Autoline Industries Ltd Directors Report.

Dear Members,

Your Directors are pleased to present 24th Directors Report on the business and operations of your Company together with the Audited Financial Statements for the year ended March 31, 2020.

FINANCIAL RESULTS

The financial to the previous financial year are given below:

PARTICULARS

Standalone

Consolidated

31.03.2020 31.03.2019 31.03.2020 31.03.2019
Revenue from operations 31623.65 45209.49 31627.21 45213.32
Earnings before Interest, Financial Charges, Depreciation, Tax & Amortization – EBIDTA (949.58) 1062.92 (1008.27) 989.28
Less: Finance Cost 3124.04 3741.30 3132.79 3752.32
Less: Depreciation & amortization expenses 2095.14 2122.18 2095.14 2123.28
Add: Exceptional items (367.53) 4398.05 (367.52) 4398.05
Profit Before (6536.29) (402.51) (6603.72) (488.27)
Tax Expense 0.00 0.00 0.00 6.57
Profit After Tax (PAT) (6536.29) (402.51) (6603.7) (494.84)
Other Comprehensive Income (8.13) 15.90 (10.30) 16.34
Profit Attributable to group (6544.41) (386.61) (6614.03) (478.50)
Earnings per Share (Basic) (in ) (24.18) (1.89) (24.13) (2.32)
Earnings per Share (Diluted) (in ) (24.18) (1.88) (24.13) (2.32)

Since the Company incurred loss during the year under review the Company does not propose to transfer any amount to reserve.

DIVIDEND

In view of loss incurred during the year under review, the Board of Directors do not recommend dividend for the financial year 2019-20. No dividend was declared in previous year.

STATE OF THE COMPANYS AFFAIRS AND BUSINESS OVERVIEW

Your Company is one of the largest automotive sheet metal components manufacturer in India and engages in production of Heavy Sheet Metal Components & Assemblies, Exhaust Systems, Pedal System, Door Assemblies, Load body, Door hinges & Skin panels etc. and supply directly to Original Equipment Manufacturers (OEMs).

The year of 2019-20 was the tough year for the Automotive industry particularly Auto Component manufacturing industry which registered de-growth in this year. The automotive industry faced a prolonged slowdown in year 2019-20 with vehicle sales in all segments dropped significantly. Subdued vehicle demand, investments made for transition from BS-IV to BS-VI, liquidity crunch, lack of a clarity on policy for electric vehicles and slow-down in key export markets, among others, had an adverse impact on the performance of the components sector in India.

Your Companys performances also got impacted, and registered a 30% decrease in standalone revenue from operation during the year under review with sale turnover of 31623 Lakhs as compared to previous year of 45209 lakhs. The Company recorded a net loss of 6168.76 lakhs before the income from exceptional items against the previous years loss of 4800.56 lakhs. Your Company is focusing on highlights for the year under review compared areas such as optimum utilization of available infrastructure, raising funds to manage cash flow requirements, expand customer base and cost rationalization measures to tide over the sectoral downturn and achieve growth in the coming years. The efforts made in those directions during the year under review are highlighted below.

Conversion of Warrants and increase in equity capital

During the year of 2018-19, the Company had issued total 60,27,397 convertible warrants to the Investor and the Promoters of the Company at a price of 73/- each to infuse equity funds in the Company to finance the working capital requirements of the Company and repayment of loans. Out of above, 47,94,520 warrants issued to IndiaNivesh Renaissance Fund ("Investor") upon receipt of balance amount had been converted into equal numbers of Equity Shares in the month of March, 2019. Rest of 12,32,877 warrants issued to the Promoters of the Company at a price of 73/- each have been converted into equal number of Equity Shares upon receipt of balance amount from the Promoters on July 28, 2020.

Consequent to the conversion of warrants to the equity shares, the paid up capital of the Company stands increased from 27,02,75,850 to 28,26,04,620 comprising of 2,82,60,462 equity shares of 10/- each fully paid-up and it resulted in improvement of Net Worth of your Company.

Technology Tie-ups & New Ventures

During the year under review, your company have signed an Agreement with Kinetic Green Energy and Power Solutions Limited, Pune ("Kinetic"), leading Electric Vehicle manufacturer in India for joint development and nationwide marketing of electric-bicycles ("E-Cycle"). Auto line in association with Kinetic, has successfully launched first 2 models of E-Cycles with R&D effort over the last 18 months and receiving good response from the customers. Kinetic, is aggressively marketing the range nationally, through its PAN India dealership network.

Your company is utilizing its own capabilities and existing capacity to manufacture the E-Cycles and Auto line Design Software Limited, (ADSL) a wholly owned subsidiary is assisting for design and development of the Electric Cycles. At present, Auto line has reserved manufacturing capacity to assemble 9000 to 10500 E-Cycles per year which can be expanded to 100000 E-cycles per year with minimal capex. The E-cycles are being built at Pune plant and on the "Make in India" principle. The E-cycle can bring transformative benefits for various customers like students in urban or rural areas, delivery boys, small businesses for various commuting or short distance delivery needs.

Within the Automotive space, Electric vehicles (EV) segment is witnessing rapid evolution due to their intrinsic benefits of zero pollution and low running cost, and this is further accelerated due to Government support, as well as increasing awareness among the consumers of the adverse impact on health of ever increasing pollution. Indian Government has set ambitious targets to transform Indias automotive sector with accelerated electrification specially with a focus on two-wheelers, three-wheelers and public transport, to bring the benefits of green mobility to the masses.

Your company is exploring the possibilities to develop two-wheelers and three wheelers parts and electronic assemblies apart from its presence in four wheelers segments.

Consolidation of facilities

Your Company believes that it will be able to operate more efficiently and economically facilities in a business. The Company plans to dispose of its two properties during the year of 2020-21 and reduce the number of locations. Consolidation of business and monetization of surplus assets are the major area wherein your Company is working since last 5 years.

As reported in previous annual report, the Company had entered into Memorandum of Understanding ("MOU") with prospective buyer to sell land admeasuring about 549.78 Sq. mtr. bearing Gat No. 825, Kudalwadi, Pune and Structures ("Kudalwadi property") constructed there upon. During the year under review, the Company has disposed of its Kudalwadi property and utilized the sale proceeds to repay the term loan of Axis Bank.

