Autoline Industries Ltd Directors Report.
Your Directors are pleased to present 23rd Directors Report on the business and operations of your Companytogether with the Audited Financial Statements for theyear ended March 31, 2019.
The financial highlights for the year under review compared to the previous financial year are given below: ( In Lakhs except EPS data)
|Earnings before Interest,|
|Depreciation, Tax & Amortization EBIDTA Less: Finance Cost||3741.30||3667.21||3752.32||3686.03|
|Less: Depreciation & amortization expenses||2122.17||2224.88||2123.28||2225.98|
|Add: Exceptional items||4398.05||0.00||4389.05||0.00|
|Pro t Before Tax||402.51||(5132.87)||(488.27)||(5225.54)|
|Pro t After Tax (PAT)||402.51||(5132.87)||(494.84)||(5237.80)|
|Pro t Attributable to group||(386.61)||(5134.80)||(444.92)||(5186.40)|
|Earnings per Share||(1.89)||(28.46)||(2.32)||(29.05)|
|(Basic) (in )|
|Earnings per Share||(1.88)||(28.45)||(2.32)||(29.03)|
|(Diluted) (in )|
PERFORMANCE REVIEW (CONSOLIDATED BASIS)
Revenue from operations increased by 14.48%: 45213 Lakhs (Previous Year 39499 Lakhs).
Operating EBIDTA (Earnings before Interest, financial Charges, Depreciation, Tax & Amortization) before exceptional items increased by 44.11%: 989 (Previous Year 686 Lakhs).
Net loss before exceptional items reduced by 6.59%: 4893 Lakhs (Previous Year 5238 Lakhs)
Net loss after exceptional items reduced by 90.55% : 494.84 (Previous Year 5237.80 Lakhs)
Since the Company incurred loss during the year under review the Company does not propose to transfer any amount to reserve.
The Company has registered 17.58% growth in standalone revenue from operation during the year under review with sale turnover of 45209 lakhs as compared to previous year of 38450 lakhs mainly due to increase in orders of Tata Motors Ltd and Non- TML customers. The Company recorded net loss of Rs. 4801 lakhs before the income from exceptional items against the previous years loss of 5133 lakhs. The net loss of the
Company decreased by 6.46% because of the rise in sales volume and the execution of various cost cutting measures in the Company which resulted in reduction of Employee Costs and other expenses with respect to the sales of the corresponding years. The Net loss after the exceptional items reduced substantial to 403 lakhs against the previous years loss of 5133 lakhs. The income from exceptional items of 4398.05 lakhs comprises the additional VAT subsidy claim amount of 4460.57 lakhs sanctioned by the Government of Maharashtra as reduced by the payment made of 62.52 lakhs towards TDS compounding fees.
In view of losses incurred during the year under review, the Board of Directors do not recommend dividend for the financial year 2018-19. No dividend was declared in the previous year.
STATE OF THE COMPANY S AFFAIRS AND BUSINESS OVERVIEW
Your Company is one of the largest automotive sheet metal components manufacturer in India and engages inproduction of Heavy Sheet Metal Components & Assemblies, Exhaust Systems, Pedal System, Door Assemblies, Load body, Door hinges & Skin panels etc. and supply to OEMs directly. Your Company is focused on optimum utilization of available infrastructure and cost cutting measures such as manpower optimization, material cost reduction, elimination of redundant processes, consolidation of business activities etc. simultaneously the efforts to tap the new markets as wellas customers are well under way. During the year under review, the Countrys domestic sales and exports in the automotive market saw a major surge across all segments. The sale of Passenger Vehicles grew by 2.70 percent in 2018- 2019. Within the Passenger Vehicles, the sales of Passenger Cars, Utility Vehicle & Vans grew by 2.05 percent, 2.08 percent and 13.10 percent respectively in April-March 2019 over the same period last year.Auto sector is in the phase to transform from conventional vehicles to electric vehicles and its successful foundation will drive the growth of autosector. India has a large enough market to consume the conventional as well as electric vehicles and your Company being a largest automotive sheet metal components and tools manufacturer will get bene ted for the growth of either or both segments since stamping, tooling and other areas where your Company operate arecommon for both the segments.
As seen in previous few months, the automotive industry in India is in trouble as the production and sales numbers continue to decline. The slowdown is accentuated by low customer sentiment, some regulatory changes, tightening of lending norms and liquidity issues. However, the prospects of the auto mobile and components industry are optimistic. The recent slump in automobile is transitory and various government reforms such as to recapitalize banks to improve the availability of credit, further liberalising FDI policy to tap overseas capital at lower rate, governments new policies and their stability, strengthening the ease of doing business by simpli cation of labour laws will de nitely boost the growth prospects for automobile and auto component industries.
