Endurance Technologies Ltd Directors Report.
The Directors of your Company take pleasure in presenting the Twentieth Annual Report on the business and operations of the Company together with financial statements for the financial year ended 31st March, 2019.
SUMMARISED STATEMENT OF PROFIT AND LOSS:
र: in million
|Particulars||Financial Year||Financial Year||Financial Year||Financial Year|
|Revenue from operations||54,174.59||46,179.61||75,104.99||64,792.88|
|Raw Material Cost||35,237.29||28,816.10||43,494.54||36,609.14|
|Employee Benefit expenses||2,777.43||2,546.95||6,527.44||5,809.33|
|Profit before exceptional items,||5,554.62||4,288.81||7,538.80||6,062.16|
|tax and minority interest|
|Profit before tax||5,346.62||4,020.03||7,330.80||5,793.38|
|Net Tax expense||1,768.01||1,304.00||2380.74||1,885.81|
|Net profit for the year||3,578.61||2,716.03||4,950.06||3,907.57|
For the financial year 2018-19, the Board of Directors have recommended dividend of र: 5.50 per equity share of र: 10 each (55%) (previous year र: 4 per equity share), for consideration of the shareholders at the ensuing Twentieth Annual General Meeting ("AGM").
The dividend, if approved by the shareholders, will result in an outgo of र: 932.71 million, which includes tax on dividend aggregating to र: 159.10 million.
The dividend pay-out is in accordance with the Companys Dividend Distribution Policy.
Dividend Distribution Policy
This policy is effective from 26th August, 2016 and has been framed and adopted in terms of Regulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing Regulations"). In terms of the said Regulation, the scope of the policy, inter alia, lays down various parameters relating to declaration/ recommendation of dividend. There has been no change to the policy during the financial year 2018-19. The policy is attached as Annexure I and forms part of this Annual Report and is also placed on the Companys website www.endurancegroup. com/investor/investor-relations.
Amount proposed to be transferred to reserves
The Company has not transferred any amount of profits to reserves.
During the year under review, the Companys total income (excluding excise duty) on standalone and consolidated basis grew by 20.5% and 18.2%, respectively. The Company posted a total income of र: 54,337 million on a standalone basis as against र: 45,084 million in the previous year. The total income on a consolidated basis was र: 75,375 million compared to र: 63,748 million in the previous year.
The profit after tax also increased significantly by 31.8% in the financial year 2018-19 at र: 3,579 million as against र: 2,716 million in the previous year, on standalone basis; while consolidated profit after tax grew by 26.7% at र: 4,950 million as against र: 3,908 million in the previous year.
Consolidation of plant operations
The Company regularly monitors operating efficiencies of each plant and evaluates consolidation of operations at appropriate junctures. Uninterrupted supplies to its Original Equipment Manufacturer (OEM) customers is one of the key factors considered during this evaluation exercise.
During the financial year 2018-19, the Company decided to consolidate its operations at the Manesar plant. Accordingly, manufacturing activities at the Companys plant in Manesar, Haryana were discontinued in December 2018 and its operations were consolidated with the Pantnagar plant. As per the settlement arrived at for separation of workmen, an exceptional cost of र: 208 million towards compensation paid र: ( _ 170 million additional_ compensation over and above र: 38 million final settlement amount) has been incurred. The consolidation of plant operations has not resulted into any loss of revenue for the Company.
CONSOLIDATED FINANCIAL STATEMENTS:
As per Regulation 33 of the Listing Regulations and applicable provisions of the Companies Act, 2013 ("Act") read with the rules issued thereunder, consolidated financial statements of the Company for the financial year 2018-19 have been prepared in compliance with applicable accounting standards. The audited financial statements of the Company and its subsidiaries (including step-down subsidiaries) have been approved by the Board of Directors of respective entities.
During the year, the Board of Directors reviewed the affairs of the subsidiary companies in accordance with Section 129(3) of the Act. Consolidated financial statements together with the statutory auditors report form part of this Annual Report.
During the year, two corporate actions were initiated with respect to the Companys subsidiaries in Italy.
A. Merger of Companys step-down subsidiaries viz., Endurance Fondalmec SpA, Italy with Endurance FOA SpA, Italy
Effective 1st January, 2019, Endurance Fondalmec SpA (EF SpA) merged with Endurance FOA SpA (EFOA SpA), two wholly-owned operating subsidiaries of Endurance Overseas Srl (EOSrl) and step-down subsidiaries of the Company. Upon the merger, EF SpA ceased to exist and the name of EFOA SpA was changed to Endurance SpA. The merger was aimed to simplify the corporate and organisation structure of the two operating subsidiaries in Italy and to enable rationalisation of certain internal processes.