The disposal of the properties situated at Gat No. 613, Mhalunge, Pune and the Gat no. 712, Kudalwadi, Pune are in pipeline during the financial year 2020-21. Post disposal, the Company will repay the outstanding term loan of Axis Bank and move on the entire manufacturing facility of Mhalunge unit including employees to its Chakan unit-II. This consolidation would result in reduction of debt, increased economies of scale and better efficiency and administrative control.

Restructuring of Loan and fresh credit facilities

During the year under review, the automobile sector faced a sharp decline in sales which resulted decreased in the revenue of the Company by 30% as compared to previous year, hence serving the loan facilities had become challenging. To manage the liquidity during these tough times, the Company had approached JM Financial Assets Reconstruction Company Limited ("JMFARC") and other secured lenders to restructure the secured loan facilities and support the Company by lending the additional funds. JMFARC sanctioned the restructuring scheme ("Scheme") on March 16, 2020 and taking into account the uncertainty posed by outbreak of Covid-19 pandemic, the scheme further modified on September 7, 2020 to restructure outstanding loans of 48.13 crores as on October 1, 2019 and interest of moratorium period of six months granted as per Covid-19 regulatory package issued by RBI.

Scheme sanctioned the conversion of a portion of secured facilities, that is, up to 10,00,00,000 (Rupees Ten Crores only) into fully paid up Equity shares having face value of 10/- each at a price as determined in accordance with Securities and Exchange Board of India (Issue of Capital and Disclosure Requirements) Regulations, 2018 and a portion of secured facilities that is, upto 15,00,00,000 (Rupees Fifteen Crores only) into Optionally Convertible Debentures of the Company carrying interest at the rate of 9% per annum. The Company has issued notice to the shareholders dated August 24, 2020 for obtaining their accent to issue and allot 27,02,702 equity shares at an issue price of 37/- each (Face value 10/ each and premium 27/- each) and 21,42,857 Optionally Convertible Debentures (OCDs) at an Issue price of 70/- each to JMFARC by converting secured loans.

The Company had approached to Tata Motors Finance Solutions Limited ("TMFSL") a NBFC company for raising fresh term loan for the purpose of increased working capital requirements and payment of critical outstanding. Your Company have secured the release of fresh term loan upto reducing the number of 30 crores from TMFSL, this will also support the liquidity shortfall in the wake of the disruptions caused by COVID-19 pandemic.

BUSINESS STRATEGIES

The Indian automobile industry has been going through a tough phase for a while now, with a slowing economy, changes in emission & safety regulations and many other challenges. The onset of COVID-19, and the extended lockdown to contain it, have only made things worse and this has directly impacted on the Automobile Sector among others. The Indian Auto Components Ancillary Industry continues to face adverse headwinds to maintain volumes and margins. Your Company was no exception and has been impacted severely during the year under review. Your company is adopting following strategies to overcome the adverse performance:

Underutilization of capacity and shortage of working capital are the prime constraints in achieving the turnaround of the Company. The Company is constantly working with the OEMs and other non-auto players for new business by demonstrating its capabilities such as available infrastructure, in-house design and tooling center, experience work force and more than 20 years sound presence. The management is confident to add more business from long associated customers and join hands with new customers. The Management is confident of its efforts in addressing the constraints.

Customer diversification is a key component of the growth strategy and to reduce the over dependency only on few major customers and accordingly, the management is striving hard with their business development initiatives. During the past couple of years, your Company have brought on board prestigious clients like Atlas Copco, Sany, Tata Hitachi (AutoMech), Hyundai Construction, Plastic Omnium, Veera Vahan, Olectra-BYD (Hyderabad), Techo Electra, Kinetic Green name the few. We expect the results of these initiatives from FY 2021-22 as the year under review and the current year faced headwinds.

Debt reduction is another area of concern and hence the Company is working to reduce its debts by unlocking values from non-core assets and restructuring the debts of the lenders.

Improving liquidity: Your Company have undertaken various measures to raise resources in the past and is continuously exploring the means to support its operations and reduce the debts. The Company is working on to get the pending additional industrial promotion subsidy (Vat subsidy), divest non-core assets, cost rationalization and saving measures, approaching the customers for better price realization, etc.

The monetization of township land of Subsidiary Company viz. Auto line Industrial Parks Ltd. ("AIPL"), the Subsidiary has received almost all the prime and vital approvals for the project. As communicated in the previous annual report, 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. Subsequent to the execution of agreement, AIPL received the Master plan approval from Pune Metropolitan Regional Development Authority ("PMRDA") and both parties were in process to execute the Conveyance deed of phase-I land. However, due to sluggish economy, slowdown in the entire Real Estate Sector and the outbreak of Corona pandemic, the execution of above proposed transaction is on hold. The Company is exploring other potential options to monetize the said land and in discussion with investors/ buyers.

Once the project is commenced, the company will start receiving agreed payments as per defined timelines. Your Board is confident that monetization of land would be one of the key resource in the turnaround of the Company and reduce debt. Your Board is also exploring other strategic options to maximize the value of investment made by your Company in its subsidiary.

Your directors are confident that all initiatives taken will help in turnaround and put the company back on its growth path once the pandemic comes under control. Further details on opportunity, challenges, risks and concern etc. are given in Management Discussion and Analysis Report, forming part of the Directors Report.

MANAGEMENT DISCUSSION & ANALYSIS:

As stipulated under the provisions of Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion & Analysis Report forms an integral part of this Report:

World Economy Overview

The year 2019 proved to be a rather challenging one. The pace of global economic activity remains weak. In 2019, the global economy grew by about 2.9 percent compared to the previous year of 3.6 percent. Momentum in manufacturing activity, in particular, has weakened substantially, to levels not seen since the global financial crisis. During 2019, there has been a decline in the prices of most commodities mainly reflecting the deterioration in the growth outlook, especially that of emerging markets, which tend to have a larger income elasticity of demand for commodities. Prices for most base metals weakened in the second half of 2019, primarily due to weaker global growth and trade tensions. Rising trade and geopolitical tensions have increased uncertainty about the future of the global trading system and international cooperation more generally, taking a toll on business confidence, investment decisions, and global trade.