The below are the highlights where your company has worked majorly:
Issue of fresh Equity Shares and Share warrants on Preferential Basis
During the year under review, the equity fund of Rs 4625 lakhs infused in the Company to nance the working capital requirements of the Company along with repayment of loans. The Board of the Company, after obtaining the requisite approvals allotted 47,94,520 Share Warrants at a price of Rs 73/- each on preferential basis to IndiaNivesh Renaissance Fund, a private equity fund, in the month of December, 2018 upon receipt of upfront 50% of Issue price. The warrants converted into Equity shares in the month of March, 2019 upon receipt of payment of remaining 50% of issue price. The Board allotted 12,32,877 Equity Shares having face value of Rs. 10/- each at a price of Rs. 73/- each (Including premium of Rs. 63/- each) to the promoters of the Company upon receipt of full consideration amount and also allotted 12,32,877 Convertible Share Warrants at a price of Rs.73 each on preferential basis to the Promoters of the Company upon receipt of payment of upfront 25% of issue price. The remaining 75% of the Issue Price of Warrant shall be payable by the warrant holders on or before the exercise of the entitlement attached to Warrants to subscribe for Equity Share(s) and should be exercised by the Warrant Holders within 18 months from the date of allotment of warrants. With this issue, paid up share capital of the Company has increased from Rs. 210001880/- to Rs. 27,02,75,850/- divided into equity shares of Rs. 10/- each. The new allotment improves the Net Worth of the Company by 88% as on March 31, 2019. The newly allotted shares have been listed on BSE Limited and National Stock Exchange of India Limited.
As stated in the previous Annual Report, your Company has entered into Memorandum of Understanding with T.S. Eng. Co. Ltd, Korea ("Tae Sung") on April 19, 2018 for getting technical assistance for low cost manufacturing of stamping die, prototype parts, pedal box, automotive camera etc. and to collaborate with Tae Sung for the development of products as well as markets local and overseas. During the year under review, technical team of Tae Sung visited India and demonstrated their advanced products and technology among the prestigious customers of the Company. The discussion is going on to venture with T.S. Eng. Co. Ltd that will support Autoline for low cost manufacturing by utilizing available infrastructure and skills with advance technology and will also open new avenues to participate in vehicle development and other possible markets.
Manufacturing Facility at Hosur
During the year under review, your Company has shifted its Chennai facility to Hosur, Karnataka to optimize the production ef ciency and to achieve better cost reduction. Shifting of Chennai operations to Hosur will yield direct saving in transportation cost since the plant of Ashok Leyland to whom Chennai unit supplies major quantity is located in Hosur and there is strong possibility of new business being awarded by Ashok Leyland since the Companys presence in Hosur will give them con dence about the immediate availability of products. Established Automobile majors such as Hyundai Motors India, Renault, KIA Motors, TI Cycles India,Toyotetsu, PSA Group Royal En eld and TVS Motors have their manufacturing plants in Hosur which will be added advantage to the Company. This will help the Company to acquire new business and increase revenue with the support of cost saving .
Consolidation of Business
Consolidation of business and monetization of surplus assets are the major area wherein your Company is working from previous 4 years. Your Company believes that it will able to operate more efficiently and economically by reducing the number of facilities in a business. During the year under review, the Company shifted the manufacturing facility carried out at rented premises in Dharwad to its own premises situated at Plot No. 186 - A, Belur Industrial Area Growth Centre, Dharwad after building the necessary infrastructure. The consolidation will also improve communication between business functions and achieve savings by decreasing head counts, overheads and consolidating systems and processes.
Moving forward the Company entered into Memorandum of Understanding ("MOU") on December 24, 2018 with one of the prospective buyers to transfer land admeasuring 11611 Sq. Mtr. bearing Survey Nos. 392/1B and 613 at Mahalunghe ("Mahalunge property"). Currently, the Company is carrying on manufacturing activities thereat and will move the manufacturing facilities i.e. plant / machineries, shed, employees etc. to its other existing units in Pune.
To monetize the surplus assets, the Company entered into MOU with prospective buyer to sell land admeasuring about 549.78 Sq. mtr. bearing Gat No. 825, Kudalwadi, Pune and building Structures ("Kudalwadi property") constructed there upon. The said property was lying empty after consolidating the manufacturing facility to other units long before.
The sell transactions of Mahalunge and Kudalwadi properties are expected to complete in first half of FY 2019-20 and the sale proceeds would be utilized to pay outstanding term loans of Axis Bank since both the properties are mortgaged with Axis Bank and the Company would be able to settle entire term loan of Axis Bank.
Also, the Company sold a 1000 ton press machine which was not being used by the Company and was also not required for future business. The said machine was pledged with JM financial Assets Reconstruction Company and the Company repaid loan of Rs. 1 Crore from the sale proceeds of press machine. Post consolidation, your Company is operating through 7 manufacturing facilities and in-house Tool & Design Centre.
Additional Vat subsidy claim
During the Year under review, the Government of Maharashtra has approved an amount of Rs.44.61 Crores as the additional Industrial Promotion Subsidy for Mega Project under Package Scheme of Incentive 2007 (Vat Subsidy) for its two more units where the fresh investment was made by the Company in addition of currently enjoying VAT/ CST Subsidy and out of the said approved amount, the Company has received 35.12 Crores by July 8, 2019 and the remaining amount is expected to receive during the year 2019-20.
