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BSE: 505163 | NSE: ZFSTEERING | ISIN: INE116C01012
Market Cap: [Rs.Cr.] 677.08 | Face Value: [Rs.] 10
Industry: Auto Ancillaries
To the Members,
The Directors are pleased to present the 33rd Annual Report and Audited Accounts forthe year ended March 31, 2013.
|Financial Results||(Rs. in Million)|
|Sales (net) and other Income||3243.7||3597.3|
|Profit before depreciation and tax||721.4||745.6|
|Provision for tax||233.8||216.5|
|Balance Brought Forward from||12.6||13.5|
|Amount available for appropriation||268.8||478.1|
|Proposed Dividend and Tax thereon||84.9||52.7|
|Interim Dividend and Tax thereon||-||52.7|
|Balance Carried Forward||22.1||12.6|
The Board is pleased to recommend a dividend of Rs. 8/- per share for the year endedMarch 31, 2013.
Management Discussion and Analysis
Global Economic Slowdown affected growth of Indian Economy. In order to containfiscal-deficit, the Government had to rationalize its Expenditure and took some austeritymeasures, which further affected aggregate demand in the economy. Investor and businessconfidence was low throughout the year.
The overall Commercial Vehicles segment registered de-growth of 2.02 percent inApril-March 2013 as compared to the same period in 2011-12. While Medium & HeavyCommercial Vehicles (M&HCVs) declined by 23.18 percent, Light Commercial Vehicles grewat 14.04 percent. In March 2013, M&HCVs sales further declined by 26.16 percent overMarch 2012.
Financial-performance of the Company was affected by the uncertain macro-economicenvironment, coupled with high interest rates, stalled infrastructure projects etc.
Review of Operations
Operating Results of the Company
Comparative quantitative figures of Sales are as under:
|Rack & Pinion||16,930||22,439||-24.5||%|
Sales, in value terms, was down by 12%.
The Members would recall that, in furtherance to the Companys commitment towardsGreen-Initiative, your Company had successfully commissioned 5 MW Solar PowerProject at Gujarat Solar Park, Charnka Village, District Patan (Kutch) Gujarat, in lastquarter of financial year 2011-12. Hence, financial year 2012-13 was the first year inwhich the Plant was operational for full year. The electricity generated is purchased byGujarat Urja Vikas Nigam Limited (GUVNL), Government of Gujarat. The Plant generated 8.5million Units of Electricity with sales-revenue of Rs. 95.30 million in the Financial Year2012-13. The Board is pleased to report that your Companys Solar Project, ranksamong top five Solar-projects in that park, in terms of power generation efficiency.
Seven Wind Turbine Machines, owned and operated by the Company, located in districts ofSatara and Ahmednagar, having aggregate capacity of 6.7 MW are mainly used for captivepower consumption. Total 9.9 million units were generated in the financial year 2012-13.The Units used as captive consumption accounted for 80 % of the factorys consumptionof power.
Income received on financial-investments, held by the Company, was Rs. 103.3 million,higher compared to Rs. 51.5 million for the financial year 2011-12.
In order to lighten the pressure on the bottom-line, Term Loan availed for the SolarProject was prepaid during the financial year, after liquidating some of the financialinvestments of the Company.
Profitability has been impacted, partly due to reduction in sales and partly due tohigher depreciation-charge. The Company was successful in containing cost of raw-materialand with the help of tight cost-control, impact on bottom-line has been minimized.
Consequently, Profit before Tax for the year was Rs. 490 million against Rs. 577million (without considering Exceptional item) for the previous year.
Earnings Per Share is Rs. 28.25 for the year ended March 31, 2013.