Global growth decelerated markedly in Financial Year 2019-20 with continued weakness in global trade and investment. This weakness was widespread, affecting both advanced economies (particularly the European market) and Emerging Market & Developing Economies (EMDE). Just when ‘Phase one trade agreement entered between the United States and China, Brexit and stable crude oil prices were turning the sentiments of geographies, the world ensnared in a devastating pandemic Covid-19. This outbreak was a huge blow to the global supply chain. Covid-19, a public health emergency, caused a never-seen-before lockdown across all regions. GDP growth of Global Economy is likely to be negative in the year 2020 as the outbreak of COVID- 19 has disrupted economic activities all over the globe.

Covid-19 Pandemic: An Unprecedented Emergency

The Novel Corona Virus (Covid-19) outbreak disrupted China and then spread over the world, making a Health Emergency round the world. Several countries announced Lockdown, resulting in economic downfall. Virus outbreak disrupted manufacturing supply chains and sharply curtailed energy and commodity demand. The market strain is being seen in ways that did not manifest during the global crisis of 2008. The entire macroeconomic parameters have changed and the future is difficult to forecast in terms of numbers and economic/ financial figures. The outbreak of Covid-19 then was noticed in the month of March, 2020 in India and the Government notified the unprecedented nationwide lockdown to contain the Virus.

Indian Economy Overview

The Indian economy was grappling with its own issues when the outbreak of Covid-19 came to worsen the matters. This unprecedented public health emergency has further augmented to the slowing economy. Government of India, as a measure to curb the spread, announced a nationwide Lockdown from March 23, 2020 to June 30, 2020 and some states extended the same with certain relaxations in order to revive the economic cycle.

An uncertain outlook in near term was created as the country was observing lockdown. Addressing the need of the hour, the Government of India announced its biggest economic package. RBI also stepped up to announce some monetary measures, ensuring market liquidity. The lockdown has caused a have while also opening new avenues of opportunity. The Nation-wide lockdown has made the corporates re-think and fortify the nations digital infrastructure. This will play a central role in transforming India into a 5 trillion-dollar economy by 2025.

Hit by the Covid-19 Pandemic, Indias Gross Domestic Products (GDPs) has shrunk by 23.9% in the first quarter of the financial year 2020-21 as compared to 5.2% growth in corresponding quarter of previous financial year. The International Monetary Fund in June, 2020 projected a sharp contraction of 4.5% for the Indian economy in 2020, a "historic low," citing the unprecedented Pandemic that has nearly stalled all economic activities, but said the country is expected to bounce back in 2021 with a robust 6% growth rate.

Overall Outlook and Recovery

The Covid-19 pandemic has significantly weakened the countrys growth prospects for the year and exposed the challenges associated with a high public-debt burden. Government has initiated various measures to boost the economy including direct benefit transfer, increased allocations to key sectors like infrastructure, agriculture, MSMEs etc. Reserve Bank of India has cut repo rate by 185 bps on a cumulative basis this year to support the aggregate demand and private investment as well as ease liquidity given the COVID-19 situation. The reduction in corporate tax rate is a big boost to the industry; it makes India much more competitive globally and should accelerate investments in the economy. The slew of policy measures and announcements are welcome and signal the Governments strong commitment to arrest and reverse the slowdown.

On the upside, better news on vaccines and treatments, and additional policy support/ fiscal stimulus can lead to a quicker resumption of economic activity. On the downside, further waves of infections can reverse increased mobility and spending, and rapidly tighten financial conditions, triggering debt distress.

Indian Auto and Auto Component Industry

The Indian automobile is the pillar of the manufacturing sector. It contributes nearly 7.5% to the Indian GDP. Being an economic multiplier, it provides employment to a large pool of around 8 million people. New launches in the utility vehicle segment did bring in some buyers, but weaker consumer sentiments due to economic slowdown, liquidity crisis and increased ownership cost of vehicle contributed to the overall slump. Just when the Government was taking steps to revive the industry demand, Covid-19 outbreak further aggravated the market. The pandemic made the production and dispatches come to a halt. Going forward, the industry players are anticipated to re-strategise the blueprint of their operations and activities related to sourcing of auto-components in future.

Auto Industry witnessed a negative growth by nearly 15% during FY 2019-20. According to SIAM data, production of Passenger Vehicles fell 14.76 % to 34,34,013 units in the year ended March 2020. The hardest blow was felt in March as volumes saw sharp decline of 55% due to the subdued demand and weak consumer sentiment. This was further aggravated by the Covid-19 outbreak in the country.

Segment-wise automobile production trends in 2019-20:

Category 2019-20 2018-19 % Growth
Passenger vehicles 3434013 4028471 (14.76)
Commercial vehicles 752022 1112405 (32.40)
Three-Wheelers 1133858 1268833 (6.46)
Two-Wheelers 21036294 24499777 (14.14)
Grand total 26356187 30909486 (14.73)

Source: SIAM report on Automobile Industry for FY 2019-20 The industry produced a total 26,362,282 vehicles including Passenger Vehicles, Commercial Vehicles, Three Wheelers, Two Wheelers and Quadricycles in April-March 2020 as against 30,914,874 in April-March 2019, registering a de-growth of (-) 14.73 percent over the same period last year. The domestic auto-components industry is driven by strategic technological alliance and in-house R&D setup of the industry players. The automobile demand has led to advancement and introduction of innovative solutions enabling industry to grow into a massive one. The Auto component industry now contributes 2.3% to the total GDP. Despite weak turnover, the auto-components exports rose by 2.7% to $7.5 billion in first half of financial year 2019-20 over the corresponding period of previous year. Wherein, Europe accounted for 32% of exports followed by the North America and Asia. The second half of financial year 2019-20 was expected to be smooth, but it suffered a demand shock both in domestic and overseas market. Majorly, this shock was caused by the Covid-19 outbreak across the globe in the Q4 of 2019-20. The lockdown led to shutdown of factories and supply chain disruption. Given the current slowdown, auto-components makers are expected to be piled up with inventories for a couple of more quarters.