Diversi cation - Products as well as Customers
The agenda of diversifying to non-auto businesses as well as client base has been on radar for several years to reduce the over dependency on its one major customer and auto-sector and most of actions are in line with drive. During the past year, your Company have taped prestigious clients like JCB, Sany, Carraro Agratalia etc. The continued efforts in this direction from past few years has resulted in sales contribution from clients other than Tata Motors went up from 22.7% in FY 2016-17 to 28.4% in FY2018-19.
The Company achieved sales contribution of Rs3,241 lakhs from new products/business range diversify the product portfolio. The objective is to diversify the products range without much capex.
Future Business Strategy
The year 2018-19 was challenging as well as re-energizes for Automobile Industry. Automobile industry registered a growth of 6.26% in production of vehicles and 14.50% growth in export during the financial year 2018-19 although there is domestic sales declined of 4.91% as compared to previous year.
Underutilization of capacity and shortage of working capital are still the prime concern to address to achieve the turnaround of the Company. The Company has worked tremendously on the said areas and able to address the working capital worry to certain extent by raising equity fund of Rs. 46.25 crores and ensuring additional VAT subsidy claim of Rs. 44.61 crores along with some rearranging of debts and rate revision from Tata Motors. Your Company has succeeded to get the price rise from Tata Motors for High Deck Load Body and Mega Excel Load Body parts supplied during the year 2018-19 and will get the difference amount in current year. The Company is planning to reduce its debts substantially with the support of extraordinary income and restructuring of debt and taking steps to un-lock values of non-core assets.
The Company constantly approaching the OEMs and OEM vendors for new business by demonstrating its capabilities such as available infrastructure, in-house design and tooling center and more than 20 years sound presence. The management is con dent to add more business from long associated customers such as TML, Ashok Leyland, Mahindra, Cummins, Daimler, Volkswagen, Ford, General Motors etc. and join hands with new customers. The Management is very keen and con dent to diversify the companys operation and exploring various possibilities to enter into JV, new ventures etc.
Regarding the monetization of township land of Subsidiary Company viz. Autoline Industrial Parks Ltd. ("AIPL"), the Subsidiary has received master plan approval for its Integrated Township Project from the Office of Pune Metropolitan Regional Development Authority which is a prime and vital approval for the project. As informed earlier, Subsidiary company has entered into an Agreement with Poddar Habitat Pvt.Ltd. a Mumbai based Developer (Subsidiary of Poddar Housing and Development Ltd.) on September 24, 2018 to develop the residential project on land. Now, the parties are nalizing the terms and conditions to move ahead the project and are discovering the available options. The Developer is also exploring the proposed development under"Pradhanmantri Aavas Yojna" (PMAY) scheme brought by the government which has several benefits and advantages to drive the fast disposal of Project. Your Board is assured that township project would be one of the milestones to result in turnaround the Company. Your Board is also exploring other strategic options to maximize the value of investment made by your Company in its subsidiary.
Large numbers of activities effectuated during the year under review in the Company as well as its subsidiary companies and your directors are con dent to bring back the company into the growth path. Further details on opportunity, challenges, risks and concern etc. are given in Management Discussion and Analysis Report which forms part of this Annual Report.
SUBSIDIARIES AND THEIR PERFORMANCE:
i. Autoline Industrial Parks Limited, Pune, India :
Autoline Industrial Parks Limited ("AIPL") a subsidiary of the Company owned and possessed Township Land spread in 102.50 acres of land at Village Mahalunge, Taluka, Khed, District-Pune (MH), India for setting up of Township under the Integrated Township Project ("ITP") of Government of Maharashtra. AIPL had received locational clearance on September 10, 2014 and received Environment Clearance (EC) from the Ministry of Environment, Forest & Climate Change, Government of India on November 22, 2017. Also, District Collector, Pune vide its letter no. Khed/NA/ SR/23/2018 dated March 31, 2018 has issued the Letter of Intent (LOI) valid for two years for commencing the further activities for the Special Township Project.
Recently, AIPL has received Master plan approval under Integrated Township Project Regulation from Pune Metropolitan Regional Development Authority (PMRDA). The proposed development is envisaged in few phases. After receipt of these significant approvals the Subsidiary Company can proceed for commencement of the construction activity on land.
During the period under review, AIPL has not contributed to the performance of the Company since there is no other activity in AIPL except to monetize the township land which is under consideration. In order to develop township project, AIPL has entered into an Agreement with Poddar Habitat Pvt. Ltd. a Mumbai based Developer (Subsidiary of Poddar Housing and Development Ltd.) on September 24, 2018 to develop the residential project on land. The Developer had conducted the title search of the entire land held by AIPL and the Title & Search Report was found satisfactory and few issues on land as pointed out by the Developer have been sorted out. After the receipt of Master plan approval, AIPL and Poddar group are working on execution of Conveyance deed of phase-I land. Sluggish economy, slowdown in the entire Real Estate Sector and continuous regulatory changes are the prime concerns and the successful execution of above proposed transaction amidst the above challenges would be a significant achievement for the Company.
ii Autoline Design Software Limited (ADSL):
ADSL is a wholly owned subsidiary of the Company and it is a multifaceted and end-to-end Engineering Solutions Company which provides Engineering and Designing Software Services and Business Solutions. ADSL is also planning to work with, in association with your Company, T.S. Eng. Co. Ltd, Korea to get technical assistance for design the stamping die, camera, prototype parts etc. ADSL is able to provide one stop complete solution to its valued customers, enabling a quick & fast response to customer from design concept to rapid prototype manufacturing. ADSL is aggressively working to develop new customers as well as products by offering off-shore and onsite engineering services.
