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The Board of Directors are pleased to present Thirtieth Annual Report along with the audited financial statements for the financial year ended March 31,2018.
The financial performance of the Company on standalone basis for the year ended March 31,2018 is summarized below:
(Rs. in Lacs except EPS)
|Revenue from Operations||56,933||53,191|
|Profit Before Depreciation, Interest, Exceptional Items and Tax (PBDIT)||7,511||6,196|
|Depreciation & Amortization Expense||526||528|
|Profit before Interest, Exceptional Items and Tax||6,985||5,668|
|Profit before Tax (PBT)||6,943||5,610|
|Profit after Tax (PAT)||4,619||3,705|
|Other Comprehensive Income||18||11|
|Total Comprehensive Income for the period||4,637||3,716|
|Opening Balance in Profit and Loss Account||14,702||12,746|
|Tax on Dividend||190||235|
|Transfer to General Reserve||-||373|
|Balance carried to Balance Sheet as Retained Earnings||18,216||14,702|
|Earnings per Share (Rs.)||21.05||16.88|
FINANCIAL REVIEW AND HIGHLIGHTS
The Company has performed well during the financial year 2017-18 and reached to the new scale of business operations. The Highlights of the Companys financial performance (Standalone) for the year ended March 31,2018 are as under:
The Company has sold 42,744 vehicles in FY 2017-18 in compare to 38,795 in previous year. Thus, the Company has achieved the growth of double digit i.e. 10.18% as committed.
The Company has achieved highest ever turnover in FY 2017-18 i.e. Rs.55,122 Lacs
Revenue from operations increased by 7.03% to Rs.56,933 Lacs (Previous year Rs.53,191 Lacs)
Export revenue increased by 53.45% to Rs.4,005 Lacs (Previous year Rs.2,610 Lacs)
PBDIT increased by 21.22 % to Rs.7,511 Lacs (Previous year Rs.6,196 Lacs)
Profit before tax (PBT) increased by 23.77% to Rs.6,943 Lacs (Previous year Rs.5,610 Lacs)
Net Profit (PAT) increased by 24.68% to Rs.4,619 Lacs (Previous year Rs.3,705 Lacs)
The highlights of consolidated results with performance of associate and subsidiary company are described in this report separately.
During the financial year 2017-18, the Board of Directors of the Company declared and paid an interim dividend of Rs.2.75 (Rupees two and paisa Seventy Five Only) (55%) per equity share of the face value of Rs.5 (Rupees Five Only) each in the month of December 2017. In addition to that, your Directors recommend payment of Rs.2.50 (Rupees Two and Fifty Paisa Only) (50%) per equity share of the face value of Rs.5 (Rupee Five Only) each as final dividend for the financial year 2017-18, subject to the approval of the shareholders at the ensuing AGM. If approved, the total dividend (interim plus final dividend) for the financial year 2017-18 will be Rs.5.25 (Rupees Five
and Twenty Five Paisa only) (105%) per equity share of the face value of Rs.5 (Rupees Five Only) each as against the total dividend of Rs.4.25 (Rupees Four and paisa Twenty Five Only) (85%) per equity share of the face value of Rs.5 (Rupees Five Only) paid for the previous financial year 2016-17.
The Company has maintained its dividend payout ratio for the year inclusive of dividend distribution tax at 30%. The total dividend (interim plus final dividend) pay-out (including dividend distribution tax) for the financial year 2017-18 will be Rs.1387 Lacs.
The final dividend, if declared will be paid to the shareholders within thirty days from the date of AGM.
CONSOLIDATED FINANCIAL STATEMENTS
As per Regulation 33 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (hereinafter referred to as "Listing Regulations") and applicable provisions of the Companies Act, 2013 read with the Rules issued thereunder, the Consolidated Financial Statements of the Company for the financial year 2017-18 have been prepared in compliance with applicable Accounting Standards and on the basis of audited financial statements of the Company, its subsidiary and associate company, as approved by the respective Board of Directors.