Domestic Sales

The sale of Passenger Vehicles declined by (-) 17.88 percent in April-March 2020 over the same period last year. Within the Passenger Vehicles, the sales of Passenger Cars and Vans declined by (-) 23.58, percent and (-) 39.23 percent respectively while sales of Utility Vehicles marginally increased by 0.48 percent in April-March 2020 over the same period last year.

The overall Commercial Vehicles segment registered a de-growth of (-) 28.75 percent in April- March 2020 as compared to the same period last year. Within the Commercial Vehicles, Medium & Heavy Commercial Vehicles (M&HCVs) and Light Commercial Vehicles declined by (-) 42.47 percent and (-) 20.06 percent respectively in April-March 2020 over the same period last year.

Sale of Three Wheelers declined by (-) 9.19 percent in April-March 2020 over the same period last year. Within the Three Wheelers, Passenger Carrier and Goods Carrier declined by (-) 8.28 percent and (-) 13.27 percent respectively in April-March 2020 over April-March 2019.

Two Wheelers sales registered a de-growth of (-) 17.76 percent in April-March 2020 over April-March 2019. Within the Two Wheelers segment, Scooters, Motorcycles and Mopeds declined by (-) 16.94 percent, (-) 17.53 percent and (-) 27.64 percent respectively in April-March 2020 over April-March 2019. Source: SIAM Repot

Government Initiatives:

In order to boost demand in the automobile sector, who has been going through a slump during the year under review, several relief measures have been introduced or are being worked upon.

Some of the recent initiatives taken by the Government of India are –

Under Union Budget 2019-20, the Government announced to provide additional income tax deduction of 1.5 lakh on the interest paid on the loans taken to purchase Electric Vehicles.

An additional 15 percent depreciation is provided on vehicles acquired on or after the August 23, 2019 but before the April 1, 2020 for corporates and businesses, taking the total depreciation to 30 percent.

The Government aims to develop India as a global manufacturing centre and a Research and Development (R&D) hub.

Introduction of ‘scrappage policy is being considered by the Government, something which the automobile industry has been advocating for, to get un fit vehicles off the roads and thus increase the demand for new vehicles. However, the scrapping infrastructure is required to put such a policy in place and the government will first try and get that in place.

Under NATRiP, the Government of India is planning to set up R&D centres at a total cost of US$ 388.5 million to enable the industry to be on par with global standards.

In February 2019, the Government of India approved FAME-II scheme with a fund requirement of Rs 10,000 crore (US$ 1.39 billion) for FY20-22.

The Ministry of Heavy Industries, Government of India has short listed 11 cities in the country for introduction of EVs in their public transport systems under the FAME (Faster Adoption and Manufacturing of (Hybrid) and Electric Vehicles in India) scheme. The Government will also set up incubation centre for start-ups working in the EVs space.

Achievements

Following are the achievements of the Government in the last four years:

In first half of 2019, automobile manufacturers invested US$ 501 million benefits to the sectors included or to in Indias auto-tech start-ups according to Venture intelligence.

Investment flow into EV start-ups in 2019 (till end November) increased nearly 170 per cent to reach US$ 397 million.

On 29th July 2019, Inter-ministerial panel sanctioned 5,645 electric buses for 65 cities.

NATRiPs proposal for "Grant-In-Aid for test facility infrastructure for EV performance Certification from NATRIP Implementation Society" under the FAME Scheme was approved by Project Implementation and Sanctioning Committee (PISC) on 3rd January 2019.

Under NATRiP, following testing and research centres have been established in the country since 2015 o International Centre for Automotive Technology (ICAT), Manesar o National Institute for Automotive Inspection, Maintenance & Training (NIAIMT), Silchar o National Automotive Testing Tracks (NATRAX), Indore o Automotive Research Association of India (ARAI), Pune o Global Automotive Research Centre (GARC), Chennai

SAMARTH Udyog – Industry 4.0 centres: ‘Demo cum experience centres are being set up in the country for promoting smart and advanced manufacturing helping SMEs to implement Industry 4.0 (automation and data exchange in manufacturing technology).

Pradhan Mantri Gram Parivahan Yojana (PMGPY): PMGPY is one such Yojana that will provide subsidies to the rural transportation. PMGPY envisages government investment on the automobile sector and its plans for infrastructure development in rural areas. Under the PMGPY scheme 10-12 seater vehicles would receive interest free loan of up to 6 lakhs with a term period of 6 months. This has helped in connecting with remote areas thereby promoting public transport and the usage of commercial vehicles in the rural areas. The scheme will enhance the public transport facility in rural areas across the nation.

Electric Vehicles Promotion Policies: The Government is pushing to incentivize the purchase of electric vehicles in India and offering various benefits/ concession to the buyers such as reduce rate of GST, tax benefits of 1.5 lakhs and many others are in pipeline. The Government approved the Faster Adoption and Manufacturing of Electric Vehicles (FAME-II scheme) with a fund requirement of 10,000 crores (US$ 1.39 billion) for FY 2020-22.

Production Linked Scheme :

In order to boost domestic manufacturing and cut down on import bills, the central government in March, 2020 introduced Production Linked Scheme that aims to give companies incentives on incremental sales from products manufactured in domestic units. Apart from inviting foreign companies to set up capacities in India, the scheme also aims to encourage local companies to set up or expand existing manufacturing units. This Scheme would provide be significant included and lead the India towards global export hub of

Other Policy Support:

To bring the Auto industry back on its wheels, the industry has demanded various reliefs and supports and the Government is working on various measures such as introduction of Scrappage policy, reduction of GST on automobiles, support for liquidity, employment, retail sales and suppliers, drawing up an incentive scheme for the autos sector to revive growth in the segment.

Company Overview

Autoline Industries Limited (herein referred as "Auto line" or "the Company") is engaged in manufacturing sheet metal components, assemblies and sub-assemblies Foot Control Modules, parking brakes, hinges, cab stay and cab tilt, exhaust systems, tubular structures, fabrications, etc. for large OEMs in the Automobile Industry. Established on December 16, 1996, the Company is a prominent Pune based leading auto components manufacturer and supplier to Original Equipment Manufacturers (OEMs) and automobile companies with presence in both domestic and international markets. Autoline has 7 manufacturing facilities backed up with in-house design & engineering services and commercial tool room. The Company is catering to global OEMs supplying over 1500 products getting assembled into different passenger cars and commercial vehicles.