E-cycle project led by ADSL has successfully launched during the year under review and the production of E-cycle has been started during the year after getting ARAI approval. ADSL has orders of more than 100 numbers of e-cycles in hand. Now ADSL is working on feedback received/to be received from the customer and simultaneously exploring JV proposal for E-cycles and this project will open up new possibilities in electric segment for the Company. ADSL is also performing testing and validation activities and orders are being awarded by Ashok Leyland, Tata Motors, Autoline etc. and exploring business with other OEMs for testing and validation services. ADSL is also in discussion with various prospective customers for E-vehicles, GPS system, auto break etc.
ADSL provides engineering design, tooling services to the Company for efficiently accomplish the work orders well in time and during the year under review almost Rs. 50 crores business is performed for the Company and it gives comfort of in-house availability of engineering design capabilities to the customers of the Company and in that manner it is directly contributing in the performance of the Company.
iii Koderat Investments Limited, Cyprus (Koderat):
In September 2008, Autoline acquired 100% stake in Koderat Investments Limited ("Koderat") (making it Wholly Owned Subsidiary), a Company incorporated and existing under the laws of Cyprus; acting as a Special Purpose Vehicle (SPV). Further "Koderat" invested funds in "SZ Design Srl" and "Zagato Srl" Italian limited liability companies, Milan and acquired 49% equity share capital of said Italian companies. These companies were into the business of developing, designing and providing engineering services.
The net worth of SZ Design Srl has been eroded due to various write offs. SZ Design Srl has been declared bankrupt by the Tribunal of Milan on January 2, 2015 and judiciary receiver has been appointed by the Bankruptcy Tribunal. Net assets value of Zagato Srl has turned into negative due to incurring of losses in previous years and it declared voluntarily in liquidation. Your Company is examining these both matters carefully and impact of thereof is yet to be ascertained. Koderat is an Special Purpose Vehicle ("SPV") and due to above mentioned reasons, it has not contributed directly to the performance of the Company during the year under review.
A Report on the performance and financial position of each of the subsidiaries of the Company pursuant to Rule 8 (1) read with Rule 5 of Companies (Accounts) Rules, 2014 in Form AOC-1 is annexed as "Annexure -A" and forms a part of this Annual Report.
EXTRACT OF ANNUAL RETURN
The extract of the Annual Return in the prescribed Form MGT-9 is enclosed as "Annexure- B" to this Annual Report. Also, in compliance with Section 92(3) of the Companies Act, 2013, the annual return is also available on the companys website at: www.autolineind.com
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of Directors of your Company is duly constituted with adequate mix and composition of executive, non-executive and independent directors. During the year under review, Mr. Amit Goela (DIN: 01754804), Non- Executive Director has resigned on July 24, 2018. The Board places appreciation for the services rendered by Mr. Amit Goela during his tenure as a Non-Executive Director on the Board of the Company. There was no change in the Key Managerial Personnel.
Mr. Umesh Chavan (DIN: 06908966), Executive Director & CEO, was appointed for five years at the 18th Annual General Meeting held on July 31, 2014 till June 25, 2019. On the recommendation of Nomination and Remuneration Committee and subject to the approval of the members, the Board at its meeting held on May 30, 2019 reappointed Mr. Umesh Chavan as Executive Director and CEO for the period of Five years starting from June 25, 2019 to June 24, 2024 and approved the payment of remuneration for the period of three years effective from June 25, 2019 to June 24, 2022.
Mr. Krishankant Rathi, being the representative of IndiaNivesh Renaissance Fund ("the Investor") is appointed as a Non-executive, Nominee Director with effect from April 12, 2019 on the Board of the Company not liable to retire by rotation by virtue of the Investment Agreement entered with Investor. The Investor has invested Rs 35 Crores in equity capital of the Company and acquired 16.97% shares (post conversion of outstanding share warrants) in the Company.
Mr. Prakash Nimbalkar and Mr. Vijay Thanawala were
the Company for five years in the 18 appointed as an Independent Directors on the Board of th Annual General
Meeting of the Company. They have completed first terms of their appointment and shown their willingness for re-appointment. The Board at its meeting held on May 30, 2019 has re-appointed them for five years to hold office of Independent Director for second consecutive terms subject to the approval of Members by way of special resolution. As per the requirement of Section 149 of the
appointment are to be placed in the 23 Companies Act, 2013 the special resolutions of their re- rd Annual General
Meeting for the approval of members.