B. Acquisition of Fonpresmetal GAP SpA, Italy by
Endurance Overseas Srl (EOSrl)
EOSrl acquired the entire equity stake of Fonpresmetal Gap SpA ("Fonpresmetal"), an aluminium die casting company based in Bione, Italy effective 7th January, 2019. This acquisition was for a consideration of Euro 8.16 million which was funded through its internal accruals / borrowings. The consideration includes cash & cash equivalent of around Euro 3.6 million gross and upon netting of the outstanding debt for leasehold assets, the cash & cash equivalents was about Euro 1.9 million. Fonpresmetal had been a preferred supplier for highly complex aluminium die casting parts to Endurance SpA (erstwhile Endurance FOA S.p.A.), an operating step-down subsidiary in Italy. Fonpresmetal has its manufacturing facility in Bione, Brescia, Italy with a capacity of 6,500 tonnes of which 50% is dedicated for supplies to the Endurance Group companies in Italy.
Acquisition of Fonpresmetal is expected to augment casting capacity and help backward integration. This acquisition would also provide future growth opportunities for European subsidiaries.
Upon acquisition, the name of Fonpresmetal has been changed to Endurance Castings SpA.
Post these corporate actions, the Company has the following subsidiaries as on 31st March, 2019:
1. Endurance Overseas Srl, Italy (Direct subsidiary);
2. Endurance SpA, Italy (Step down subsidiary);
3. Endurance Engineering Srl, Italy (Step down subsidiary);
4. Endurance Castings SpA, Italy (Step down subsidiary); and
5. Endurance Amann GmBH, Germany (Direct subsidiary).
In terms of Section 129(3) of the Act, a statement in Form AOC-1, containing salient features of the financial statements of the Companys subsidiaries, forms part of the Annual Report. A copy of the audited financial statements of each of the subsidiary companies and English translation thereof will be available for inspection by any shareholder of the Company at its registered office during business hours. These financial statements are also placed on the Companys website www. endurancegroup.com/investor/investor-relations. A copy of these financial statements shall be made available to any shareholder of the Company on request.
Details of the subsidiary companies and their performance are covered in the Management Discussion and Analysis Report, forming part of this Report.
Amendments to Articles of Association of the Company
At the Nineteenth AGM held on 6th September, 2018, the shareholders of the Company had approved following amendments to the Articles of Association ("AOA") of the Company:
a. Modification in the manner of affixing Common Seal: The Companies (Amendment) Act, 2015 has amended the provisions relating to Common Seal, making it optional for companies to continue maintaining a seal. The Act, allows affixing the Common Seal on instruments by persons authorised by the Board by way of a resolution. Hence, for the purpose of administrative convenience, Article 104 of the AOA was amended to enable affixing Common Seal of the Company in the presence of such person(s) as the Board or a committee of the Board, may authorise; and
b. Deletion of Chapter II:
Chapter II of the AOA contained rights conferred to Actis Components and System Investments Limited ("Actis") as per the Shareholders Agreement dated 19th December, 2011 ("SHA"). Actis was a private equity investors and had invested in the equity shares of the Company in the financial year 2011-12. Actis divested its entire shareholding in the Company in the Initial Public Offering of the Companys equity shares in October 2016. As per the SHA, provisions of Chapter II ceased to be effective immediately upon receipt of listing approvals from the stock exchanges viz.: National Stock Exchange of India Ltd. and BSE Ltd. i.e. effective 18th October, 2016. Considering that the said Chapter had become redundant, the same was deleted from the AOA.
The paid-up equity share capital as on 31st March, 2019, was र: 1,406,628,480. There was no public issue, rights issue, bonus issue or preferential issue, etc., during the year. The Company has not issued shares with differential voting rights, sweat equity shares, neither has it granted any employee stock options nor issued any convertible securities.
OFFER FOR SALE OF EQUITY SHARES BY MR. ANURANG JAIN, PROMOTER AND MANAGING DIRECTOR OF THE COMPANY:
In terms of the requirement of continuous listing as stipulated under Rule 19(2)(b) and Rule 19A of the Securities Contracts (Regulation) Rules, 1957 and Regulation 38 of the Listing Regulations, the Company was required to increase its public shareholding to at least 25% within three years from listing of its equity shares on stock exchanges, i.e., from 19th October, 2016.