Following are the major business divisions of the Company:

Business Outlook:

The domestic automobile industry together with auto component industry account for 7% of Indias total GDPs. According to outlook of SIAM, it projected that by end of the current fiscal year domestic sales across categories including commercial vehicles could be 25-45 % lower than in previous fiscal year. Auto sector is expected to recover partly in the second half of the FY 2020-21 as sales gradually increase after the easing of lockdown measures.

The sales data of August, 2020 is encouraging and the industry is beginning to observe the growth which is instilling confidence back into the industry, especially in the Passenger Vehicle and Two-wheeler segments. The industry witnessed year-on-year growth in August 2020, it registered 14% growth of Passenger Vehicles and 3% growth in Two Wheelers in August 2020 though it is on the backdrop of pent-up demand and beginning of a Festive Season this month. However, Three-Wheeler segment continues to post a de-growth of more than 75% compared to August 2019. Industry is positive that the coming festive season will pave the way for a faster revival of the industry.

The Government of India undertook various initiatives and announced 1.70 lakh crore relief package to help Indias marginalised population tackle the challenges caused by the COVID-19 pandemic. The Reserve Bank of India (‘RBI) provided a monetary stimulus by slashing the repo rate to 5.15%, a cut of 135 basis points in FY 2019-20, to boost demand and private consumption.

Your Company is taking all necessary measures in terms of mitigating the impact of the challenges being faced in the business with the required support from the lenders, customers, promoters and investors as well. Your Company is poised to the market conditions and focusing more on Off road & Commercial Vehicle segment wherein recently Government has announced economic relief package to agriculture & infrastructure sector. However, key concerns relate to slow down in economy, fast recovery of auto industry, higher prices with BS-VI rollout, impact of Axle load norms, rise in commodity price, and dipped consumer sentiment owing to uncertainty surrounding the Pandemic continue to be challenges for the performance of the Company and auto industry, in general.

The Company has been working on increasing its product base by prototyping its pilot products. Moreover, the Company is also anticipating higher growth in stamping tool manufacturing business and overseeing the possibilities to develop the new business and expand existing business with JBM Auto systems, Mahindra & Mahindra, Tata and several other automobile giants. The Company has also worked on incorporating advanced manufacturing technologies, adoption of the best methods and tools in manufacturing of its products and a strong focus on product innovation and improvisation. The Company intends to grasp all the future opportunities in Automobile Industry and lead the sheet metal assembly business in future.

The Company is majorly engaged in auto ancillary or parts business, where it provides parts and body stamping tools & services to commercial vehicle, passenger vehicle and electric vehicles segment. Hence the transformation into electric vehicle segment would not adversely impact Auto lines business in the future. Backed with the below strengths and strategies being adopted your Company is confident of achieving positive cash flows in the coming years.

The Company is enjoying strong client base consists of Tata Motors, General Motors, Volkswagen, Ashok Leyland, Ford Motors, Fiat, Mahindra, Cummins, Tata Hitachi and Daimler. The efforts are being made to increase the client portfolio further.

The Company holds an expansive portfolio of over 1500 products and also continuously upgrades its quality and performance. It is engaged in manufacturing of a wide range of products including assemblies and sub-assemblies.

The Company focuses on skilled workforce and in-house skill development and it retains and recruits highly experienced, skilled and qualified engineers/manpower.

The Company has well established infrastructure, machines and robotic welding facilities to the best of its competitors and owns second largest tool-room in the auto-hub of Pune. At present the Company operates through 7 manufacturing facilities spread across Pune, Karnataka, Uttarakhand and Chennai.

The Company is leveraging its existing capabilities and set up for introducing new products and working towards the business association or joint venture for diversification and expansion of business. As informed in previous Annual Report, your company has signed an Agreement with Kinetic Green Energy and Power Solutions Limited, Pune ("Kinetic"), for joint development and nationwide marketing of electric-bicycles ("E-Cycle"). The Company is utilizing its own capabilities and existing capacity to manufacture the E-Cycles and Auto line Design Software Limited, (ADSL) a wholly owned subsidiary is assisting for design and development of the Electric Cycles. The Company has sold 180 E-cycles till August 31, 2020 and has received schedule for dispatch of approx. 10000 e-cycles in FY 2020-21.

As reported previously, the Company is working extensively to consolidate its current level of installed product manufacturing capacities further. Continuing to achieve the consolidation target, the Company has entered into Memorandum of Understanding on July 30, 2020 with new prospective buyers for sell of the factory land admeasuring area 11,388 sq mtrs. and shed situated at Gat No. 613, Mahalunge, Pune.

To optimize the cost and reduce the debt burden, the Company is in process to issue and allot the equity shares and 9% optionally convertible debentures by converting secured debt of 10 Crores and 15 Crores respectively, to JM Financials ARC. JM Financials ARC has sanctioned the debt restructuring scheme. The Company is focused on cost optimization by improving operational productivity, manpower rationalization, effective inventory management, control over scrap generation etc.

CONSOLIDATED FINANCIAL PERFORMANCE:

Revenue from operations decreased by 30%: 31627 Lakhs (Previous Year 45213 Lakhs). Operating EBIDTA (Earnings before Interest, Financial Charges, Depreciation, Tax & Amortization) before exceptional items decreased by 202%: (1008) (Previous Year 989 Lakhs). Net loss before exceptional items increased by 28%: 6236 Lakhs (Previous year 4886 Lakhs). The slump in vehicle sales during 2019-20 adversely impacted the financial performance of Indias auto component manufacturing industry and it resulted to the poor consolidated performance of the Company during the year under review.

Details of significant changes in Key Financial Ratios, if any (i.e. change of 25% or more as compared to the immediately previous financial year)

Pursuant to Schedule V read with the Regulation 34(3) of the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the significant

Ratios (i.e. change of 25% or more as compared to the immediately previous financial year) with detailed reasons are provided as under:

The Debtors Turnover Ratio has been reduced to 8.91x in FY 2019-20 from 10.11x in FY 2018-19 due to the significant reduction in sales.