Mr. Prakash Nimbalkar has attained the age of 76 years. The Board, based on the performance evaluation of Independent Directors and as per the recommendation of the Nomination and Remuneration Committee, considered that, given his background, experience and contributions made by him during his tenure, the continued association of Mr. Prakash Nimbalkar (DIN: 00109947) would be of immense benefit for the Company and it is desirable to continue him as an Independent Director and accordingly Board has recommended reappointment of Mr.Prakash Nimbalkar.
Mr. Vijay Thanawala age of 72 years, will be attaining the age of 75 years during the course of term of his reappointment. The Board, based on the performance evaluation of Independent Directors and as per the recommendation of the Nomination and remuneration Committee, considers that, given his background, experience and contributions made by him during his tenure, the continued association of Mr. Vijay Thanawala (DIN: 00001974) would be of immense benefit for the Company and it is desirable to continue him as an Independent Director and accordingly the Board has recommended re-appointment of Mr. Vijay Thanawala. In accordance with the provisions of the Companies Act, 2013 and Companys Articles of Association, Mr. Umesh Chavan (DIN: 00006754), Executive Director & CEO of the Company is liable to retire by rotation at the conclusion of this Annual General Meeting and being
23 eligible, he has offered himself for re- appointment at the rd Annual General Meeting.
DIRECTORS RESPONSIBILITY STATEMENT
Pursuant to the requirement of Section 134(5) of the Companies Act, 2013, the Directors hereby con rm that: i) in the preparation of the Annual Accounts for the year ended March 31, 2019, the applicable Accounting Standards have been followed alongwith proper explanations relating to material departures; ii) 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 as on March 31,2019 and of the loss of the Company for that period; iii) 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) The Directors have prepared the annual accounts on a going concern basis. v) The directors have laid down internal financial controls to be followed by the Company and such controls are adequate and are operating effectively. vi) The Directors have devised proper system to ensure compliance with the provisions of all applicable laws and such systems are adequate and are operating effectively, which are being further strengthened.
NUMBER OF BOARD MEETINGS
The Board of Directors duly met Eight (8) times in the year under review. The details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013.
Mr. Prakash Nimbalkar (DIN: 00109947), Mr. Vijay Thanawala (DIN: 00001974) and Dr. Jayashree Fadnavis (DIN: 01690087) are the Independent Directors on the Board of the Company and have remained independent throughout the year as contemplated in section 149(6) of the Companies Act, 2013. Mr. Prakash Nimbalkar (DIN: 00109947) was appointed as an Independent Director on the Board of the Company for five years upto the conclusion of twenty third Annual General Meeting. The Board at its meeting held on May 30, 2019 has re-appointed him for five years effective from September 29, 2019 till September 28, 2024 to hold office of Independent Director for second consecutive terms subject to the approval of Members by way of special resolution. As per the requirement of Section 149
of the Companies Act, 2013 the special resolution of his re-appointment is to be placed in the 23rd Annual General
Meeting for the approval of members.
Mr. Vijay Thanawala (DIN: 00001974) was appointed as an Independent Director on the Board of the Company for five years upto the conclusion of twenty third Annual General Meeting. The Board at its meeting held on May 30, 2019 has re-appointed him for five years effective from September 29, 2019 till September 28, 2024 to hold office of Independent Director for second consecutive terms subject to the approval of Members by way of special resolution. As per the requirement of Section 149
of the Companies Act, 2013 the special resolution of his reappointment is to be placed in the 23rd Annual General
Meeting for the approval of members.
All 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 and Clause 16 (b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company familiarizes the Independent Directors through various Programmes with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company etc. The details of such familiarisation programmes are put on the Companys website and can be accessed at the link : http://www. autolineind.com/code-of-conduct-policies
Pursuant to Section 178 (2) of the Companies Act, 2013 and the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, a separate exercise was carried out to evaluate the performance of Individual Directors including the Chairman of the Board who were evaluated on various parameters such as level of engagement, contribution and independence of judgment as per the criteria formulated by Nomination & Remuneration Committee; thereby safeguarding the interest of the Company. The performance evaluation of the Independent Directors was carried out by the entire Board excluding the director being evaluated. The performance was evaluated on the basis of 1-5 scores (Min: 1, Max: 5) each on the basis above parameters.
The performance evaluation of the Non-Independent Directors was carried out by the Independent Directors. Annual evaluation of the performance of the Board and its committees such as Audit, Nomination and Remuneration as well as Stakeholder Relationship Committee were carried out. The Directors expressed their satisfaction with the evaluation process.
NOMINATION & REMUNERATION COMMITTEE AND COMPANYS POLICY ON DIRECTORS APPOINTMENT AND REMUNERATION
Your Company has duly established a Nomination and Remuneration Committee. The Committee has presented to the Board the policy with respect to appointment of directors including criteria for determining quali cations, positive attributes, independence of directors, remuneration for the directors, key managerial personnel and other senior employees etc. and thereafter the Board approved the same. In compliance with Section 178(4) of the Companies Act, 2013 and the rules made thereunder, the salient features of the Nomination and Remuneration Policy of the Company and its web link is given as under: The Nomination and Remuneration Policy of the Company is in compliance with the requirements of the Section 178 of the Companies Act, 2013 and Regulation 19 read with Part D of Schedule II of the SEBI (Listing Obligation and Disclosure Requirement) Regulations, 2015. The Policy extensively provides for the identi cation of the persons who are qualified to become Directors of the Board and those who may be appointed in the Senior Management in accordance with the criteria laid down and recommend to the Board their appointment. The policy also provides that the Nomination and Remuneration Committee shall ensure that the level and composition of remuneration is reasonable and is sufficient to attract, retain and motivate Directors and the employees of senior management. The Policy provides that remuneration to directors, key managerial personnel and senior management involves a balance between xed and incentive pay re ecting short term and long-term performance objective. Policy also has unique feature of providing Directors, Key Managerial Personnel and Senior Management reward linked directly to their effort, performance, dedication and achievement relating to the Companys operations.