In view of this requirement, Mr. Anurang Jain, Promoter and Managing Director of the Company, sold 7.5% stake (10,552,688 shares) in the Company by offering the shares by way of Offer for Sale ("OFS") through the stock exchange mechanism._ As a result, the Company has achieved the mandated minimum public shareholding threshold of 25% within the stipulated time limit of three years post - IPO listing in October 2016. The OFS process was completed on 8th March, 2019.
DIRECTORS AND KEY MANAGERIAL PERSONNEL:
There was no change in the Board of Directors during the year under review.
The composition of the Board of the Company, as on 31st March, 2019, is as follows:
|Sr. Name of Director||Position|
|1. Mr. Naresh Chandra||Chairman (Non-Executive)|
|2. Mr. Anurang Jain||Managing Director (Executive)|
|3. Mr. Roberto Testore||Independent Director (Non-Executive)|
|4. Mr. Partho Datta||Independent Director (Non-Executive)|
|5. Mr. Soumendra Basu||Independent Director (Non-Executive)|
|6. Mr. Ramesh Gehaney||Director and Chief Operating Officer (Executive)|
|7. Mr. Satrajit Ray||Director and Group Chief Financial Officer (Executive)|
|8. Ms. Anjali Seth||Independent Director (Non-Executive)|
|9. Mrs. Falguni Nayar||Independent Director (Non-Executive)|
|10. Mr. Massimo Venuti||Director (Non-Executive)|
Continuation of directorship of Mr. Naresh Chandra, Chairman
In terms of Regulation 17(1A) of the Listing Regulations, the Members of the Company, at the Nineteenth AGM of the Company, accorded their consent by way of a Special Resolution for continuing the directorship of Mr. Naresh Chandra, Chairman of the Company, as he has attained the age of eighty-three years.
Re-appointment of Executive Directors
Mr. Ramesh Gehaney, Director and Chief Operating Officer (DIN: 02697676) and Mr. Satrajit Ray, Director and Group Chief Financial Officer (DIN: 00191467) were appointed as Executive Directors of the Company effective 6th June, 2014 for a term of five years each. The existing term of their appointment is valid up to 5th June, 2019. Based on the recommendation of the Nomination & Remuneration Committee, the Board at its meeting held on 14th May, 2019 has, subject to the approval of Members, approved re-appointment of Mr. Ramesh Gehaney and Mr. Satrajit Ray, as Executive Directors of the Company, for a period of five years from 6th June, 2019 and also approved the terms of their remuneration.
In terms of the provisions of Section 196, 197 and 198 read with Schedule V to the Act, approval of the Members is sought at the ensuing AGM of the Company, for reappointment of:
Mr Ramesh Gehaney as Executive Director of the .
Company, designated as Director and Chief Operating Officer; and
Mr . Satrajit Ray, as Executive Director of the Company, designated as Director and Group Chief Financial Officer.
Information as required under Regulation 36(3) of the Listing Regulations relating to Mr. Ramesh Gehaney and Mr. Satrajit Ray is provided in the Notice convening the Twentieth AGM.
Retirement of directors by rotation
In terms of Section 152(6) of the Act, Mr. Massimo Venuti, Director (DIN: 06889772), retires by rotation at the ensuing AGM and being eligible, has offered himself for reappointment. Information as required under Regulation 36(3) of the Listing Regulations is provided in the Notice convening the Twentieth AGM.
KEY MANAGERIAL PERSONNEL:
The following officials are Key Managerial Personnel of the Company in terms of the provisions of Section 203 of the Act: i. Mr. Anurang Jain, Managing Director; ii. Mr. Ramesh Gehaney, Director and Chief Operating Officer (Whole Time Director); iii. Mr. Satrajit Ray, Director and Group Chief Financial Officer (Chief Financial Officer); and iv. Mr. Sunil Lalai, Company Secretary and Vice President Legal (Company Secretary).
There has been no change in the Key Managerial Personnel during the year.
Number of Meetings of the Board, its Committees and Meetings of the Board Committees
During the year under review, the Board met five times. A detailed update on the Board, its composition and attendance of the Directors at each meeting is provided in the Corporate Governance Report.
The Board has constituted six committees, namely, Audit Committee, Nomination and Remuneration Committee,
Corporate Social Responsibility Committee, Stakeholders Relationship Committee, Risk Management Committee and Finance Committee. All recommendations made by the Committees of Board including the Audit Committee were accepted by the Board.
A detailed charter including terms of reference of various Board constituted Committees, number of Committee meetings held during the financial year 2018-19 and attendance of members at each meeting, forms part of the Corporate Governance Report.
