Bhagwati Autocast Ltd Directors Report.

To the Members,

Your Directors are pleased to present the 37TH ANNUAL REPORT for the financial year ended on March 31, 2019. The financial statements are prepared in accordance with Indian Accounting Standards (‘Ind AS). The performance of the Company is summarized as follows:

01.FINANCIAL HIGHLIGHTS :

(Amount Rs. in Lakhs)
For the year Ended 31/03/2019 For the year Ended 31/03/2018
Total Income 12000.58 9255.37
Earnings before interest, depreciation and taxation (EBIDTA) 836.02 451.25
Less: Interest & finance charges 109.79 94.47
Profit /(Loss) before depreciation & taxation 726.23 356.78
Less: Depreciation 233.20 211.49
Profit before tax 493.03 145.29
Less: Provision for income tax
[1] Current Tax 144.18 63.37
[2] Deferred Tax (25.39) (14.44)
[3] Short / (Excess) provision for earlier years 5.14 (14.56)
Profit for the Year 369.10 110.92
Add / (Less) : Other Comprehensive income 0.71 (1.16)
Total Comprehensive Income for the year 369.81 109.76
Add : Surplus of last year brought forward 815.86 733.84
Less : Dividend Paid 23.05 23.05
Less : Corporate Tax on Dividend Paid 4.74 4.69
Surplus available for appropriation 1157.88 815.86

02. REVIEW OF OPERATIONS:

During the year under review, Your Companys revenue increased by 29.90% and profit before Taxincreased by 239%. This is due to good demand from our customers, who are big OEM tractor industries and sales price realization. During the year, your Companys production increased by 21.04% on year to year basis.The Company increased power demand from 2800 KVA to 3100 KVA and added certain balancing equipment to utilize maximum capacity.

03. DIVIDEND :

The Board of Directors recommend dividend ofRs. 1per Equity Share (10% on the face value of Rs. 10/- each) for the year ended on March 31, 2019(Previous year Rs. 0.80 per equity share, i.e. @ 8%) subject to the approval of shareholders at the ensuing Annual General Meeting.

04. TRANSFER TO RESERVES :

Your Company has not transferred any amount to General Reserves. Your Company has retained amount of Rs. 1157.88 Lakhs in the Statement of Profit and Loss.

05. TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND :

The Company has transferred Rs. 1.08 Lakh to the Investor Education and Protection Fund established by the Central Government during the financial year 2018-19, as unclaimed dividend after expiry of seven years for the year ended March 31, 2011.

06. PUBLIC DEPOSITS :

During the financial year 2018-19, your Company has not accepted or renewed any deposit from the public falling within the ambit of Section 73 of the Companies Act, 2013 read together with the Companies (Acceptance of Deposits) Rules, 2014 and as such, no amount on account of principal or interest on deposits from public was outstanding as on the date of the balance sheet.

As per Rule 2(1)(c)(viii) of the Companies (Acceptance of Deposit) Rules, 2014, the Company has accepted money not considered as deposit from Dr. Pravin N. BhagwatiRs. 23.70 lakhs and Ms. Reena P. BhagwatiRs. 50.00 lakhs, Managing Directors of the Company.

07. SHARE CAPITAL :

The paid up equity share capital as on March 31, 2019 was Rs. 2.88 Crores. During the year under review, the Company has not issued shares with differential voting rights nor granted stock options nor sweat equity. The Company has also not purchased of its own shares by employees or by trustees for the benefit of employees.

08. LISTING :

The Equity shares of the Company continue to be listed on BSE Limited (Security Code: 504646) and required Listing fees for the year 2018-19 has been paid.

09. EXTRACT OF THE ANNUAL RETURN :

Pursuant to the provisions of Section 92(3) of the Companies Act, 2013, the details forming part of the extract of the Annual Return for the financial year ended March 31, 2019 in form MGT-9 is annexed herewith as (Annexure-1).

10. THE DETAILS OF CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO :

The Information required to be disclosed in the report of the Board of Directors as per the provisions of Section 134(3)(m) of the Companies Act,2013 read with Rule 8 of Companies (Accounts) Rules, 2014 is annexed herewith as (Annexure-2).