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES
Pursuant to the provisions of Section 129(3) of the Act read with Rule 5 of the Companies (Accounts) Rules, 2014, a statement containing salient features of the financial statements of the Companys subsidiaries, Associates and Joint Ventures in Form AOC-1 is attached to this report as Annexure [A].
Khushbu Auto Finance Limited
The Company is having an Associate Company namely, Khushbu Auto Finance Limited ("KAFL"), a Non-Banking Finance Company categorized as Asset Finance Company ("AFC"). KAFL, registered with RBI as Asset Finance Company (AFC) is primarily in the business of financing of automobile vehicles.
During the financial year 2017-18, KAFL disbursed loan of Rs.10,044 Lacs to 6050 customers. The Asset Under Management (AUM) of the Company as on March 31,2018 was Rs.11470 Lacs in compare to Rs.3299 Lacs as on March 31, 2017. During FY 2017-18, the Company has generated operational revenue of Rs.1549 Lacs in compare to last year of Rs.286 Lacs. The Profit before Tax of the Company converts in positive numbers from FY 2017-18 i.e. Rs.474 Lacs in compare to loss of Rs.61 Lacs in previous year. The Company
has earned net profit after tax of Rs.861 Lacs in the year under review. (The financial figures provided here are as per I-GAAP and not as per Ind-AS though the consolidation of accounts has been done as per Ind-AS.)
KAFL is currently focusing on establishing the network and infrastructure through Direct Branch Operations as well as through Income Distribution Partner (IDP) and tie-up with Dealers for collection. KAFL has presence in various locations in state of Gujarat, Haryana, Andhra Pradesh, Telangana and Karnataka through Direct Branch Operations/ IDPs.
To meet with the requirements of working capital, KAFL had increased equity share capital of Rs.18 Crores by right issue of 90 lacs equity shares of face value of Rs.10/- at a premium of Rs.10/- each. KAFL had also secured conventional working capital finance facilities from various Banks/ NBFCs for a total amount of Rs.150 Crores as on March 31, 2018. Atul Auto Limited has provided the corporate guarantee for repayment of these facilities to the Lenders.
KAFL had incorporated a Wholly Owned Subsidiary namely Sanand Home Finance Limited on June 27, 2017 with an object to commence the business of housing finance. KAFL has invested Rs.5 Lacs as initial equity share capital in Sanand Home Finance Limited. The business will be commenced after obtaining the required license from National Housing Bank (NHB).
Atul Green Automotive Private Limited
Atul Auto Limited has incorporated a Wholly Owned Subsidiary namely Atul Green Automotive Private Limited with an object of exploring opportunities in providing e-mobility and green energy. The Registrar of Companies, Gujarat, had issued the Certificate of Incorporation on February 12, 2018. The Company has invested Rs.1 Lac as an initial equity share capital in the Company. This Company is planning to commence its business in financial year 2018-19.
The Company does not have any Joint Venture as on March 31,2018.
LOANS, GUARANTEES AND INVESTMENTS
During the year under Report, the Company has not given any loans or provided security to any person or body corporate beyond the limit as prescribed under Section 186 of the Companies Act, 2013.
The Company has provided the corporate guarantee of total amounting to Rs.150 Crores in favour of below Banks/ Financial Institutions guarantying the repayment of credit facilities in case of default by Khushbu Auto Finance Limited. Khushbu Auto Finance Limited will utilize the money borrowed for the purpose of onward lending to their customers:
|Sr No||Name of Bank/ Financial Institutions||
Guarantee Given (Rs. In Lacs)
Utilization of Credit Facilities by KAFL as on March 31, 2018
|4||Clix Finance India Private Limited||5000||2500|
During the year, the Company has invested following amounts in equity share capital of the Company:
|Sr No||Name of Company||Type of Company||Investment (Rs. in Lacs)||Nature of Investment|
|1||Khushbu Auto Finance Limited||Associate||5400||Subscribed 27 Lacs right equity shares of face value of Rs.10/- each at a premium of Rs.10/-|
|2||Atul Green Automotive Private Limited||Wholly Owned Subsidiary||1||Initial subscription money for 10,000 equity shares of Rs.10/- each on incorporation of the Company|
We continue to be debt-free company and maintain sufficient cash to meet our strategic objectives. We understand that the liquidity in the Balance Sheet has to balance between earning adequate returns and the need to cover financial and business risks. Liquidity enables us to make a rapid shift in direction, if there is a market demand. We believe that our working capital is sufficient to meet our current requirements. As on March 31,2018 we had liquid assets of Rs.6181 lacs as against Rs. 5668 lacs at the previous year end. These funds comprise cash, bank balance and investment in liquid mutual funds.
