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Z F Steering Gear (India) Ltd

BSE: 505163 | NSE: ZFSTEERING ISIN: INE116C01012
Market Cap: [Rs.Cr.] 1,531.02 Face Value: [Rs.] 10
Industry: Auto Ancillaries

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Director's Report

To the Members,

The Directors are pleased to present the 34th Annual Report and Audited Accounts for the year ended March 31, 2014.

Financial Results (Rs. in Million)
2013-2014 2012-13
Sales (net) and other Income 2984.3 3243.7
Profit before depreciation and tax 659.1 721.4
Depreciation 210.4 231.4
Provision for tax 307.7 233.8
Net Profit 141.0 256.2
Balance Brought Forward from
Previous year 22.1 12.6
Amount available for appropriation 163.1 268.8
General Reserve 70.0 161.8
Proposed Dividend and Tax thereon 74.3 84.9
Balance Carried Forward 18.8 22.1
163.1 268.8


Your Directors are pleased to recommend a dividend of Rs. 7 per share for the year ended March 31, 2014.

Management Discussion and Analysis

Financial Year 2013-14 was yet another challenging year for the Indian economy. The investment scenario was weighed down due to many factors. The uncertain macro-economic environment affected the automobile industry, too. The data published by SIAM (Society of Indian Automobile Manufacturers) indicate that the total sales of Commercial Vehicles for 2013-14 were down by 19% compared to the year before. The Medium and Heavy Commercial Vehicles recorded 22% dip in sales. Gravity of the situation can be gauged from the fact that in the financial year 2012-13, too, Medium and Heavy Commercial Vehicles were in negative territory year-on-year by 26%. Hence, this is the second year in a row that Commercial Vehicles sales are down compared to their corresponding previous year.

The recent cut in excise-duty in the Interim Budget, despite being passed on to the customers, did little to lift sales of automobiles in the country. This shows that the economic slowdown and higher interest rates continue to weigh high on demand. Truck fleet owners have remained highly cautious in adding new fleet despite record discounts, minimum margin money on the back of weak economic indicators, lower GDP and uncertain investment climate. Commercial Vehicle sector was also hurt due to lack of mining activities and stalled infrastructure projects. There has been no respite from high inflation, rising fuel price and the unfavourable interest-rate regime that is dampening customer interest in a weak economy.

Keeping the above challenging economic conditions in perspective, sales-performance of Power Steering can be termed as satisfactory. Sales-performance of Mechanical Steering was impressive in view of growth in Tractor numbers, thanks to good monsoon. Throughout the year, due to weak rupee, landed cost of Rack & Pinion Power Steering became higher, thereby losing its price-competitiveness and sales numbers.

Review of Operations

Operating Results of the Company

Auto Components

Comparative quantitative figures of Sales are as under:

Type 2013-14 2012-13 Growth
Power Steering 162,437 178,192 -8.84%
Mechanical Steering 185,676 152,641 21.64%
Rack & Pinion Power
Steering for Car 3,019 16,930 -82.17%

Sales, in value terms, was down by 8.42%.

Renewable Energy -


Financial Year 2013-14 was the second year of full year operations for your Company's 5 MW Solar Power Project at Gujarat Solar Park, Charnka Village, District Patan (Kutch) Gujarat. As you may be aware, the electricity generated is purchased by Gujarat Urja Vikas Nigam Limited (GUVNL), Government of Gujarat. The Plant generated 8.50 million Units of Electricity with sales-revenue of Rs. 95.11 million in the Financial Year 2013-14.

Wind Mills

Seven Wind Turbine Machines, owned and operated by the Company, located in districts of Satara and Ahmednagar, having aggregate capacity of 6.7 MW are mainly used for captive power consumption. Total 9.72 million units were generated in the financial year 2013-14. The 8.67 million Units used as captive consumption almost accounted for entire consumption of power of the Company's factory. The Company also sold 1.04 million units to Maharashtra Electricity Board with revenue of Rs.2.62 Million.