The complete policy is available at : http://www.autolineind.com/code-of-conduct-policies/ The Non-executive Directors have no pecuniary relationship or transactions with the Company.
Further the Company makes no payments to the Non-executive Directors other than sitting fees which is in accordance with the provisions of the Companies Act, 2013 and the Rules made there under.
RISK MANAGEMENT POLICY
Your Directors have formed a Risk Management Committee chaired by Mr. Prakash Nimbalkar (DIN: 00109947). A Risk Management Policy is also in place. The Management has put in place adequate and effective system and resources for the purposes of risk management. At present your company has not identified any element of risk which may threaten the existence of your company except the general and business risks as given under the para Threats and Risks and Concern in Management Discussion and Analysis Report which forms part of this Annual Report.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
Your Company has an Internal Control System, commensurate with the size, scale and complexity of its operations. During the year under review, your Company replaced the internal auditor after three years to bring more expertise, more transparency and new approach in the Audit work and appointed multidiscipline and multi locational rms Moore Stephens Singhi Advisors LLP as Internal Auditors for FY 2019-20. The Internal Auditors/Audit Department monitors and evaluates the ef cacy and adequacy of internal control system in the Company, its compliance with operating systems, accounting procedures and policies at all locations of the Company and its subsidiaries. Based on the report of internal audit function /Internal Auditors, process owners undertake corrective action in their respective areas and thereby strengthen the controls.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has constituted CSR Committee and composition of CSR Committee is given in the Corporate Governance Report of the Company. The Company has incurred losses during previous four financial years and hence the provisions of Section 135 of the Companies Act, 2013 with respect to CSR activities are not applicable to your Company. Although the Company has not carried out CSR activities in accordance with section 135 of the Companies Act, 2013 however your company have been undertaking CSR initiatives voluntarily such as tree planation, visit and helping to orphanages and needy ones etc.
Your Company has established an Audit Committee whose composition and other details are mentioned in the Corporate Governance report.
The Audit Committee, on a regular basis, gives its recommendation to the Board. The Board gives due consideration to those recommendations. However, there have been no instances of recommendations given by the Audit Committee not being accepted by the Board during the year under review.
AUDITORS STATUTORY AUDITORS
M/s. A.R. Sulakhe & Co. Chartered Accountants (FRN 110540W) who are the statutory auditors of your Company, hold of ce, in accordance with the provisions of the Companies Act, 2013 up to twenty third Annual General Meeting of the Company. The Board at its meeting held on May 30, 2019 after considering the recommendation of the Audit Committee of the Company, reappointed M/s. A.R. Sulakhe & Co. Chartered Accountants (Registration No. 110540W), as the Auditors of the Company subject to the approval of the members of the Company, for a second term of 3 (three) consecutive years to hold office from the conclusion of this Annual General Meeting to the conclusion of the twenty sixth Annual General Meeting. Statutory Auditors have submitted their consent to act as an Auditor and they have con rmed their eligibility for being re-appointed as Statutory Auditors of the Company under the Companies Act, 2013 and that they are not disquali ed.
The Notes on financial statement referred to in the Auditors Report are self-explanatory and do not call for any further comments.
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s. KANJ & Co. LLP, Company Secretaries, (Erstwhile M/s. KANJ & Associates, Company Secretaries) Pune, a rm of Practicing Company Secretaries, was engaged by your Board for the purposes of Secretarial Audit for the year ended March 31, 2019. Secretarial Audit Report in terms of Section 204 (1) is enclosed as "Annexure C". The Secretarial Auditors in their Secretarial Audit Report have observed that:
A) THE COMPANIES ACT, 2013 AND THE RULES MADE THEREUNDER:
The Company has transferred shares in respect of which dividend has not been claimed for seven consecutive years or more in the name of Investor Education and Protection Fund pertaining to the financial Year 2011-12 with a delay of 2 months & 22 days and to that extent the Company has not complied with the provisions of Section 124 (6) of the Companies Act, 2013 read with the Rules made thereunder.
Comments by the Board of Directors: the Company inadvertently missed to transfer the shares to the Investor Education and Protection Fund within the prescribed time being this was the new requirement and there is a delay of 2 months & 22 days.