DIRECTORS RESPONSIBILITY STATEMENT:
Pursuant to Section 134(5) of the Act, the Directors, based on the representation received from the management, confirm that: (i) in the preparation of the annual accounts for the year ended 31st March, 2019, the applicable accounting standards have been followed along with proper explanation 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 at the end of the financial year and of the profit and 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 this Act 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 internal financial controls are adequate and are operating effectively; and (vi) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.
DECLARATION BY INDEPENDENT DIRECTORS:
In terms of Section 149(7) of the Act and Regulation 16(1) (b) of the Listing Regulations, the Independent Directors of the Company have submitted their declarations confirming compliance with the criteria of independence as stipulated thereunder.
All the Independent Directors of the Company have affirmed compliance with the Companys Code of Conduct for Directors and Employees for the financial year 2018-19.
DIRECTORS REMUNERATION POLICY AND CRITERIA FOR MATTERS UNDER SECTION 178 OF THE ACT:
The Nomination and Remuneration Policy approved by the Board at its meeting held on 10th June, 2016, was last revised by the Board at its meeting held on 25th April, 2019. This is also placed on the Companys website: www. endurancegroup.com/investor/investor-relations. In terms of the said Section, the scope of the policy covers directors, key managerial personnel and senior management employees of the Company. The policy, inter alia, lays down the principles relating to appointment, cessation, remuneration and evaluation of directors, key managerial personnel and senior management employees of the Company.
Details of the Companys policy on directors appointment and remuneration, including criteria for determining qualifications, positive attributes, independence of a director and other matters provided under sub-section (3) of Section 178 of the Act, adopted by the Board, forms part of the Corporate Governance Report.
PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND THE DIRECTORS:
Pursuant to the amendments notified effective 7th May, 2018 vide Companies (Amendment) Act, 2017, Section 178 was amended. In terms of the revised Section 178 of the Act, the Nomination and Remuneration Committee ("NRC") of a company is responsible for specifying: i. the manner for effective evaluation of_ performance of the Board, its Committees and individual directors; and ii. the body who shall be conducting the performance evaluation.
In view of the foregoing, the Nomination and Remuneration Policy ("NR Policy") of the Company, inter alia, specifies that the Board will conduct performance evaluation of the Board as a whole and its Committees and the individual Directors. Performance evaluation of Directors shall be done by the entire Board (excluding the director being evaluated) based on recommendations of the meeting of independent directors. The NRC shall continue to be responsible for implementation of the methodology followed by the Company in this regard. The NR Policy of the Company is placed on the Companys website at www.endurancegroup.com/investor/investor-relations.
Performance of the Board was evaluated after seeking inputs from all the directors on the basis of criteria such as the board composition and structure, effectiveness of board processes, information and functioning, its contribution in effective management of the Company, etc. Based on the assessment, observations on the performance of Board were discussed. Key action areas for the Board, Committees and directors were noted.
During the period under review, the annual performance evaluation of the Board, its Committees and individual directors for the financial year ended 31st March, 2019 was conducted by:
i. the independent directors, at their meeting held on 24th April, 2019; and
ii. the Board, at its meeting held on 25th April, 2019.
Information and other details on annual performance assessment is given in the Corporate Governance Report.
The Company is in compliance with the Secretarial Standards on Meetings of Board of Directors (SS-1) and General Meetings (SS-2).
INFORMATION ON BOARD MEETING PROCEDURE AND ATTENDANCE DURING THE FINANCIAL YEAR 2018-19:
Board meetings of the Company are conducted as per the provisions of the Act, the Listing Regulations and applicable Secretarial Standards. In the last meeting of the calendar year, the Board decides the schedule of meetings to be held in the succeeding year.
Based on the dates of meetings decided by the Board, adequate notice is given to all directors and Committee members; an agenda with detailed notes thereon is sent at least seven days in advance for the meetings. The notes to agenda contain relevant information and supporting documents along with recommendation from the management, for meaningful deliberation on the agenda items. During the year under review, no meeting was held at short notice.
A gist of Board and Committee meetings held during the year along with the attendance record of each director forms part of the Corporate Governance Report.
Audit Committee of the Company is constituted in terms of Section 177 of the Act and Regulation 18 of the Listing Regulations.
As on 31st March, 2019, the Committee comprised following directors as its members: i. Mr. Partho Datta, Chairman; ii. Mr. Soumendra Basu; and iii. Ms. Anjali Seth.