Global and domestic recovery is anticipated. As per the World Bank as well as the IMF(International Monetary Fund), and as per the Finance Ministry of Government of India,Indias GDP (Gross Domestic Product) is expected to improve to 6% and above in theFinancial Year 2013-14. The announcement of investment allowance reintroduction is verypositive. Focus on infrastructure is also a welcome move which will help growth of theeconomy. Automobile industry appreciates the Finance Ministers gesture of allocatingdouble the funds under JNNURM scheme enabling substantial part for purchase of up to 10thousand buses. This was very much needed for revival of Commercial Vehicles sector.Bottlenecks stalling road projects are being addressed and it is expected that roadconstruction orders will be awarded, which should boost demand for commercial vehicles.
Meanwhile, The Reserve Bank of India (RBI) in its annual monetary policy for 2013-14has cut the interest-rate by 25 basis points in an effort to push industrial growth andstimulate economy. This is the third rate-cut since January 2013. The Indian AutomobileIndustry, which is struggling with sluggish market due to high interests, welcomed RBIdecision to cut lending rates, as this measure would boost the demand.
Global commodity prices have been showing a declining trend over the past few months.The trend if it were to continue augurs well for manufacturing sector as a whole.Increasing Urbanisation, opening-up of Indian markets for globalization, increase inpurchasing power parity, instant availability of automobiles and easier loans are allpositive factors for boosting demand in Automobile sector. India is emerging as a countryhaving higher number of vehicles per one thousand persons in view of increasing domesticdemand and purchasing power. Hence, outlook for the commercial vehicles remains strong inview of government focus on infrastructure development, new products and entry of moreforeign players.
As far as Solar Power generation is concerned, price of solar-panels have come downdrastically, which helps in lowering of project-cost, but at the same time purchase-priceoffered for electricity so generated is also lower.
ZF Lenksysteme India Private Limited (Joint Venture with ZF Lenksysteme GmbH, Germany)(hereinafter JV Company)
The JV Company has set up a new manufacturing plant, situate at Village Phulgaon,Alandi-Markal Road, Dist. Pune, in order to establish its manufacturing operations insteering systems. The said plant was inaugurated on April 26, 2012.
The JV Company is yet to commence substantial business activity. Nevertheless, it hasreported a sales turnover of Rs. 60.3 million during the financial year 2012-13.
In January, 2013, additional capital, by way of Rights issue, has been raised by the JVCompany. Consequently, the paid-up capital of the JV Company now stands at Rs. 1508million and your Company holds 26% of the total paid up capital of the JV Company. Totalinvestment of the Company in the JV Company stands at Rs. 392.08 million. The Company, asper the contractual obligations undertaken by the Company continues to support the JVCompany and invested the additional equity capital in the JV Company.
Expansion and Capital Expenditure
Steering Gear Systems
The Company is in a process to gradually enhance its installed capacity of PowerSteering Gears and Mechanical Steering Gears and modernize its plant at Vadu Budruk. TheCompany plans to further invest Rs. 500-600 million in coming years for this purpose.
Renewable Energy - Solar Power Project
The Company is exploring the avenues of further investments in the Solar Power by wayof new project/ expanding capacity to the existing project.
Internal Control Systems
The Internal Control Systems of the Company is responsible for the financial reporting,assets, adherence to management policies and to conduct ethical conduct within theorganization. The Company has independent Internal Auditors for conducting internal auditsof the financial reporting and operations of the Company. The Companys existingsystem of internal controls is commensurate with its size and nature of business.Companys Internal control ensures reliable financial reporting, better utilizationof Companys resources, effectiveness of operations, compliance with the legalobligations and proper implementation of policies and procedures.
The Companys Audit Committee also regularly reviews the financial managementreports and data, and interacts with the External and Internal Auditors for ascertainingthe adequacy of internal control systems.
Human Resource Development
The Company has been continuously training its employees in the newer technical/management skills. Various steps have been taken for improving the performance ofemployees. During the year, 64 training programs (19 external and 45 internal) coveringover 578 training man-days were covered. It is expected that the customized developmentprogrammes, suitable to individual employees, to continue for the next few years. Thetotal number of employees as on March 31, 2013 was 903.