Other Income

Income received on financial-investments, held by the Company, was Rs. 59.6 million, lower compared to Rs. 103.3 million for the financial year 2012-13, in view of lackluster financial markets for major part of the year. It should also be noted that more than 50% of the Investment portfolio is allocated as the Company's contribution in the Joint-Venture Company, which is yet to yield any returns.


Finance cost was Rs. 6.9 million against Rs. 36.4 million, as the Company had prepaid the Term Loan availed for the Solar Project by the end of financial year 2012-13.


Profit before Tax (PBT) for the year was Rs. 449 million against Rs. 490 million in the preceding year, mainly due to dip in Other Income. Despite drop in Sales by 8% and Other Income (from Investments) down by almost 42%, PBT has been impacted only by 9%, due to strict cost-cutting and austerity measures undertaken at all fronts.

Earnings Per Share is Rs.15.55 for the year ended March 31, 2014.

Outlook/ Opportunities

We expect demand outlook to continue to remain weak for Commercial Vehicles, primarily due to the uncertain macroeconomic environment. In the long run though, expected easing of interest rates, following expected tapering of inflation, will revive demand and would be the key driver for volume growth. While the near term environment continues to remain challenging for the automotive sector, we believe the long-term structural growth drivers for the industry, such as GDP growth (leading to increasing affluence of rural and urban consumers), favorable demographics, low penetration levels, entry of global players and easy availability of finance, remain intact.

A new category of four-wheelers, 'Quadricycle' (alternative to auto rickshaw) will be allowed to ply in cities across the country, from October 2014. Notification to this effect has been issued by the Government. You will be pleased to know that your Company's Research and Development team has successfully developed a Rack and Pinion manual steering gear for the Quadricycle, which has been approved by the leading prospective Quadricycle- Manufacturer.

Joint Venture (JV)

ZF Lenksysteme India Private Limited (Joint Venture with ZF Lenksysteme GmbH, Germany) (hereinafter 'JV Company')

After the incorporation in the year 2007 and FIPB (Foreign Investment Promotion Board)'s approval, the JV Company set up an Assembly and manufacture of Steering Gears for Commercial Vehicles, situate at Village Phulgaon, Alandi-Markal Road, Dist. Pune. The said plant was inaugurated on April 26, 2012. They have recently set-up an assembly-line for manufacture of Electronic Power Steering Systems for Passenger Cars.

The JV Company has reported a turnover of Rs. 184 million and incurred a loss of Rs. 479 million for Financial Year 2013-14. The said Company has incurred heavy capital expenditure and other expenses. The JV Company is in a process to acquire License and Know-how from ZF Lenksysteme, GmbH.

In the financial year under review, additional capital, by way of Rights issue, has been raised by the JV Company. Consequently, the paid-up capital of the JV Company now stands at Rs. 2145 million and your Company holds 26% of the total paid up capital of the JV Company. Total investment of the Company in the JV Company stands at Rs. 557.7 million. The Company, as per the contractual obligations undertaken by the Company continues to support the JV Company and invested the additional equity capital in the JV Company. The JV Company plans to further raise additional capital, by way of Rights issue, in the current financial year.

Expansion and Capital Expenditure

Steering Gear Systems

The Company is in a process to gradually enhance its installed capacity of Power Steering Gears and Mechanical Steering Gears and modernize its plant at Vadu Budruk, mainly from internal accruals.

Renewable Energy - Solar Power Project

The Company is exploring the avenues of further investments in the Solar Power by way of new project/ expanding capacity to the existing project.

Internal Control System

The Internal Control Systems of the Company is responsible for the financial reporting, assets, adherence to management policies and to conduct ethical conduct within the organization. The Company has independent Internal Auditors for conducting internal audits of the financial reporting and operations of the Company. The Company's existing system of internal controls is commensurate with its size and nature of business. Company's internal control ensures reliable financial reporting, better utilization of Company's resources, effectiveness of operations, compliance with the legal obligations and the Company policies and procedures.