All Committee members are non-executive independent directors and are financially literate as required under Regulation 18(1)(c) of the Listing Regulations.
The Committee invites the Managing Director, the Director and Group Chief Financial Officer, the Director and Chief Operating Officer, the Statutory Auditors and the Chief Internal Auditor to attend meetings of the Committee.
Mr. Sunil Lalai, Company Secretary and Vice President - Legal acts as Secretary to the Committee.
CORPORATE SOCIAL RESPONSIBILITY COMMITTEE:
The Corporate Social Responsibility Committee is constituted in compliance with Section 135 of the Act.
As on 31st March, 2019, the Committee comprised following directors as its members: i. Mr. Anurang Jain, Chairman; ii. Mr. Soumendra Basu; and iii. Mr. Ramesh Gehaney
RISK MANAGEMENT COMMITTEE:
In terms of the Regulation 21(5) of Listing Regulations, amended vide SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018, notified on 9th May, 2018, the requirement of constituting a Risk Management Committee had been extended to the top 500 listed entities, from the earlier top 100 listed entities, based on market capitalisation as at the end of previous financial year. The amendment was effective 1st April, 2019.
The Company ranked 145th as per the market capitalisation as of 31st March, 2018. Accordingly, the Board, at its meeting held on 3rd November, 2018, constituted a Risk Management Committee ("RMC") comprising the following Directors as its members: i. Mr. Anurang Jain, Chairman; ii. Mr. Partho Datta; iii. Mr. Ramesh Gehaney; and iv. Mr. Satrajit Ray.
The Company has a Risk Management Policy which was framed in June, 2015 and was last revised in August, 2017.
The policy lays down a framework for risk management and mitigation process commensurate with the scale and nature of the Companys business. The policy also identifies the category of risks in line with the Companys growth strategy, continuously changing business environment and legislative requirements. As per the terms of reference of RMC, it is entrusted with the responsibility to review Risk Management Framework.
The Risk Management Policy embodies a function-wise risk management framework. This framework defines thresholds against each of the identified risk events and mitigation measures implemented to alleviate such risks. The framework is dynamic in nature and is reviewed periodically by the respective functions. The senior management team reviews the critical risk events and implements action plan to avoid recurrence of such events. A risk report to this effect is reviewed by the RMC bi-annually and critical matters, if any, along with mitigation plans are placed before the Board and reviewed.
During the year under review, ICRA Ltd, a credit rating agency registered with SEBI had improved the rating and assigned long term rating of ICRA AA+/ Stable from ICRA AA/ Positive and reaffirmed ICRA A1+ for short term rating. CRISIL Limited, a credit rating agency registered with the SEBI, has reaffirmed the Companys long-term rating of CRISIL AA/Positive and short-term rating of CRISIL A1+.
INTERNAL FINANCIAL CONTROLS:
In terms of the Section 134(5)(e) of the Act, the term Internal Financial Control means the policies and procedures adopted by a company for ensuring orderly and efficient conduct of its business, including adherence to companys policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and timely preparation of reliable financial information.
The Company has adequate Internal Financial Control system in the form of policies and procedures. It follows a structured mechanism of function-specific reviews and risk reporting by the Management Committee of the Company and critical matters are brought to the attention of the Audit Committee and the Board. Further, internal Standard Operating Procedures (SOPs) and Schedule of Authority (SOA) are well-defined and documented to provide clear guidance to ensure that all financial transactions are authorised, recorded and reported correctly.
In order to record day-to-day financial transactions and ensure accuracy in reporting thereof, the Company uses an established Enterprise Resource Planning (ERP) system. Adequate controls and checks are built in the ERP system to integrate the underlying books of account and prevent any kind of control failure. Mapping of policies and procedures including SOPs and SOA is done through ERP and audit of these processes forms part of the work scope of both internal and statutory auditors of the Company.
The Company has an in-house Internal Audit (IA) team lead by the Chief Internal Auditor who reports to the Audit Committee. The scope of work, accountability, responsibility, reporting and authority of the IA Department is defined in the Internal Audit Charter which is reviewed by the Audit Committee, annually.
The IA team draws up an internal audit plan in advance for a financial year, which is approved by the Audit Committee and progress thereof is reviewed by the Committee at its quarterly meetings. In order to ensure objectivity and independence of the audit mechanism, internal audit of processes for certain plants are outsourced. The IA team conducts audits of the processes followed by plants and corporate functions, specifically emphasising on adherence to SOPs, controls and internal guidelines issued by the management. Implementation of the recommendations are monitored by the IA team.