The Company has made the expenditure for plant and building at Bhayla, Bavla near Ahmedabad for future expansion. The Company incurred total capital expenditure Rs.685 Lacs (including Capital- work-in progress of Rs.220 Lacs) whereas in previous year, it was Rs.821 Lacs (including Capital-work-in progress of Rs.30 Lacs). The entire capital expenditure was funded out of internal accruals only.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Independent Directors of Company are not liable to retire by rotation. Mr. Mahendra J Patel, Whole-time Director & CFO is liable to retire by rotation at the ensuing AGM pursuant to the provisions of Section 152 of the Companies Act, 2013 read with the Companies (Appointment and Qualification of Directors) Rules, 2014 and the Articles of Association of your Company and being eligible has offered himself for reappointment.
Ms. Margie S Parikh has been appointed as an Independent Director of the Company at Twenty Seventh Annual General Meeting of the Company for an initial period of 3 (Three) years with effect from August 31,2015 and this term expires on August 30, 2018. On the basis of recommendations of the Nomination and Remuneration Committee, the Board of Directors has decided to extend her term for two years more as permissible under the Act. This is subject to approval of the shareholders at the ensuing Annual General Meeting.
The terms of office of all three Executive Directors of the Company namely Mr. J J Chandra, Mr. Mahendra J Patel and Mr. Niraj J Chandra are expiring in coming months. Considering their performance, the Nomination and Remuneration Committee has recommended the Board to re-appoint them for further three years and also to revise the remuneration with performance of the Company. The Board has decided to do so with approval of the shareholders in ensuing Annual General Meeting
All the directors of the Company have confirmed that they are not disqualified from being appointed as directors in terms of Section 164 of the Companies Act, 2013. The Company has received declarations from all the Independent Directors confirming that they meet the criteria of independence as prescribed under 149(6) of the Companies Act, 2013 read with Rules issued there under as well as Regulation 16(1)(b) of the Listing Regulations (including any statutory modification(s) or re-enactment(s) for the time being in force).
The details of policy on Directors Appointment, its remuneration including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under subsection (3) of section 178; and performance evaluation has been described in detail in the report on Corporate Governance of the Company which forms and integral part of the report.
There was no change in the Key Managerial Personnel during the year.
NUMBERS OF MEETINGS OF BOARD
The Board met five times during financial year 2017-18, the details of which are provided in the Corporate Governance Report. The gap between any two meetings was within the period prescribed by the Companies Act, 2013 and the SEBI Listing Regulation.
COMMITTEES OF THE BOARD
The Board of Directors has the following Committees:
(a) Audit Committee
(b) Nomination and Remuneration Committee
(c) Stakeholders Relationship Committee
(d) Corporate Social Responsibility Committee
The details of the Committees along with their composition, number of meetings and attendance at the meetings are provided in the Corporate Governance Report.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the provisions of Section 134 (5) of the Companies Act, 2013, the Directors, based on the information and representations received from the operating management confirm that:
a) in the preparation of the annual accounts for the financial year ended March 31, 2018, the applicable accounting standards had been followed and there are no material departures from the same;
b) they 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 March 31,2018 and of the profit and loss of the company for that period;
c) they have taken proper and sufficient care to the best of their knowledge and ability for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;
d) they have prepared the annual accounts on a going concern basis; and
e) they have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and are operating effectively during the financial year ended March 31,2018.
f) they had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively throughout the financial year ended March 31,2018.
MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis 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.