The Interest Coverage Ratio has been reduced to -0.84x from -0.30x, due to decline in Earnings before Interest and Taxes (EBIT).

The Debt Equity ratio (excluding current maturities of debt in FY 2019-20 has decelerated from 0.75x in FY 2018-19 to 1.09x in FY 2019-20 largely on account of erosion of the net worth.

During the year, the Operating Profit Margin turned negative at -3.98 % as compared to the positive margin of 1.65 % recorded in FY 2018-29 due to decline in sales.

The Net Profit Margin in FY 2019-20 was recorded at -20.88 % as compared to that of -1.09% in FY 2018-19; a steep reduction due to reduced EBIDTA.

Return on Net worth stood at -24.18%, reduction mainly due to increased losses as compared to the previous FY 2018-19 at -3.28% supported by extraordinary income on account of receipt VAT subsidy.

Corporate Social Responsibility

The Company has appointed a CSR Committee to monitor and maintain its CSR activities. Since the Company has been suffering losses in its previous few years and hence the provisions of Section 135 of the Companies Act, 2013 with respect to CSR activities are not applicable to the Company. However, the Company has taken various CSR Initiatives voluntarily such as tree plantation, donation of necessary things during cultural events, visit and helping to orphanages and needy ones etc.

Risks and Mitigation Strategies

Liquidity Risk: The Auto ancillary industry witnessing slowing sales stemming from sluggish economic activity, tight financing norms, and poor consumer sentiment which further aggravated by the outbreak of Covid-19 pandemic. The government and banking regulator are undertaking various measures to address the issue. The company, as visible in the past, continuously works its operations and to reduce debt levels. These include equity infusion, conversion of debts, monetisation of non-core assets and consolidation of its manufacturing facilities to maintain its liquidity position.

Customer Concentration Risk: The Company has been proactively looking for new clients and has been offering robust range of products with the support of state of art tools and design center. The Company is also striving to increase share of business with existing customers where Companys share is low.

Input cost rising risk: The Company passes through any increase in the price of raw materials, especially steel, so that there is a limited impact on its profitability. Your Company also concentrate on ‘cut to size raw materials so as to reduce the conversion cost, scrap and other associated cost.

Competition Risk: The Company enjoys strong and long standing direct relationship with many global OEMs. It has continued its investment in newer products and better quality control in order to stay ahead of the value chain.

Market/economic risk: The COVID-19 pandemic is leading to disruption in supply chain management and manufacturing processes that is impacting business goals and profitability. Your Company is taking all necessary measures to minimise the impact of COVID-19 outbreak.

Environment, Health and Safety (EHS)

The Company provides periodic mandatory training to operators and staff on fire-fighting, safety & mock drill. It also includes training of personnel in accident prevention, accident response, emergency preparedness, and use of protective clothing and equipment. The Companys EHS management involves creating organized efforts & procedures for identifying workplace potential hazards which in turn assists in reducing accidents and exposure to harmful situations and substances. EHS management played a broad role in handling the Covid-19 pandemic whereby the Company insisted on Work from Home (WFH) modes, regular health checkup of employees, thermal screening and sanitization measures.

Your Company took a number of measures to ensure effective prevention of the Corona Virus infection by ensuring thermal checking of the employees at the entrance and exit gates, compulsory wearing of masks and sanitization measures. Majority of the employees were given the option to work from home during the lockdown period. The Company followed all the orders issued by Central, State and Local Governments in this regard.

Quality

In order to achieve best in class quality control processes and to manufacture absolute quality products, the Company focuses on vigorous efforts and adopts high end technological advancements. It eventually helps in gaining significant customer satisfaction. The Companys manufacturing facilities are highly automated. Also the safety protocols are being diligently enforced and quality standards are being strictly monitored. The Quality system upgradation is an ongoing process in the Company to bring and keep the same to the level of global standard. The Company achieves all the customers quality requirements and Customer perceived Quality is produced at work station by adding "poka yoke" to avoid complaints. The Company has obtained QMS certification- IATF 16949 (developed by The International Automotive Task Force (IATF) members) during the year 2018-19. In addition of above the Company adopts various other quality control measures such as quality awareness, training & involvement of all Shop floor team members in order to achieve quality targets, regular and preventive maintenance of dies and other machines to produce good quality parts, periodic review of suppliers quality performance and escalation etc. Overall, the Company endeavors to constantly improve its product portfolio, the quality of the products and efficiency thereby attaining customer satisfaction and appreciation.

Internal Control Systems

The Companys policies and procedures are well-framed so that they include the design, implementation and maintenance of proper internal financial controls considering the size and nature of business. The Companys internal team and an independent Internal Audit Firm regularly monitor all of its business operations and any deviations are immediately brought to the notice of the Management and Audit Committee for immediate correction and to suggest the standard operating and control process. The Company ensures the optimal utilization of resources and the accurate reporting of financial transactions and strict compliance with applicable laws and regulations.

The Audit Committee periodically reviews the significant audit findings, internal controls adequacy, accounting policies compliances, practices and standards as well as the statutory compliances. The Audit Committee reviews internal audit reports and the adequacy of internal controls from time to time. It aids in review and reporting of efficiency and effectiveness of different processes and operations.

The Company is working to replace the existing Microsoft Dynamics AX 2009 with TCS ion-ERP System. This new ERP system is best for the organization and the Company will have to invest only for hardware since it will work on cloud based server. It is cost effective and one of the best ERP system to strengthen the internal control system in the organization. The Company would be in a better position to increase the operational efficiency and cost effectiveness of overall operational controls with the help of ERP and other continuous improvements.