Report on audit findings and corrective measures taken by the respective process owners, is reviewed periodically by the senior management team of the Company comprising the Managing Director, the Director and Group Chief Financial Officer and the Director and Chief Operating Officer. Significant observations and status of implementation of recommendations of the IA team are presented to the Audit Committee. The Committee reviews the report and advises on improving the systems and processes, where necessary.
The Companys internal control mechanism is commensurate with the scale of its operations thereby ensuring compliance of the Act and the Listing Regulations.
In compliance with Regulation 34 of the Listing Regulations, a separate report on Corporate Governance along with a certificate from the statutory auditors towards compliance of the provisions of Corporate Governance, forms an integral part of this Annual Report.
The Managing Director and the Director and Group Chief Financial Officer have certified to the Board with regard to financial statements and other matters as required under Regulation 17(8) read with Schedule II to the Listing Regulations.
BUSINESS RESPONSIBILITY REPORT:
Regulation 34(2) of the Listing Regulations, inter alia, provides that the annual report of the top 500 listed entities based on market capitalisation (calculated as on 31st March of every financial year), shall include a Business Responsibility Report. In compliance thereto, a Business Responsibility Report for the financial year 2018-19 forms part of this Annual Report.
CODE OF CONDUCT FOR PREVENTION OF INSIDER TRADING AND FAIR DISCLOSURE OF UNPUBLISHED PRICE SENSITIVE INFORMATION:
In terms of the SEBI (Prohibition of Insider Trading) Regulations, 2015, ("PIT Regulations") the Company has adopted a Code of Conduct for Prevention of Insider Trading ("PIT Code"). Further, the Company has also adopted a Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information ("UPSI Code").
The PIT Code and UPSI Code are drawn up on the principle that the Companys directors and employees owe a fiduciary duty, amongst others, to the shareholders of the Company to place the interest of shareholders above their own and conduct their personal securities transactions in a manner that does not give rise to any conflict of interest.
The PIT Code lays down guidelines for insiders on the procedures to be followed and disclosures to be made while dealing in securities of the Company and also stipulates the consequences of non-compliances or leak of confidential price sensitive information.
The UPSI Code documents the manner of disseminating UPSI for making it accessible to the public on non-discriminatory basis.
Any information is determined to be UPSI, based on the principles enumerated in the Companys policy on Determination of Materiality of Event / Information.
The SEBI had issued a notification dated 31st December, 2018, amending the provisions of the PIT Regulations. These amendments were notified vide SEBI (Prevention of Insider Trading) (Amendment) Regulations, 2018 and are effective 1st April, 2019.
In terms of the notified amendments, the PIT Code, UPSI Code and Whistle Blower Policy of the Company were revised by the Board, at its meeting held on 7th February, 2019, to align these policies with the amended regulations.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND 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 Act read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as Annexure II.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES:
In terms of Schedule VII to the Act and Companys Corporate Social Responsibility ("CSR") Policy, the Company has undertaken CSR projects under the aegis of Sevak Trust, with whom it has been associated for more than a decade. The CSR projects and programmes approved by the Board are aimed towards enhancing employability by imparting skill-building vocational training to unemployed youth and undertake developmental activities in villages to improve living standards and welfare through education, promoting health & hygiene, educating on agriculture methods & means of livelihood, provision of community facilities and the like. As part of its CSR initiatives, the Company has also undertaken the responsibility of upgrading the Sevak Trust Balwadi. This Balwadi, located in Waluj, Aurangabad, provides pre-primary education to children from economically weaker sections of the society.
Details about the CSR Policy and initiatives undertaken during the year, are available on Companys website at www. endurancegroup.com. The Annual Report on CSR activities is attached as Annexure III to this Report.
Expenditure towards CSR activities
During the year under review, the Company had earmarked an amount of र: 68.09 million for expenditure towards CSR activities. The Board of Directors have approved following projects / programmes, which are as per Schedule VII to the Act and CSR Policy of the Company:
1. Village Development Project;
2. Vocational Training Centre; and
3. Sevak Trust Balwadi.
Against the amount earmarked, the total CSR expenditure has been र: 69.27 million during the financial year 2018-19 with respect to the above projects/ programmes.
DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS:
During the year under review, no instances of fraud have been reported under Section 143(12) of the Act.
The shareholders of the Company at their Eighteenth AGM had approved the appointment of M/s. S R B C & CO. LLP (ICAI Firm Registration No. 324982E/ E300003) as Statutory Auditors of the Company from the conclusion of
Eighteenth AGM till the conclusion of Twenty-third AGM of the Company.