In compliance with Regulation 34 of the Listing Regulations, a separate report on Corporate Governance along with certificate from the Auditors on its compliance forms an integral part of this report.
AUDITORS AND AUDITORS REPORT Statutory Auditors
At last Annual General Meeting, M/s. Kamlesh Rathod & Associates, Chartered Accountants (ICAI Firm Registration No. 117930W) have been appointed as Statutory Auditors of the Company from the conclusion of last annual general meeting until the conclusion of the Thirty Forth annual general meeting of the Company.
In accordance with the Companies Amendment Act, 2017, enforced on May 7, 2018 by the Ministry of Corporate Affairs, the appointment of Statutory Auditors is not required to be ratified at every Annual General Meeting.
M/s. Kamlesh Rathod & Associates, Chartered Accountants (ICAI Firm Registration No. 117930W) have confirmed their eligibility and qualification required under Section 139, 141 and other applicable provisions of the Companies Act, 2013 and Rules issued thereunder (including any statutory modification(s) or re-enactment(s) thereof for the time being in force).
The Auditors Report for the financial year ended March 31,2018 on the financial statements (Standalone and consolidated) of the Company is a part of Annual Report. The auditors report does not contain any qualification, reservation or adverse remark.
The Board of Directors of the Company has appointed CS Bunty Hudda (CP No. 11560) to undertake the Secretarial Audit of the Company for the financial year 2017-18. The Secretarial Audit Report for the financial year ended March 31, 2018 is set out in Annexure [B] to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
The Company is not required to get its cost records audited for the financial year 2017-18.
REPORTING OF FRAUDS BY AUDITORS
During the year under review, the Statutory Auditors and Secretarial Auditor have not reported any instances of frauds committed in the Company by its Officers or Employees to the Audit Committee under section 143(12) of the Companies Act, 2013, details of which needs to be mentioned in this Report.
INTERNAL FINANCIAL CONTROLS
The Board has adopted policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to the Companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial disclosures.
RELATED PARTY TRANSACTIONS
All transactions entered with Related Parties for the year under review were on arms length basis and in the ordinary course of business and that the provisions of Section 188 of the Companies Act, 2013 and the Rules made thereunder are not attracted. Thus, disclosure in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 is not required. Further, there is no material transaction with any related party during the year under review. The Company has developed a framework through Standard Operating Procedures for the purpose of identification and monitoring of such Related Party Transactions.
All transactions with related parties were reviewed and approved by the Audit Committee and are in accordance with the Policy on Related Party Transactions formulated by the Company. There are no materially significant related party transactions that may have potential conflict with interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee as also to the Board for approval. Omnibus approval of the Audit Committee was obtained for transactions which are of repetitive nature. Transactions entered into pursuant to omnibus approval are audited by the Audit Committee and a statement giving details of all Related Party Transactions are placed before the Audit Committee and the Board for review and approval on a quarterly basis.
The details of the related party transactions as per Indian Accounting Standards (IND AS) - 24 are set out in Note 35 to the Standalone Financial Statements of the Company.
EXTRACT OF THE ANNUAL RETURN
The details forming part of the extract of the Annual Return as on March 31,2018 in Form MGT - 9 in accordance with Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, are set out in Annexure [C] to this report.
EMPLOYEE AND RELATED DISCLOSURES
The remuneration paid to the Directors is in accordance with the Nomination and Remuneration Policy formulated in accordance with Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations (including any statutory modification(s) or re- enactment(s) for the time being in force).
Except Managing Director and Whole-time Directors, there is no employee in the Company who have been paid the remuneration in excess of the limit specified in rule 5(2)(i) and (ii) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014.
Details of employee as per Rule 5(2)(iii) & 5(3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are available at the Registered Office of the Company during working hours, 21 days before the Annual General Meeting and shall be made available to any Shareholder on request.
Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report as Annexure [D].
CORPORATE SOCIAL RESPONSIBILITY
Your Company has always laid emphasis on progress with social commitment. We believe strongly in our core values of empowerment and betterment of not only the employees but also our communities. Following this principle the Company had laid the foundation of a comprehensive approach towards promoting and facilitating various aspects of our surrounding communities.