Human Resources

The Company provides firm atmosphere for development of different skills which enables it to recruit and retain quality professionals in all the fields. Auto line firmly believes that key to best business results is a superior talent pool. Employees are acknowledged as most valuable asset and human resource management at Auto line has been a continuous process, where different methods are being constantly adopted and applied for the achieving best performance. During the year under review the Company has taken various steps for the betterment of the employees and cohesive working atmosphere in the Company. Auto lines HR policies provide a work atmosphere that leads to employee satisfaction, unflagging motivation, and a high retention rate. The Company is devoted towards maintenance of employees entire work life cycle, to ensure timely interventions that help build future leaders. Auto line provides training to its employees on a continuous basis for skill building, management skills, innovation, creativity and developing quality manpower. Auto line is driving Performance Management System (PMS) to build Performance oriented culture across the Organization.

For attaining the best potential the Company has formed and implemented various Human resource policies such as Policy on Death Benevolent Fund, Rewards and Recognition Policy, star award policy, attendance Policy etc. The Company also sponsors/organizes programme and activities for betterment of its employees such as Annual Health Check-up, Sports events etc. in addition of availability of self-funded Medi claim known as ‘Auto line Employees Health Benefit Scheme, etc. The Company had an average number of 2028 employees during the year of 2019-20.

Cautionary Statement

The statements forming part of this Annual Report including Directors Report and Management Discussion and Analysis report may contain certain forward looking statements within the meaning of the applicable securities laws and regulations. Forward-looking statements are based on certain assumptions and expectations of future events. Many factors could cause the actual results, performances or achievements of the Company to be materially different from any future results, performances or achievements that may be expressed or implied, since the Companys operations are influenced by many external and internal factors beyond the control of the Management. The Company cannot guarantee that these statements, assumptions and expectations are accurate or will be realized. The Company assumes no responsibility to publicly amend, modify or revise any forward looking statements, on the basis of any subsequent developments, information or events.

SUBSIDIARIES AND THEIR PERFORMANCE:

i. Autoline Industrial Parks Limited ("AIPL"):

AIPL engaged in land acquisition and development activities and has the foreign investment. It owned and possessed Township approved Land spread in 102.50 acres of area 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 has received Master Plan approval under the Integrated Township Project Regulations from Pune Metropolitan Regional Development Authority (PMRDA). Your company owned 46.22% stake (including ADSL stake of 1.55%) in AIPL. 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/develop the land which is under consideration. In order to develop or monetize the township approved land, AIPL had 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. However, due to Sluggish economy, slowdown in the entire Real Estate Sector and Corona pandemic situation the execution of above proposed transaction is hold off. The Company is exploring other potential options to monetize the said land and in discussion with investors/buyers.

ii. Autoline Design Software Limited (ADSL):

ADSL provides Engineering and Designing Software Services and Business Solutions to the Customers. ADSL is a multifaceted and end-to-end Engineering Solutions provide Company and 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. Your Company owned 100% stake in ADSL.

With the technical assistance and design support of ADSL, your Company succeeded to launch E-cycles in the market. Your Company entered into an Agreement with Kinetic Green Energy and Power Solutions Limited, Pune ("Kinetic"), leading Electric Vehicle manufacturer in India for joint development and nationwide marketing of electric-bicycles ("E-Cycle").

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 1.67 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):

Your company acquired 100% stake in Koderat Investments Limited in September, 2008 ("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 a 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.

SUBSIDIARIES PERFORMANCE

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

In accordance with the Notification no. GSR 538(E), dated August 28, 2020, the extract of the Annual Return as prescribed in Form MGT-9 is not enclosed with the Directors Report, and the Annual Return, in compliance of Rule 12 of the Companies (Management and Administration Rules), 2014 of the Companies Act, 2013 and the above stated Notification in Form MGT-9 is available on the companys website at the following link: http://www.autolineind.com/ investor-relations

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. Mr. Krishan Kant Rathi, appointed on April 12, 2019 as a Nominee Director representing IndiaNivesh Renaissance Fund ("the Investor") resigned on July 30, 2020. Investor has nominated Mr. Sridhar Ramachandran as a Nominee Director representing the investor. The Board places appreciation for the services rendered by Mr. Krishan Kant Rathi during his tenure as a Non-Executive Nominee Director on the Board of the Company. Also, CA. Gokul Naik, Chief Financial Officer of the Company resigned from the post of Chief Financial Officer on July 31, 2020 and the Board of Directors appointed Mr. Venugopal Pendyala, as the Chief Financial Officer effective from August 1, 2020.

Mr. Sridhar Ramachandran, being the representative of India Nivesh Renaissance Fund ("the Investor") is appointed as a nominee director with effect from July 30, 2020 on the Board of the Company not liable to retire by rotation by virtue of the Investment Agreement entered with the Investor. The resolution for confirmation of his appointment is placed at the 24th Annual General Meeting of the members of the Company.

In accordance with the provisions of the Companies Act, 2013 and Companys Articles of Association, Mr. Shivaji Akhade (DIN: 00006755), Managing Director of the Company is liable to retire by rotation at the conclusion of this Annual General Meeting and being eligible, he has offered himself for re- appointment at the 24th Annual General Meeting.

DIRECTORS RESPONSIBILITY STATEMENT

Pursuant to the requirement of Section 134(5) of the

Companies Act, 2013, the Directors hereby confirm that:

i) In the preparation of the Annual Accounts for the year ended March 31, 2020, the applicable Accounting Standards have been followed along with 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, 2020 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 Six (6) 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.

INDEPENDENT DIRECTORS

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.

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 ("Act") and Clause 16 (1) (b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. Further, the Independent Directors have complied with the Code for Independent Directors prescribed in Schedule IV to the Act.

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

PERFORMANCE EVALUATION

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 Chairman and 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 qualifications, 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 there under, 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 framed 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 identification 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 fixed and incentive pay reflecting 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. The Internal Auditors / Audit Department monitors and evaluates the efficacy and adequacy of internal control systems 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, the Board has advised the functional heads / process owners undertake corrective action 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 five 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.

AUDIT COMMITTEE

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 held office, in accordance with the provisions of the Companies Act, 2013 up to twenty third Annual General Meeting of the Company. The members of the Company at the previous Annual General Meeting held on September 28, 2019 approved the appointment of M/s. A.R. Sulakhe & Co. Chartered Accountants (FRN 110540W) for a second term of

3 (three) consecutive years to hold office from the conclusion of the twenty third Annual General Meeting to the conclusion of the twenty sixth Annual General Meeting.