Industrial relations at the Companys Plant continued to be cordial and peaceful.
The above Management Discussion and Analysis is a forward looking Statement based onthe Companys projections, estimates and perceptions. These statements reflect theCompanys current views, with respect to the future events and are subject to risksand uncertainties. Actual results may vary materially from those projected here.
Your Company has not accepted any fixed deposit.
Conservation of Energy, Research And Development, Technology Absorption And Innovation,Foreign Exchange Earnings And Outgo
The details as required under the Companies (Disclosure of particulars in the Report ofBoard of Directors) Rules, 1988 are given in Annexure II to this Report.
Transfer to Investor Education and Protection Fund
The Company has transferred a sum of Rs. 411,300/- during the year ended March 31, 2013to the Investor Education and Protection Fund (IEPF) established by the CentralGovernment, in compliance with the provisions of Section 205C of the Companies Act, 1956.The said amount represents unclaimed dividend lying with the Company for a period of 7years from its date of payment.
Unclaimed Dividend for the Financial Year 2005-06 is due for transfer to the IEPF onAugust 25, 2013.
With profound sorrow and grief, the Board reports the sad demise of our Director Mr. D.S. Bomrah. The Board places on record its appreciation for Mr. Bomrahs richcontribution to the growth of the Company in his capacity as Director as well as member ofthe Audit Committee and the Remuneration Committee of Directors.
Mr. Jitendra A. Pandit has been appointed as Director on January 29, 2013, in thecasual vacancy caused by the death of Mr. D S Bomrah. Mr. Pandit is an IndependentDirector. As per the provisions of Section 262 of the Companies Act, Mr. Pandit holdsoffice up to the date of the forthcoming Annual General Meeting (AGM) of the Company andis eligible for appointment as Director. The Company has received notice under Section 257of the Companies Act, in respect of Mr. Pandit, proposing his appointment as a Director ofthe Company. Resolutions seeking approval of the members for the appointment of Mr. Panditas Director of the Company has been incorporated in the Notice of the forthcoming AGMalong with brief details about Mr. Jitendra Pandit.
During the period under report, Mr. Jinendra Munot was reappointed as Jt. ManagingDirector of the Company for a period of 5 years with effect from April 1, 2013.
At the 33rd Annual General Meeting, Mr. M. L. Rathi, Mr. Shridhar S. Kalmadi and Dr.Hans Friedrich Collenberg, retire by rotation and being eligible, offer themselves forre-appointment.
Profiles of these Directors, as required by Clause 49 of the Listing Agreement with theStock Exchange, are provided in the Notice convening the Annual General Meeting of theCompany.
Directors Responsibility Statement
Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 withrespect to Directors Responsibility Statement, it is hereby confirmed:
i) That in the preparation of the accounts for the financial year ended March 31, 2013the applicable Accounting Standards have been followed along with proper explanationrelating to material departures;
ii) That the Directors have selected such Accounting Policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31, 2013 andof the profit of the Company for the year ended on that date.
iii) That the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act, 1956for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities; and
iv) That the Directors have prepared the accounts on a going concern basis.
Corporate Governance Report
Pursuant to Clause 49 of the listing agreement, a detailed report on CorporateGovernance is given in Annexure - III along with the Auditors Certificate on itscompliance, which forms part of this report.
M/s. MGM and Company, Chartered Accountants, retire as Statutory Auditors of theCompany at the ensuing Annual General Meeting and offer themselves for re-appointment. ACertificate from them has been received to the effect that their reappointment asStatutory Auditors of the Company, if made, would be within the limits prescribed underSection 224(1B) of the Companies Act, 1956.
The Board of Directors have appointed Messrs Joshi Apte & Associates, CostAccountants, for conducting the statutory audit of the cost accounting records of theCompany, for the financial year 2013-14, subject to approval of the Central Government.Cost Audit Report for the financial year 2012-13 will be filed within the prescribedtime-limit.