(B) THE SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS) REGULATIONS, 2015 ("LODR") -
resignation on 24 Mr. Amit Goela, Non-Executive Director tendered his th July, 2018 which was taken note in the Board Meeting dated 11th August, 2018 and the said resignation was reported to the stock exchanges on the same day. The Listed Entity has made delayed compliance with the provisions of the Regulation 30 (2) read with Regulation 30 (6) of the LODR as there was a delay in reporting of the resignation of Mr. Amit Goela to the Stock Exchanges.
Comments by the Board of Directors: The Company has reported the resignation of Mr. Amit Goela immediately after the Board meeting held on August 11, 2018 wherein the matter of resignation was placed. There was a gap of 17 days in resignation date and the date of Board Meeting and therefore there was a delay of 17 days to inform the resignation to Stock Exchanges which was an inadvertent mistake.
(C) FOREIGN EXCHANGE MANAGEMENT ACT, 1999
The Company has not led Annual Performance Report of its wholly owned subsidiary Koderat Investments Limited, Cyprus for the financial years 2015-16, 2016-17 and 2017-18. Thus, to that extent it has not complied with Regulation 15 of the ForeignExchange Management (Transfer or Issue of Any Foreign Security) Regulations, 2000. Comments by the Board of Directors: Koderat Investment Limited is acting as special purpose vehicle and acquired 49% stake of "SZ Design SRL" and "Zagato SRL" Italian Limited Liability companies and these companies are into liquidation/ bankruptcy stage and the audited accounts of these companies for the relevant period were not released and made available to us and therefore the Audit of Accounts for Koderat Investment Limited for the financial years 2015-16, 2016-17 and 2017-18 is yet not completed and Annual Performance Report has not led. The Company will le the same immediately after receipt of Audited Accounts of Koderat Investment Limited.
Your Company had appointed M/s Ketan H. Shah & Associates, Chartered Accountants, Pune, as Internal Auditors for the financial year 2018-19 and Internal Auditors have carried out the internal audit for said period and submitted their report to the Audit Committee and Board of the Company. Further, the Company has appointed M/s. Moore Stephen Singhi Advisors LLP, as Internal auditors for FY 2019-20 under Section 138 of the Companies Act, 2013 to carry out internal audit assignment.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION 143(12)
During the year under review, there were no frauds reported by the auditors to the Audit Committee or the Board under Section 143(12) of the Companies Act, 2013
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has a vigil mechanism in the form of Whistle Blower Policy (WBP) to deal with instances of fraud and mismanagement, if any. The details of the Whistle Blower Policy is explained in the Corporate Governance Report and also posted on the website of the Company.
LOANS, GUARANTEES AND INVESTMENTS BY COMPANY
Details of Loans, Guarantees and Investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the financial Statements.
Your Company has not accepted any deposits from the public falling within the ambit of Section 73 under chapter V of the Companies Act, 2013 and The Companies (Acceptance of Deposits) Rules, 2014.
RELATED PARTIES TRANSACTIONS
All related party transactions that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons and their associates /relatives which may have a potential conflict with the interest of the Company at large. All the Related Party Transactions were approved by the Audit Committee and also by the Board, wherever necessary. The Audit Committee has also granted omnibus approval for related party transactions that were repetitive in nature by following the requirements as laid down in the Companies Act and Rules made thereunder and Clause 23 (3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. The Company has not entered into any transactions with related parties during the year under review which require reporting in Form AOC-2 in terms of Companies Act, 2013 read with Companies (Accounts) Rules, 2014. The policy on Related Party Transactions and the Policy on Determination of Material Subsidiaries as approved by the Board is also uploaded on your Companys website.
MATERIAL CHANGES AND COMMITMENTS OCCURRED DURING APRIL 1, 2019 TILL THE DATE OF THIS REPORT WHICH WOULD AFFECT THE FINANCIAL POSITION OF YOUR COMPANY.
No such material changes and commitments occurred during April 1, 2019 till the date of this report which would affect the financial Position of your Company.
I. No significant or material orders were passed by the Regulators or Courts or Tribunals which will impact the going concern status and Companys operations in future. ii.
The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of The Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013. Internal Complaints Committee (ICC) has been set up to redress complaints received regarding sexual harassment. All employees (permanent, contractual, temporary, trainees) of the Company and its associates are covered under this policy. During the year under review,there were no cases led pursuant to the Sexual Harassment of Women at Workplace (Prevention,Prohibition and Redressal) Act, 2013. iii. The Company has not issued Equity Shares with differential rights as to Dividend, Voting or Otherwise. iv.The Company has not issued shares (including Sweat Equity Shares) to Employees of The Company under any Scheme. v. There has not been any change in the nature of business of the Company during the year under review.
As per the Listing Obligations and Disclosure Requirement (Regulations), 2015 a separate section on corporate governance practices followed by your Company, together with a certi cate from the Companys Auditors con rming compliance forms an integral part of this Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated financial Statements of your Company prepared in accordance with the Companies (Indian Accounting Standards) Rules, 2015 (Ind AS) prescribed under Section 133 of the Companies Act, 2013 and other recognized accounting practices and policies to the extent applicable and forms part of this Annual Report.
CONSERVATION OF ENERGY, TECHNOLOGICAL ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3) (m) of the Companies Act, 2013 read with Rule, 8 of The Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure-D".