The Company has undertaken projects in the area of promoting education, promoting health care, ensuring environment sustainability, eradicating hunger and poverty etc. These projects are in accordance with Schedule VII of the Companies Act, 2013 and the Companys CSR policy. The Report on CSR activities as required under the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed as Annexure [E] and forms an integral part of this Report.
The Board has approved a policy for Corporate Social Responsibility and same has been uploaded on the website.
The Company has adopted a Whistle Blower Policy, as part of vigil mechanism to provide appropriate avenues to the Directors and employees to bring to the attention of the management any issue which is perceived to be in violation of or in conflict with the Internal Rules/ Code of Conduct of the Company. The details of the same have been described in more depth in Corporate Governance Report.
Any incidents that are reported are investigated and suitable action taken in line with the whistle blower policy. The Whistleblower Policy is also available on your Companys website.
The CRISIL has reaffirmed his rating as CRISIL "A" with stable outlook for the cash credit facility of Rs.15 Crores approved to the Company by IDBI Bank Limited. The rating continues to reflect the Companys above-average financial risk profile, marked by low gearing, above average debt protection metrics, improving market share, established distribution network and efficient working capital management.
CONSERVATION OF ENERGY, RESEARCH AND DEVELOPMENT, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars of conservation of energy, research and development, technology absorption and foreign exchange earnings and outgo in terms of Section 134 of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014 for the year ended March 31,2018 are annexed to this report as Annexure [F].
Risk management is embedded in your Companys operating framework. Your Company believes that managing risks helps in maximizing returns. The Companys approach to addressing business risks is comprehensive and includes periodic review of such risks and a framework for mitigating controls and reporting mechanism of such risks. The risk management framework is reviewed periodically by the Board and the Audit Committee.
Some of the risks that the Company is exposed to are: Financial Risk, Commodity Price Risk, Regulatory Risk, Human Resource Risk, Strategic Risk etc.
SECRETARIAL STANDARDS OF ICSI
Pursuant to the approval given on April 10, 2015 by the Central Government to the Secretarial Standards specified by the Institute of Company Secretaries of India (ICSI), the Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS- 2) came into effect from July 1,2015. The Company is in compliance with the same.
INDIAN ACCOUNTING STANDARDS
The Company adopted Indian Accounting Standards (Ind AS) from April 1, 2017. Accordingly, the financial statements have been prepared in accordance with Ind AS as per the Companies (Indian Accounting Standards) Rules, 2015 as amended and notified under section 133 of the Act and other relevant provisions of the Act.
Few statutory disclosures the Company are required to be disclosed are as under:
The paid up Equity Share Capital as at March 31,2018 stood at Rs.10.97 Crore. During the year under review, the Company has not issued shares with differential voting rights nor has granted any stock options or sweat equity. As on March 31,2018, none of the Directors of the Company hold instruments convertible into equity shares of the Company.
During the year under review, your Company has not accepted any deposit within the meaning of Sections 73 and 74 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 (including any statutory modification(s) or re-enactment(s) for the time being in force).
The Company has not paid any commission to any of its Directors and hence, provision of disclosure of commission paid to any Director as mentioned in Section 197(14) is not applicable.
The Managing Director of the Company has not received any remuneration or commission from any of Companies subsidiary;
There has been no instance of any revision in the Boards Report or the financial statement, hence disclosure under Section 131(1) of the Act.
During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Companys operations in future.
There have been no material changes /commitments, affecting the financial position of the company which have occurred between the end of the financial year of the company to which the financial statements relate and the date of the report
Your Directors wish to convey their gratitude and place on record their appreciation for all the employees at all levels for their hard work, solidarity, cooperation and dedication during the year.
Your Directors sincerely convey their appreciation to customers, shareholders, vendors, bankers, business associates, regulatory and government authorities for their continued support.
For and on behalf of the Board of Atul Auto Limited
(J J Chandra)
Chairman and Managing Director [DIN: 00057722]
Shapar (Dist. Rajkot)
May 19, 2018