Particulars of Employees
Information as required under Section 217(2A) of the Companies Act, 1956 and the Rulesframed there under is attached as Annexure I.
The Board of Directors takes this opportunity to express their appreciation for theassistance and co-operation received from Banks, Government Authorities, Customers,Suppliers, Members, Collaborators and other Business Associates. The Board alsoacknowledges the understanding and support extended by all employees.
|For and on behalf of the Board of Directors|
|May 23, 2013||Chairman & Managing Director|
Annexure I to the Directors' Report 2012-13
Particulars of Employees u/s 217 (2A)
Information as per Section 217 (2A) of the Companies Act, 1956, read with Companies(Particulars of Employees) Rules, 1975, as amended and forming part of the Directors'Report for the year ended on March 31, 2013.
A. Name of the employees employed throughout the financial year and who were inreceipt of remuneration for the year which, in the aggregate, was not less than Rs.6,000,000 in terms of Section 217 (2A) (a) (i):
|Name||Age (Years)||Designation||Total Remuneration Received (Rs.)||Qualification||Date of Commen- -cement of Employment||Experience||Last Employment held Name of the Company||Designation|
|Mr. Dinesh Munot||65||Chairman & Managing Director||28,789,696||B.E.(Ele.) M.I.E.||01.07.1984||39||Kinetic Engg. Ltd.||Executive Director|
|Mr. Jinendra Munot||61||Jt. Managing Director||18,688,732||B.E.(Mech.) M.S.(Mech.) U.S.A, AMIE (India)||01.02.1986||34||Bajaj Tempo Ltd.||Senior Manager (Projects)|
|Mr. Utkarsh Munot||32||Executive Director||11,538,591||B.E. (Mechanical & Mfg. Engg.) U.S.A. Diploma in Business Administration, U.S.A.||14.05.2004||10|
B. Name of the employees employed for the part of the financial year and who werein receipt of remuneration for the year which, in the aggregate, was not less than Rs.500,000 p.m. in terms of Section 217 (2A) (a) (i ):
1. All appointments are contractual. Other terms and conditions are as per the Rules ofthe Company.
2. Remuneration above includes salary, commission, medical expenses, allowances,perquisites (valued as per Income Tax Rules) and the Company's contribution to ProvidentFund, wherever applicable.
3. The employees are also entitled to gratuity, in addition to the above remuneration.
4. Experience includes number of years of services both, within the Company andelsewhere, wherever applicable.
Mr. Dinesh Munot, Mr. Jinendra Munot and Mr. Utkarsh Munot are related to each other.
Annexure II to the Directors Report 2012-13
Conservation of Energy, Technology Absorption, Companies' (Disclosure of particulars inthe Report of Board of Directors) Rules, 1988
A. Conservation of Energy
Automatic power factor controller installed for entire factory to maintain power factorat unity.
Factory shop floor 250W & 150W overhead lamps replaced by 48W LED lamps, whichprovide better illumination and save energy.
Waste water treated and recycled for gardening.
Wind Power Project
7 Windmills of aggregate 6.7 MW capacity generated 9,890,604 units of electricity in2012-13, which was capatively consumed in Company's plant. This covered 80% of the powerrequirement of the Company for the year 2012-13.
Solar Power Project
It has generated 8,519,658 units till 31.03.2013. These units are sold to GUVNL(Gujarat Urja Vikas Nigam Limited) as per the PPA (Power Purchase Agreement) signed withGovernment of Gujarat.
B. Technology Absorption, Research And Development
1) Specific areas in which R & D has been carried out by the Company a.Import substitution. b. Process/ equipment developments. c. Value engineering and valueanalysis (VEVA). d. Up-gradation of existing products to the need of customers. e. Filedpatent for Auto Setting Limiters.
2) Benefits derived as a result of above R & D
The benefits to the Company resulting from the above R &D are manifold.