11. DIRECTORS :

A) Changes in Directors and Key Managerial Personnel

As per provision of the Companies Act, 2013, Dr. Pravin N.Bhagwati retires by rotation in the forthcoming Annual General Meeting and being eligible offeredhimself for re-appointment. The Board of Directors recommends his re-appointment.

Mr. Mahadev B. Shinde, has been appointed as Chief Executive Officer (KMP) of the Company in the Board of directors meeting held on November 13, 2018 effective from the said date, he resigned from the Chief Executive Officer (KMP) position, w.e.f. March 8, 2019.

B) Declaration by an Independent Director(s) and reappointment, if any

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013.

Independent directors (IDs) shall hold office for a term up to five consecutive years on the Board of the Company, but shall be eligible for reappointment for next five years on passing of a special resolution by the Company and disclosure of such appointment in the Directors report.As per the provisions of the Companies Act, 2013, Mr. Padmin H. Buch and Mr. Rajendraprasad J. Shah will retire at the ensuing AGM and being eligible, seek reappointment. The Board recommends their re-appointment.

The Companies Act, 2013, provides for the appointment of IDs. Sub-section (10) of Section 149 of the Companies Act, 2013 provides that IDs shall hold office for a term of up to five consecutive years on the board of a Company and shall be eligible for reappointment on passing of a special resolution by the shareholders of the Company. Accordingly, Mr. Padmin H. Buch and Mr. Rajendraprasad J. Shah, IDs were appointed by the shareholders at the general meeting held on 24th September, 2014. Further, sub-section (13) of Section 149, provides that the provisions of retirement by rotation as defined in sub-sections (6) and (7) of Section 152 of the Companies Act, 2013 shall not apply to such IDs.

C) Annual evaluation by the board of its own performance, its committees and individual directors

The Board of Directors of the Company has initiated and put in place evaluation of its own performance, its committees and individual directors. The result of the evaluation is satisfactory and adequate and meets the requirement of the Company.

D) Policy on Directors appointment and remuneration

(Including criteria for determining qualification, positive attributes, independence of a Director, policy relating to remuneration for Directors, Key Managerial Personnel and other employees)

Policy on Directors appointment

Policy on Directors appointment is to follow the criteria as laid down under the Companies Act, 2013, the Listing Agreement with Stock Exchanges and good corporate practices. Emphasis is given to persons from diverse fields or professions.

Policy on Remuneration

Guiding Policy on remuneration of Directors, Key Managerial Personnel and employees of the Company is that –

• Remuneration to unionised workmen is based on the periodical settlement with the workmen union.

• Remuneration to Key Managerial Personnel, Senior Executives, Managers, Staff and Workmen (non Unionised) is industry driven in which it is operating taking into account the performance leverage and factors such as to attract and retain quality talent.

• For Directors, it is based on the shareholders resolutions, provisions of the Companies Act, 2013 and Rules framed therein, circulars and guidelines issued by Central Government and other authorities from time to time.

12. MEETINGS OF THE BOARD OF DIRECTORS:

Four meetings of the Board of directors of the Company held during the year under review. Your Company has complied with the Secretarial Standard as applicable to the Company pursuant to the provisions of the Companies Act, 2013.

13. AUDIT COMMITTEE :

The Committee comprises Mr. R. J. Shah, Chairman and Ms. R. P. Bhagwati, Mr. P. H. Buch, Mr. V. R. Ambani, Members. In accordance with provisions of Section 177(8) of the Companies Act, 2013 and Listing Regulations, the Board has accepted all the recommendations of the Audit Committee during the financial year 2018-19.

14. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES :

The Company has formulated Vigil Mechanism named Whistle Blower Policy with a view to report concern about unethical behavior, actual or suspected fraud. This policy provides mechanism for employee of the Company of any violation and to approach the chairman of the Audit Committee of the Company who shall investigate into the same and recommend suitable action to the management.

15. NOMINATION AND REMUNERATION COMMITTEE :

The Board has on recommendation of nomination and remuneration committee, framed a policy for selection and appointment of Director, senior management and their remuneration.

16. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186:

There is no loan given, investment made, guarantee given or security provided by the Company to any entity under Section 186 of the Companies Act, 2013.

17. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

The particulars of every contract or arrangements entered into by the Company with related parties referred to in section 188(1) of the Companies Act, 2013 including certain arms length transactions under third proviso thereto aredisclosed in Form No. AOC -2 is annexed herewith as (Annexure-3).

18. PARTICULAR OF SUBSIDIARY/JOINT VENTURE/ ASSOCIATE COMPANY :

The Company does not have any subsidiary, Joint Venture and Associate Company.

19. RISK MANAGEMNET :

Your Company recognizes that risk is an integral part of business and is committed to managing the risks in a proactive and efficient manner. Your Company periodically assesses risks in the internal and external environment, along with the cost of treating risks and incorporates risk treatment plans in its strategy, business and operational plans.

Your Company, through its risk management process, strives to contain impact and likelihood of the risks within the risk appetite as agreed from time to time with the Board of Directors.

There are no risks which in the opinion of the Board threaten the existence of your Company.

20. CORPORATE GOVERNANCE :

As per the provisions of Regulation 15(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Corporate Governance requirements are not applicable to your Company, as the Company has not attained the prescribed limit as mentioned hereunder:

The Regulations 17 to 27 (including both regulations) and clauses (b) to (i) of sub-regulation (2) of regulation 46 and Para C, D and E of Schedule V shall not be mandatory in respect of the companies having paid-up share capital not exceeding rupees ten crores and net worth not exceeding rupees twenty five crores as on the last day of the previous financial year.

21. INFORMATION REQUIRED UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 READ WITH COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014:

Disclosures pertaining to remuneration and other details as required under Section 197(12) of the Act, read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 are annexed to this report as (Annexure-4).

22. MANAGEMENT DISCUSSION AND ANALYSIS:

Pursuant to the Regulation 34(2) of the SEBI (LODR) Regulations, 2015, the report relevant to Management discussion and analysis forming part of the Annual report for the year under review is annexed herewith as (Annexure-5).

23. AUDITORS:

1. STATUTORY AUDITORS:

M/s. Mahendra N. Shah& Co., Char tered Accountants(FRN: 105775W) Ahmedabad were appointed as Statutory Auditor of the Company for a term of 5 (five) consecutive years, at the 34th Annual General Meeting held on September 21, 2016upto the conclusion of the 39th Annual General Meeting at a remuneration as may be mutually agreed between the Board of directors of the Company and the Auditors.

The Company has received relevant letters/ certificates from them to the effect that they have not been disqualifiedfrom continuing as Statutory Auditors of the Company within the prescribed limits under Section 141 of the Companies Act, 2013.

EXPLANATION OR COMMENTS ON AUDITORS REPORT :

The report given by the Auditor is part of the Annual Report. There has been no adverse qualification, observations, adverse remark or disclaimer given by the Auditor in their report.

2. INTERNAL AUDITORS:

Pursuant to the provisions of Section 138 of the Companies Act, 2013, the Board of directors of the Company has appointed M/s. Mehta Sheth&Associates, Chartered Accountants (FRN:106238W) Ahmedabad as an Internal auditor of the Company for the financial year 2019-20.

3. SECRETARIAL AUDITOR:

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of directors has appointed M/s. Chirag Shah & Associates, Company Secretaries in Practice to undertake the Secretarial Audit of the Company for the financial year 2018-19. The Report of the Secretarial Audit Report is annexed herewith as (Annexure-6).

The Board has appointed M/s. Chirag Shah &Associates, Company Secretaries, Ahmedabad as Secretarial auditor of the Company for the financial year 2019-20.

4. COST AUDITOR :

As per Section 148 of the Companies Act, 2013, the Company is required to have the audit of its cost records conducted by a Cost Accountant in practice. In this connection, the Board of Directors of the Company has on the recommendation of the Audit Committee, approved the appointment of M/s. Kiran J. Mehta & Co. (FRN: 000025), Cost Accountants, Ahmedabad as the cost auditor of the Company for the year ending March 31, 2020.

