 2014-15. The Report of the Secretarial Audit is annexed herewith as Annexure - B.
PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS
The particulars of loans, guarantees and investments covered under the provisions of section 186 of Companies Act, 2013 are given in the Notes to financial statements.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements of the Company are prepared in accordance with the Accounting Standards, Companies Act, 2013, Listing Agreement and all other laws for the time being in force (if applicable) and the same forms part of this Annual Report.
The Audited Financial Statements, including the Consolidated Financial Statements and related information and audited accounts of subsidiaries are available on the website of the Company i.e. www.lumaxautotech.com. These documents shall also be available for inspection by any shareholder at the registered office of the Company and subsidiaries.
RELATED PARTY TRANSACTION AND POLICY
All related party transactions entered during the financial year were on arms length basis and were in the ordinary course of business. None of the transactions with any of related parties were in conflict with the Companys interest. The particulars of contracts or arrangements with related parties referred to in Section 188 of the Companies Act, 2013 in the prescribed Form AOC-2 is annexed herewith as Annexure - C.
All Related Party Transactions, which are foreseen and repetitive in nature, are placed before the Audit Committee on a yearly basis for obtaining prior omnibus approval of the committee. Prior omnibus approval of the committee is also obtained for the transactions which are not foreseen and specified details of transactions are not available subject to their value not exceeding Rs. 1 (One) crore per transaction. The transactions entered into pursuant to the omnibus approval so granted are placed before the Audit Committee for its approval on a quarterly basis.
The policy on Related Party Transactions as approved by the Board is uploaded on the Companys website. The Web link of the same is provided here under: http://www.lumaxautotech.com/downloads/related-party-transaction-policy-28-05-2015.pdf
The Company has established a vigil mechanism named Whistle Blower Policy, for directors, employees and business associates to report to the management, concerns about unethical behaviour, actual or suspected fraud or violation of the Companys code of conduct or ethics policy, in accordance with the provisions of Companies Act, 2013 and Listing Agreement. The mechanism provides for adequate safeguards against unfair treatment of employees who wishes to raise a concern and also provides for direct access to the Chairman of the Audit committee in appropriate/ exceptional cases. The Whistle Blower Policy is uploaded on the website of the Company.
MATERIAL CHANGES AND COMMITMENTS
No other material changes and commitments affecting the Financial position of the Company have occurred between April 1, 2015 and the date on which this Report has been signed.
INFORMATION ON CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
Disclosure of information regarding Conservation of Energy, Research & Development, Technology Absorption and Foreign Exchange Earning and Outgo etc. under Section 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014, is annexed separately as Annexure D.
RISK MANAGEMENT POLICY
The Company has adopted an enterprise risk management policy and established a risk management framework to identify, mitigate and control the risks, which may threaten the existence of the Company, in accordance with the provisions of Companies Act, 2013 and Listing Agreement.
The Company accepts a level of risk in achieving its goals, however, sound risk management helps it to make the most of each business opportunity and enables the Company to be resilient and respond decisively to the changing environment.
The Company has also constituted a Risk Management Committee. The Committee reviews the risk trend, exposure and potential impact analysis carried out by the Internal Auditors of the Company. The Committee also finalises the risk mitigation plans, identify the risk owners and monitor the progress of mitigation actions.
The Board, Audit committee and Senior management periodically reviews the risk trend, exposure and potential impact analysis carried out by the Internal Auditors of the Company to gain assurance that risks are being managed within approved risk levels.
CORPORATE SOCIAL RESPONSIBILITY (CSR) POLICY AND INITIATIVES
Your Company has been undertaking CSR activities through Lumax Charitable Foundation, a Trust set up by the Group Company. The key focus areas of your Company are education and the wellbeing of disadvantaged section of the society.
The Company has constituted a CSR Committee of the Board and also developed & implemented a CSR Policy in accordance with the provisions of Companies Act, 2013.
As part of its CSR initiatives, the Company has undertaken projects in the areas of Education and Healthcare for the disadvantaged children of the society. These projects are largely covered under Schedule VII of the Companies Act, 2013. During the year, the Company supported the schools by way of providing financial support in terms of fees of girl children, contributing towards infrastructure and other facilities for students in the school. Towards its healthcare initiatives, the Company is focussing on preventive healthcare by continuously organising health check-up camps and partnering in special drives organised by various agencies for this cause.
The Companys spend on CSR activities is around one percent of the average net profits during the three immediately preceding financial years. The company is planning to scale up its CSR activities in phased manner in the coming years. The Annual Report on CSR activities is annexed herewith as Annexure-E.
PERFORMANCE EVALUATION OF BOARD, COMMITTEE AND DIRECTORS
The Nomination and Remuneration Committee lays down the criteria for performance evaluation of independent directors and other directors, Board of Directors and Committees of the Board of Directors. The criteria for performance evaluation cover the areas relevant to their functioning as independent directors or other directors, member of Board or Committees of the Board.
The Board has established a formal process, on the recommendation of Nomination and Remuneration Committee, for the annual evaluation of the performance of the Board. This includes the completion of a questionnaire designed and approved by the Board to provide a framework for the evaluation process. It is the role of the committee to summarise the responses and present the same to the Board. The committee also undertake a similar evaluation process of the committees of the Board.
MANAGEMENT DISCUSSION & ANALYSIS REPORT
Pursuant to the provisions of Clause 49 of the Listing Agreement, Management Discussion & Analysis Report is annexed as part of this report separately as Annexure F.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There are no significant and material orders passed by the Regulators / Courts / Tribunals, which would impact the going concern status of the Company and its future operations.
INTERNAL FINANCIAL CONTROL
The Company has a comprehensive internal control system for all the major processes to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedures, laws and regulations, safeguarding of assets and economical and efficient use of resources.
The monitoring and reporting of finance systems is supported by a web-based system SAP. Through this system, the Company undertakes an overview of income, expenditure, as well as commitments (labour contracts, procurement in progress, etc.) at all levels of the organization.
The report on Corporate Governance together with the Auditors Certificate regarding the Compliance of conditions of Corporate Governance as stipulated in Clause 49 of the Listing Agreement is annexed and forms part of this Annual Report as Annexure G.
PARTICULARS OF EMPLOYEES
Information on Particulars of Employees as required under Section 197 of the Companies Act, 2013 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms an integral part of this report as Annexure H.
The information required pursuant to section 197 of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of your Company is available for inspection by the members at the registered office of the Company during business hours on working days up to the date of ensuing Annual General Meeting. If any member is interested in obtaining a copy thereof, such member may write to the Company Secretary, whereupon a copy would be sent.
Your Directors place on record their appreciation for the continued co-operation and support extended to the Company by its highly valued customers, Joint Venture Partners, all other business partners, all the shareholders, Financial institutions, Banks, Vendors and various Government Agencies with whose help, cooperation and hard work the Company is able to achieve the results.
The Board deeply acknowledges the co-operation and commitment rendered by all the associates and employees of the Company for their contribution and support for the growth of the Company.
|For and on behalf of the Board of Directors|
|Place: Gurgaon||D. K. JAIN|
|Dated: May 25, 2015||CHAIRMAN|