These benefits have been reflected in terms of: a. Product quality and cost reductionb. Improvement in market share c. Indigenization of various components d. Reduction inforeign exchange outgo
3) Future Plan of Action
Effort is being made to make R & D more result oriented, in improving the designand quality of products and towards cost effective indigenization of components.
Specific areas include development of new products (steering systems).
4) Benefits derived as a result of above efforts a. Improvements inManufacturing methods and quality standards. b. Aiming towards self sufficiency inengineering skills for manufacturing range of steering gears and connected products. c.Development of cost effective, high performance engineering products.
|C. Foreign Exchange Earnings and Outgo|
|a. Earnings in Foreign Exchange||Rs. 9.50 million|
|b. Expenditure in Foreign Exchange||Rs. 4.73 million|
|c. Value of Imports calculated on CIF basis-|
|- Raw Material, Components etc||Rs. 423.74 million|
|- Capital Goods||Rs. 3.67 million|
|For and on behalf of the Board of Directors|
|May 23, 2013||Chairman & Managing Director|
Annexure III to the Directors' Report
1. Company's Philosophy on Corporate Governance:
The Company is fully committed to attainment of the highest levels of transparency,accountability and equity, in all facets of its operations, and in all its interactionswith its shareholders, employees, the government and its customers.
The Company believes that all its operations and actions must serve the underlyinggoals of achieving business excellence and increasing long-term shareholder value.
2. Board of Directors:
The Board of Directors consists of 12 Directors (excluding Alternate Directors) of whom3 are Executive and 9 are Non-executive. The Chairman of the Board is an ExecutiveDirector. The Non-executive
Directors are eminent professionals with experiences in various fields. The Company hasno nominee Director from any bank or financial institution.
The necessary disclosures regarding Committee positions have been made by all theDirectors. None of the Directors on the Board is a Member of more than 10 Committees andChairman of more than 5 Committees across all companies in which they are Directors.
Number of Board Meetings held and the dates on which held
The Board Meetings dates are normally pre-determined. During the year ended on March31, 2013, the Board of Directors had 4 meetings. These were held on May 16, 2012, July 28,2012, October 22, 2012 and January 29, 2013.
The information as specified in Annexure IA to Clause 49 of the Listing Agreementsentered into with BSE Limited is regularly made available to the Board, wheneverapplicable and materially significant, for discussion and consideration.
Details of Composition of the Board, category, attendance of Directors, number of othercommittee memberships are given below:
|Sr. No.||Name of the Director||Category of Directorship||Attendance Particulars|| |
No. of other directorship and committee membership/ chairmanship
|Board Meetings||Last AGM||Other Director- ship #||Committee Member- ship||Committee Chairmanship|
|1||Mr. Dinesh Munot (Chairman and||Executive||4||Yes||11||1||-|
|2||Mr. Jinendra Munot|
|(Jt. Managing Director)||Executive||4||Yes||5||-||-|
|3||Mr. Utkarsh Munot|
|4||Mr. Manish Motwani||Non-Executive, Independent||3||Yes||12||-||-|
|5||Dr. Dinesh Bothra||Non-Executive||3||Yes||8||-||-|
|6||Mr. Ludwig Rapp||Non-Executive||3||No||1||-||-|
|7||Mr. M. L. Rathi||Non-Executive, Independent||3||No||10||-||-|
|8||Dr. Hans Friedrich Collenberg||Non-Executive||1||Yes||3||-||-|
|9||Mr. Shridhar S. Kalmadi||Non-Executive, Independent||3||No||4||-||-|
|10||Mr. Ajinkya Arun Firodia||Non-Executive, Independent||3||Yes||4||-||-|
|11||Mr. Carl Magnus Backlund||Non- Executive||4||Yes||2||-||-|
|12||Mr. Jitendra A. Pandit (appointed w.e.f. 29.01.2013)||Non-Executive, Independent||1||No||-||-||-|
|13||Mr. Klaus Traeder (Alternate Director for Mr. Carl Magnus Backlund)||Non- Executive||Nil||Yes||1||-||-|
|14||Mr. B. S. Iyer||Non-Executive||3||Yes||3||2||-|
|(Alternate Director for Dr. Hans Friedrich Collenberg)|
|15||Mr. D. S. Bomrah (up to 10.08.2012)||Non Executive, Independent||Nil||No||-||-||-|