The Company's Audit Committee also regularly reviews the financial management reports and data, and interacts with the External and Internal Auditors for ascertaining the 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 of employees. During the year, training programs (17 external and 11 internal) covering over 375.5 Training man-days were covered. It is expected that the customized development programmes, suitable to individual employees, to continue for the next few years. The total number of employees as on March 31, 2014 was 949.

Industrial relations at the Company's plant continued to be cordial and peaceful.

Cautionary statement

The above Management Discussion and Analysis Report is a forward looking Statement based on the Company's projections, estimates and perceptions. These statements reflect the Company's current views with respect to the future events and are subject to risks and uncertainties. Actual results may vary materially from those projected here.

Fixed Deposits

Your Company has not accepted any fixed deposit from public.

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 of Board 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. 385,762/- during the year ended March 31, 2014 to the Investor Education and Protection Fund (IEPF) established by the Central Government, in compliance with Section 205C of the Companies Act, 1956. The said amount represents unclaimed dividend lying with the Company for a period of 7 years from its date of payment.

Unclaimed Dividend for the Financial Year 2007-08 is due for transfer to the IEPF on August 28, 2015.


Dr. Hans Friedrich Collenberg relinquished his office as Director of the Company with effect from June 30, 2013. Dr. Dinesh Bothra resigned as Director of the Company with effect from August 19, 2013. The Board places on record its appreciation for the services rendered by Dr. Collenberg and Dr. Bothra.

At the 34th Annual General Meeting, Mr. Carl Magnus Backlund retires by rotation and being eligible, offers himself for reappointment.

The Companies Act, 2013 provides for appointment of independent directors. Sub-section (10) of Section 149 of the Companies Act, 2013 (effective April 1, 2014) provides that independent directors shall hold office for a term of up to five consecutive years on the Board of a company.

All our non-executive (independent) directors were appointed as directors liable to retire by rotation under the provisions of the erstwhile Companies Act, 1956. The Board of Directors has been advised that non-executive (independent) directors so appointed would continue to serve the term that was ascertained at the time of appointment as per the resolutions pursuant to which they were appointed. Therefore, only Mr. Manish Motwani, non-executive (independent) director, who will complete his present term at the ensuing Annual General Meeting of the Company in July 2014, being eligible and seeking reappointment, be considered by the shareholders for reappointment for a term of up to five consecutive years. Other Non-executive (independence) directors, who do not complete their term at the ensuing Annual General Meeting, will continue to hold office till the expiry of their term (based on retirement period calculation) and thereafter would be eligible for reappointment for a fixed term in accordance with the Companies Act, 2013.

Profile of Mr. Backlund and Mr. Motwani, as required by Clause 49 of the Listing Agreement is provided in the Notice convening the Annual General Meeting.

Directors' Responsibility Statement

Pursuant to the requirement under Section 217 (2AA) of the Companies Act, 1956 with respect to Directors' Responsibility Statement, it is hereby confirmed:

i) That in the preparation of the accounts for the financial year ended March 31, 2014 the applicable Accounting Standards have been followed along with proper explanation relating to material departures;

ii) That the Directors have selected such Accounting Policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2014 and of 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 of adequate accounting records in accordance with the provisions of the Companies Act, 1956 for safeguarding the assets of the Company and for preventing and detecting fraud and other 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 Corporate Governance is given in Annexure - III along with the Auditors' Certificate on its compliance, which forms part of this report.


M/s. MGM and Company, Chartered Accountants, retire as Statutory Auditors of the Company at the ensuing Annual General Meeting and offer themselves for re-appointment. A Certificate from them has been received to the effect that their reappointment as Statutory Auditors of the Company, if made, would be within the limits prescribed under Section 139 of the Companies Act, 2013.