In terms of the proviso to Section 139(1) of the Act, the said appointment was subject to ratification by shareholders at every AGM held during the tenure of their appointment. The proviso to Section 139(1) of the Act has been omitted by the Companies (Amendment) Act, 2017 with effect from 7th May, 2018; accordingly, the requirement of ratifying appointment of statutory auditors at every annual general meeting, during their tenure of appointment, has been dispensed with.
As per the provisions of Section 148 of the Act and Rule 3 of the Companies (Cost Records and Audit) Rules, 2014, the Company is required to maintain cost records with respect to the manufacturing activities, viz. manufacturing of engine components, manufacturing of dies & moulds and generation of electricity through windmill, and get the same audited.
Based on the recommendation of the Audit Committee, the Board has appointed Mr. Jayant B. Galande, Cost Accountant (Membership No. M-5255) as Cost Auditor of the Company for the financial year 2019-20. The remuneration proposed is र: 400,000 and is subject to ratification by the shareholders at the ensuing AGM. The said remuneration is excluding applicable taxes and out-of-pocket expenses, if any, payable at actuals.
In terms of the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board of Directors had appointed Mr. Sachin Bhagwat (Membership No. A10189, CP No. 6029) Practicing Company Secretary, to conduct an audit of the secretarial records for the financial year 2018-19.
The Secretarial Audit Report for the financial year 2018-19 is set out as Annexure IV to this report. The said report does not contain any qualification, reservation or adverse remark.
Policies of the Company
The Listing Regulations mandate formulation of certain policies for listed companies. Accordingly, the Board of Directors has, from time to time, framed and approved policies as required under the Listing Regulations as well as under the Act.
Listed below are certain key policies that have been framed by the Company:
|Name of Policy|
|1. Nomination and Remuneration Policy|
|2. Corporate Social Responsibility Policy|
|3. Dividend Distribution Policy|
|4. Whistle Blower Policy|
|5. Risk Management Policy|
|6. Code of Conduct for Prevention of Insider Trading|
|7. Code of Conduct for Directors and Employees|
|8. Policy on Fair disclosure of Unpublished Price Sensitive Information|
|9. Policy for Determination of Materiality of Subsidiaries|
|10. Policy for Determination of Materiality of and Dealing with Related Party Transactions|
|11. Policy for Determination of Materiality of Events/ Information|
|12. Policy for Preservation of Documents|
|13. Archival Policy for disclosure to Stock Exchanges|
The above-mentioned policies are available on the Companys website at the link www.endurancegroup.com/ investor/investor-relations.
These policies are periodically reviewed by the Committees responsible therefor and changes, if any, are recommended to the Board for approval. Changes to the policies also factor amendments in statutes or governing regulations. During the period from 1st April, 2018 till the date of report, the following policies were revised:
|Name of Policy||Revised effective|
|1. Policy for Determination of Materiality of Event/ Information||25th April, 2018|
|2. Policy for Preservation of Documents|
|3. Corporate Social Responsibility Policy||10th August, 2018|
|4. Policy for Determining Material Subsidiaries|
|5. Policy on Determining Materiality of and Dealing with Related Party Transactions|
|6. Whistle Blower Policy|
|7. Code of Conduct for Prevention of Insider Trading||7th February, 2019|
|8. Policy on Fair disclosure of Unpublished Price Sensitive Information|
|9. Nomination and Remuneration Policy||25th April, 2019|
In terms of Section 134(3) of the Act, a brief on revisions to the following policies of the Company is given below:
1. Nomination and Remuneration Policy
Based on the recommendation of the Nomination and Remuneration Committee ("NRC"), the Nomination and Remuneration Policy was revised by the Board, at its meeting held on 25th April, 2019. The key changes made to the NR Policy are tabulated below:
|Existing Clause||Revised clause|
|Clause IV. Definition|
|A. -||New definition included |
|Designated Senior Management Employees means officers/ personnel of the Company who are members of its core management team excluding the Board of Directors, and such other officers as may be decided by the Nomination and Remuneration Committee, from time to time.|
|Clause VI. Nomination|
|B. 1. Appointment (a) to fill up casual vacancy||1. Appointment (a) to fill up any vacancy|
|5. Cessation of engagement This can either be:||5. Cessation of engagement This can either be:|
|5.2. Retirement from services in terms of Companys||5.2 Retirement from services in terms of Companys Human|
|Human Resource Policy. The Board may, at its discretion, continue employment of whole-time directors in the same position/ remuneration or otherwise even after attaining the retirement age, for the benefit of the Company. The discretion to continue employment of key managerial personnel and senior management employees shall vest with the Managing Director, who shall decide the position / remuneration or otherwise after an incumbent attains the retirement age.||Resource Policy|
|The Board may, at its discretion, continue employment of whole-time directors in the same position/ remuneration or otherwise even after attaining the retirement age, for the benefit of the Company. The discretion to continue employment of Key Managerial Personnel and Designated Senior Management employee shall vest with the Committee, who shall decide the position / remuneration or otherwise after an incumbent attains the retirement age.|
2. Corporate Social Responsibility Policy
The CSR Policy of the Company was revised on 10th August, 2018. The earlier policy covered a few selected activities permitted for CSR as per Schedule VII to the Act. Hence, the CSR Policy was revised to cover all the areas as mentioned under Schedule VII along with an indicative list of activities under each of them. The CSR Policy forms part of the Annual Report on Corporate Social Responsibility Activities attached as Annexure III as stated earlier in this Report.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES:
Disclosure of 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 herewith as Annexure V.