PARTICULARS OF EMPLOYEES:
The information required pursuant to Section 197 read with Rule 5 of The Companies (Appointment and Remuneneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is as under:
|(i) The ratio of the remuneration of each director||Name of the Director||Ratio|
|to the median remuneration of the employees of the Company for the financial year||Mr. Shivaji Akhade||31.25:1|
|Mr. Sudhir Mungase||12.5:1|
|Mr. Umesh Chavan||31.25:1|
|(ii) Percentage increase in remuneration of each director, CEO, CFO and CS in the financial year 2018-19.||Name of the Director &||% Increase|
|Mr. Shivaji T Akhade||Nil|
|Mr. Sudhir Mungase||Nil|
|Mr. Umesh Chavan||Nil|
|Mr. Gokul Naik (CFO)||5%|
|Mr. Ashish Gupta (CS)||20%|
|(iii) Percentage increase in the median emuneration of employees in the financial year 2018-19||8%|
|(iv) Number of permanent employees on the rolls of Company;|
|(v) Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justi cation thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration.||Due to financial constraint there is no regular annual increment to the salaries of the employees and the increment is being given slab/grade wise and accordingly the 9% increment was given to non-managerial personnel upto certain grade in the previous financial year 2017-18 and 1% increment was given to few higher grade nonmanagerial personnel during financial year 2018- 19 and further due to more than 10% reduction in head count during the financial year 2018-19 the average percentile increase made noncomparable. Average 3% increase made in the salaries of managerial personnel in the FY 2018- 19 as mentioned above no increment was given to managerial personnel in FY 2017-18.|
|*Managerial personnel includes KMPs.|
|The increment given to each individual employee is based on the employees performance and also benchmarked against a comparable basket of relevant companies in India.|
|(vi) Af rmation||The Board af rms that the remuneration paid to the Directors and other employees is as per the remuneration policy of the Company.|
Information as per Rule 5 (2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014:
Particulars of Top Ten Employees in terms of remuneration drawn and the name of every employee whose remuneration aggregated to Rs. 1.02 Crores per annum or Rs. 8.50 lakhs per month during FY 2018-19: NIL
During the year under review, there is no employee employed throughout the financial year or part thereof, was in receipt of remuneration which in the aggregate, or at a rate which, in the aggregate, is in excess of that drawn by the Managing Director or Whole Time Director and holds by himself or along with his spouse and dependent children, not less than 2% of the equity shares of the Company.
SHAREHOLDING OF DIRECTORS AS ON MARCH 31, 2019
|Name of the Director||DIN||No. of Equity Shares||Percentage Holding|
|1 Mr. Prakash Nimbalkar||00109947||6700||0.03|
|2 Mr. Shivaji Akhade||00006755||3064022||13.78|
|3 Mr. Sudhir Mungase||00006754||2537472||11.41|
|4 Mr. Umesh Chavan||06908966||NIL||NIL|
|5 Mr. Amit Goela||01754804||125000||0.56|
|6 CA Vijay Thanawala||00001974||2525||0.02|
|7 Dr. Jayashree Fadnavis||01690087||NIL||NIL|
INTER SE RELATIONSHIP BETWEEN DIRECTORS
There are no inter se relationships between the Directors except that Mr. Sudhir Mungase (Whole-time Director) and Mr. Shivaji Akhade (Managing Director) are related to each other that Mr. Sudhir Mungase is brother-in-law of Mr. Shivaji Akhade.
EMPLOYEES STOCK OPTION SCHEME ESOS
In accordance with SEBI (Employee Stock Option Scheme and Employee Stock Purchase Scheme) Guidelines, 1999, the Company has instituted Employee Stock Option Scheme 2008 (Autoline ESOS 2008) pursuant to the Special Resolution passed by Shareholders at 12th Annual General Meeting held on September 27, 2008. As per Autoline ESOS 2008, 1,60,000 options were granted to 171 Permanent employees and 15,000 options were granted to 5 Independent Directors. During the year under review, no options were exercised and 4 employees holding 1510 options have resigned. The details of the scheme as per Companies (Share Capital and debentures) Rules, 2014, SEBI (ESOP and ESPS) Guidelines 1999 and SEBI (Employee based benefits Scheme) Regulations, 2014 are given in the "Annexure-E" to this Annual Report.
Your Directors express their sincere appreciation for the assistance and co-operation received from the various Central and State Government Departments, Customers, Vendors and Lenders speci cally Bank of Baroda, The Catholic Syrian Bank Ltd., Axis Bank Ltd., J M financial Asset Reconstruction Company Limited, NKGSB Co-op. Bank Ltd. for extending financial support by way of sanctioning credit facilities and fresh term loans for the Company and to Tata Motors Ltd., Tata Capital financial Services Ltd., Tata Motors Finance Solutions Limited for their continued help and support during a very challenging times of the Company. The directors also gratefully acknowledge the support given by and trust entrusted by all shareholders of the Company and directors also wish to place on record their deep sense of appreciation for unstinted commitment and committed services by all the employees of the Company.
|For and on Behalf of the Board|
|Pune, August 14, 2019|