Cost Auditors

The Board of Directors have appointed M/s Joshi Apte & Associates, Cost Accountants, for conducting the Statutory audit of the cost accounting records of the Company, for the financial year 2014-15. Cost Audit Report for the financial year 2013-14 will be filed within the prescribed time-limit.

Particulars of Employees

Information as required under Section 217(2A) of the Companies Act, 1956 and the Rules framed there under is attached as Annexure I.


The Board of Directors takes this opportunity to express their appreciation for the assistance and co-operation received from Banks, Government Authorities, Customers, Suppliers, Members, Collaborators and other Business Associates.

The Board also acknowledges the understanding and support shown by all its employees.

For and on behalf of the Board of Directors
Pune Dinesh Munot
May 21, 2014 Chairman & Managing Director

Annexure I to the Directors' Report 2013-14

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, 2014.

A. Name of the employees employed throughout the financial year and who were in receipt 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):

Last Employment held

Name Age (Years) Designation Total Remuneration Received (Rs.) Qualification Date of Commen- -cement of Employment Experience Name of the Company Designation
Mr. Dinesh Munot 66 Chairman & Managing Director 23,997,132 B.E.(Ele.) M.I.E. 01.07.1984 40 Kinetic Engg. Ltd. Executive Director
Mr. Jinendra Munot 62 Jt. Managing Director 14,382,673 B.E.(Mech.) M.S.(Mech.) U.S.A, AMIE (India) 01.02.1986


Bajaj Tempo Ltd. Senior Manager (Projects)
Mr. Utkarsh Munot 33 Executive Director 8,921,791 B.E. (Mechanical & Mfg. Engg.) U.S.A. Diploma in Business Administration, U.S.A. 14.05.2004 11

B. Name of the employees employed for the part of the financial year and who were in 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): NIL.


1. All appointments are contractual. Other terms and conditions are as per the Rules of the Company.

2. Remuneration above includes salary, commission, medical expenses, allowances, perquisites (valued as per Income Tax Rules) and the Company's contribution to Provident Fund, 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 and elsewhere, wherever applicable.

5. Mr. Dinesh Munot, Mr. Jinendra Munot and Mr. Utkarsh Munot are related to each other.

Annexure II to the Directors' Report 2013-14

Conservation of Energy, Technology Absorption, Companies' (Disclosure of particulars in the Report of Board of Directors) Rules, 1988

A. Conservation of Energy

• Automatic power factor controller installed for entire factory to maintain power factor at unity.

• Factory shop floor 250 W & 150 W overhead lamps replaced by 48W LED lamps, which provide better illumination and save energy.

• Waste water treated and recycled for gardening.

Wind Power Project

5 Windmills capively used, generated 8.67 millions units. These units catered to the plants total requirement of power.

Other 2 Windmills, generated 1.04 million units, which were sold to Maharashtra State Electricity Board (MSEB).

Solar Power Project

It has generated 8.50 million units till 31.03.2014. These units are sold to GUVNL (Gujarat Urja Vikas Nigam Limited) as per the PPA (Power Purchase Agreement) signed with Government 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 value analysis (VEVA).

d. Up-gradation of existing products to the need of customers.

e. Filed patent 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 reduction

b. Improvement in market share

c. Indigenization of various components

d. Reduction in foreign exchange outgo

3) Future Plan of Action

Effort is being made to make R & D more result oriented, in improving the design and 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 in Manufacturing methods and quality standards.

b. Aiming towards self sufficiency in engineering 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. 31.36 million
b. Expenditure in Foreign Exchange Rs. 6.20 million
c. Value of Imports calculated on CIF basis-
- Raw Material, Components etc Rs. 267.80 million
- Capital Goods Rs. NIL


For and on behalf of the Board of Directors
Pune Dinesh Munot
May 21, 2014 Chairman & Managing Director
Futures & Options Quote
Future Data Not present
Key Information

Key Executives:

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 : satish.mehta@zfindia.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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