Auditors Report:

The Notes on financial statement referred to in the Auditors Report are self-explanatory and do not call for any further comments .There is no remarks made by the Statutory Auditors in his Report.

SECRETARIAL AUDITORS

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, Pune, a firm of Practicing Company Secretaries, was engaged by your Board for the purposes of Secretarial Audit for the year ended March 31, 2020. Secretarial Audit Report in terms of Section 204 (1) is enclosed as "Annexure B". The Secretarial Auditors in their Secretarial Audit Report have observed that:

(A) FOREIGN EXCHANGE MANAGEMENT ACT, 1999

The Company has not filed Annual Performance Report of its wholly owned subsidiary Koderat Investments Limited, Cyprus for the financial years 2015-16, 2016- 17, 2017-18 and 2018-19. Thus, to that extent it has not complied with Regulation 15 of the Foreign Exchange 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, 2017-18 and 2018-19 is yet not completed and Annual Performance Report has not filed. The Company will file the same immediately after receipt of Audited Accounts of Koderat Investment Limited.

INTERNAL AUDITORS

Moore Stephens Singhi Advisors LLP, Chartered Accountants, were appointed as the internal auditors of the company since from previous financial year. The Internal Auditors have carried an in-depth Audit and analyzed the areas like Product Purchases, Purchase Order & approval Processes etc. They have provided solutions and remedial measures to improve overall efficiency and efficacy in the related areas.

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.

DEPOSITS

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 PARTY TRANSACTIONS

All related party transactions that 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 or material orders were passed by 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.

The Related Party Transactions were approved by the Audit Committee and also by the Board, wherever necessary. The Audit Committee has 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 there under and Clause 23 (3) of Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015. A quarterly statement of Related Party Transactions is being placed before the Audit Committee for review and noting.

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, 2020 TILL THE DATE OF THIS REPORT WHICH WOULD AFFECT THE FINANCIAL POSITION OF YOUR COMPANY.

On account of COVID-19 pandemic, the Company temporarily suspended the operations in all the units of the Company. COVID-19 has impacted the normal business operations of the Company by way of interruption from the Companys in production, supply chain disruption, unavailability of personnel, closure/lock down of production facilities, retail outlets of dealers etc. However, production and sales/supply of goods have commenced during the month of May 2020 with partial capacity. The Company has performed a detailed assessment of its liquidity position and the recoverability of the assets as at the Balance Sheet date and has concluded that based on current indicators of future economic conditions, the carrying value of the assets will be recovered. Management believes that it has fully considered all the possible impact of known events in the preparation of the standalone financial results. However, the impact assessment of COVID-19 is a continuing process, given the uncertainties associated with its nature and duration. The Company will continue to monitor any material changes to future economic conditions and the consequent impact on its business, if any. The outbreak of Corona Virus and subsequent halt in the economic activities and the nationwide lockdown resulted in a steep downturn in the already stressed auto sector in the country.

According to the latest data by the industry body, Society of Indian Automobile Manufacturers (SIAM), the first quarter June 2020 witnessed a 75 percent drop in total domestic sales at 14,91,216 units as against 60,84,478 units in the same period last year. This includes the Passenger Vehicles, three-wheelers, two-wheelers and commercial vehicles. Your Companys performance for quarter 1 of FY 2020-21 also impacted substantially.

OTHER MATTERS

i. No significant 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 filed 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.

CORPORATE GOVERNANCE

As per the SEBI (Listing Obligations and Disclosure Requirement) Regulations, 2015 a separate section on corporate governance practices followed by your Company, together with a certificate confirming compliance forms an integral part of this Annual Report.

In terms of the SEBI Regulations, the Board has laid down a Code of Conduct for all Board Members and Senior Management of the Company. The Code of Conduct has been uploaded on the website of the Company. All the Board Members and Senior Management Personnel have affirmed compliance with the Code.

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 Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company is as under:

Sr. Particulars
No.
(i) The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year 2019-20. Name of the Director Ratio
Mr. Shivaji Akhade (DIN: 00006755) 29.66: 1
Mr. Sudhir Mungase (DIN: 00006754) 11.86: 1
Mr. Umesh Chavan (DIN: 06908966) 29.66: 1
Name of the Director & KMPs % Increase
(ii) Percentage increase in remuneration of each director, CEO, CFO and CS in the financial year 2019-20. Mr. Shivaji Akhade Nil
Mr. Sudhir Mungase Nil
Mr. Umesh Chavan Nil
Mr. Gokul Naik(CFO) Nil
Mr. Ashish Gupta (CS) Nil
(iii) Percentage increase in the median remuneration of employees in the financial year 2019-20 5%
(iv) Number of permanent employees on the rolls of Company (average number); 895
(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 justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration. *Managerial personnel includes KMPs Due to financial constraint, there is no annual increment to the salaries of the employees including managerial personnel during the year 2019-20. Percentage increase (5%) in the median remuneration of employees in the financial year 2019-20 is due to reduction in the number of low pay scale workers.
(vi) Affirmation The Board affirms 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 1.02 Crores per annum or 8.50 lakhs per month during FY 2019-20: 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, 2020

Sr. No. 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. Krishan Kant Rathi 00040094 NIL NIL
6 CA Vijay Thanawala 00001974 2525 0.02
7 Dr. Jayashree Fadnavis 01690087 NIL NIL

* 410,509 warrants allotted to Mr. Shivaji Akhade, Mr. Sudhir Mungase & Mr. Vilas Lande each were converted into equal number of Equity Shares of 10/- each on July 28, 2020. The same is not considered above as the information is for the year ended on March 31, 2020.

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

The ESOP Scheme is lapsed due to efflux of time on April

12, 2019 and total lapsed options are 38915.

ACKNOWLEDGEMENTS

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 specifically Bank of Baroda, J M Financial Asset Reconstruction Company Limited, Tata Motors Finance Solutions Limited, The Catholic Syrian Bank Ltd., Axis Bank Ltd., NKGSB Co-op. Bank Ltd. 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

Prakash Nimbalkar

CHAIRMAN

DIN: 00109947

Pune, September 12, 2020