24. DIRECTORS RESPONSIBILITY STATEMENT:

In terms of Section 134(3) of the Companies Act, 2013, in relation to the Financial Statements for FY 2018-19, the Board of Directors states that:

(a) in preparation of the annual accounts, the applicable accounting standards have been followed along with proper explanation relating to material departures;

(b) 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 at the end of the financial year and of the profit and loss of the company for that period;

(c) the directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities;

(d) the directors have prepared the annual accounts on a going concern basis;

(e) the directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively; and

(f) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

25. HUMAN RESOURCES:

Many initiatives have been taken to support business through organizational efficiency, process change support and various employee engagement programmes which has helped the Organization achieve higher productivity levels. A significant effort has also been undertaken to develop leadership as well as technical/ functional capabilities in order to meet future talent requirement.

26. CHANGE IN THE NATURE OF BUSINESS, IF ANY:

No change in nature of the business of the Company occurred during the year.

27. PROHIBITION OF INSIDER TRADING :

The Company has adopted a Code of Conduct for Prohibition of Insider Trading with regulate trading in securities by the Directors and designated employee of the Company. The Board is responsible for implementation of the Code. The code requires preclearance for dealing in the Companys shares and prohibits the purchase or sale of Company shares by the Directors and the designated employee while in possession of unpublished price sensitive information in relation to the Company and during the period when the Trading window is closed. The relevant policy is available on the Companys website.

28. DEMATERIALISATION OF SHARES:

The shares of your Company are being traded in electronic form and the Company has established connectivity with both the depositories, i.e. National Securities Depository Limited (NSDL) and Central Depository Services (India) Limited (CDSL). In view of the numerous advantages offered by the Depository system, members are requested to avail the facility of dematerialization of shares with either of the Depositories as aforesaid.

29. THE NUMBER OF COMPLAINTS RELATING TO CHILD LABOUR, FORCED LABOUR, INVOLUNTARY LABOUR, SEXUAL HARASSMENT IN THE LAST FINANCIAL YEAR AND THOSE PENDING AS ON THE END OF THE FINANCIAL YEAR :

Sr. No. Category No. of Complaints field during the financial year No. of Complainants pending as on end of the financial year
1. Child labour/forced labour/ Involuntary labour NIL NIL
2. Sexual harassment of women at workplace (Prevention, Prohibition and Redressal) Act, 2013. NIL NIL

30. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR OF THE COMPANY TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF THE REPORT:

No other material changes have taken place after completion of the financial period up to the date of this report which may have substantial effect on business and finances of the company and which are required to be disclosed in this Report.

31. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYS OPERATIONS IN FUTURE:

There are no significant material orders passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

32. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS:

The Company has an internal control system, commensurate with the size, scale and complexity of its operations. To maintain its objectives and independence, the internal Audit reports to the chairman of the Audit Committee of the Board.

The Internal Auditor monitors and evaluates the efficiency and adequacy of Internal Control System of the Company, its compliance with operating system, accounting procedures and policy of the Company. Based on the report of internal audit function, process owners undertake corrective action and thereby strengthen the controls. Significant audit observation and corrective actions thereon are presented to the audit committee of the board.

33. General:

(i). Insurance :

The assets of the company including Plant and Machineries, Factory Building, Stocks, Stores, Vehicles etc. have been adequately insured.

(ii). Industrial Relations :

During the year under review, your Company enjoyed cordial relationship with the workers and employees at all the levels.

(iii). Acknowledgement :

Your Directors expresses sincere thanks to various Central and State Government Departments, Organizations and Agencies for the continued co-operation and support extended by them. The Directors also gratefully acknowledge all stakeholders of the Company viz. customers, members, dealers, vendors, banks and other business partners for the excellent support received from them during the year. The Directors place on record their sincere appreciation to all employees of the Company for their unstinted commitment and continued contribution to the Company.

Place : Ahmedabad By order of the Board of Directors
Date : 29/05/2019 For, Bhagwati Autocast Limited
Dr. Pravin N. Bhagwati
Chairman & Managing Director
DIN : 00096799