# Includes Directorship in Private Companies.
Relationship between Directors Inter-se
1. Mr. Dinesh Munot and Mr. Jinendra Munot are brothers.
2. Mr. Dinesh Munot is father of Mr. Utkarsh Munot.
3. Mr. Dinesh Munot is father-in-law of Dr. Dinesh Bothra
4. Mr. Manish Motwani is brother-in-law of Mr. Ajinkya Firodia.
3. Audit Committee:
During the year under review, the following Directors were the members of the AuditCommittee: Members: Mr. Manish Motwani Chairman, Mr. D. S. Bomrah (upto August 10, 2012),Dr. Dinesh Bothra, Mr. M. L. Rathi and Mr. Jitendra A. Pandit (with effect from January29, 2013)
All the members of the Committee are Non-Executive Directors. The role, powers andfunctions of the Audit Committee are as stated in Clause 49 of the Listing Agreement. Mr.Jitendra A. Pandit, who was appointed as a Director of the Company on January 29, 2013,was inducted into the Audit Committee and Remuneration Committee of the Company witheffect from January 29, 2013.
In addition to the members of the Audit Committee, these meetings were attended by theChairman & Managing Director, Chief Financial Officer (CFO), Internal Auditor and theStatutory Auditors of the Company. The Company Secretary acted as the Secretary to theAudit Committee.
The Committee reviews the financial statements before they are placed before the Board.
During the period under review, the Committee met 4 times on May 14, 2012, July 27,2012, October 18, 2012 and January 29, 2013. The attendance record of the members of theAudit Committee is given below:
|Name of the Members||Mr. Manish Motwani||Mr. D. S. Bomrah (up to 10.08.2012)||Mr. M. L. Rathi||Mr. Jitendra A. Pandit (w.e.f. 29.01.2013)|
The Committee is authorized by the Board in the manner as envisaged under Clause 49(II) (C) of the Listing Agreement. The Committee has been assigned tasks as listed underClause 49(II)(D)of the Listing Agreement. The Committee reviews the information as listedunder Clause 49(II)(E) of the Listing Agreement.
The Minutes of the Audit Committee Meetings are noted by the Board of Directors at theBoard Meetings. The Chairman of the Audit Committee was present at the 32nd Annual GeneralMeeting held on July 28, 2012.
4. Remuneration Committee:
During the year under review, the following Directors were the members of theRemuneration Committee: Members: Mr. D. S. Bomrah (upto August 10, 2012), Mr. ManishMotwani, Mr. M. L. Rathi and Mr. Jitendra A. Pandit (with effect from January 29, 2013).
The Remuneration Committee has been constituted to recommend to the Board the amount ofcommission payable to each whole-time Director and periodically review and suggestrevision of the remuneration package of the Managing/ Whole time Directors, based onperformance
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Dinesh Munot , Chairman & Managing Director
Jinendra Munot , Joint Managing Director
Utkarsh Munot , Executive Director
Manish Motwani , Director
Company Head Office / Quarters:
Gat No 1242 & 1244,
Vadu Budruk Shirur Taluka,
Phone : Maharashtra-91-2137-252223/252433/252459 / Maharashtra-
Fax : Maharashtra-91-2137-252302 / Maharashtra-
E-mail : email@example.com
Web : http://www.zfindia.com
Link Intime India Pvt Ltd
BNo 202 Akshay Compl,Off Dhole Patil Road,Near Ganesh Mandir ,Pune-411001
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