A statement containing particulars of employees as required under Section 197(12) of the Act read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is provided as a separate annexure forming part of this Report. In terms of Section 136 of the Act, the Annual Report and financial statements are being sent to the shareholders excluding the aforesaid annexure. The said annexure is available for inspection at the registered office of the Company during business hours and will be made available to any shareholder on request.
PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:
The Company has not advanced any loans or given guarantees covered under the provisions of Section 186 of the Act. Particulars of investments form part of the notes to financial statements.
During the year under review, the Company has not accepted any deposits from the public.
VIGIL MECHANISM/ WHISTLE BLOWER POLICY:
In terms of the provisions of Section 177(9) of the Act, read with Rule 7 of the Companies (Meetings of Board and its Powers) Rules, 2014, the Company has established a vigil mechanism (which incorporates a whistle blower policy in terms of Regulation 22 of the Listing Regulations) for Directors and employees to report their genuine concerns. The objective of the policy is to create a window for any person who observes an unethical behavior, actual or suspected fraud, or violation to the Companys Code of Conduct. Pursuant to the notification of Prevention of Insider Trading (Amendment) Regulations, 2018, the Whistle Blower policy was amended in the Board meeting held on 7th February 2019. The amendment pertains to make employees aware of such a policy to enable them to report instances of leak of Unpublished Price Sensitive Information.
Protected disclosures can be made by a whistle blower to the dedicated e-mail ID and/ or postal address of ombudsman, appointed under the Policy. The Policy has been hosted on the Companys website at www.endurancegroup.com.
In terms of the provisions of the Act, an ombudsman has been appointed to independently investigate protected disclosures communicated under the Whistle Blower Policy and matters of violation to Companys Code of Conduct.
MATERIAL CHANGES AND COMMITMENTS AFFECTING FINANCIAL POSITION OF THE COMPANY BETWEEN 31ST MARCH, 2019 AND DATE OF BOARDS REPORT:
The Company has availed र: 1000 million by issue of Commercial Papers to meet its fund requirements.
RELATED PARTY TRANSACTIONS:
As per the Listing Regulations, all Related Party Transactions (RPT) and any modifications thereto are placed before the Audit Committee for approval.
During the year, the Company did not enter into any contract/ arrangement/ transaction with related parties which could be considered material for which shareholders approval is required in accordance with Section 188 of the Act and the RPT Policy.
Accordingly, there is no information to be disclosed in Form AOC-2, while the particulars of all RPT in terms of Indian Accounting Standard (Ind AS) 24 are forming part of the financial statements.
The RPT Policy, as approved by the Board, can be accessed on the Companys website at www.endurancegroup.com/ investor/investor-relations.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS:
There were no significant material orders passed by Regulators /Courts which would impact the going concern status of the Company and its future operations.
In terms of Section 92(3) of the Act, the annual return of the Company for the financial year ended 31st March, 2019 shall be available on the Companys website at: www.endurancegroup.com/investor/investor-relations.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013:
The Company has adopted a "Safety and Security of Women at Workplace" policy ("Policy") in line with the requirements of The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. The Policy aims to provide a safe, friendly, positive and productive working environment and promote an atmosphere in which employees can realise their maximum potential. The Policy applies to all permanent and temporary employees and also to workmen engaged by the Company through contractors. The Company observes zero tolerance towards any kind of violation of the aforementioned Policy. As per the Policy, the Company has constituted Internal Complaints Committees ("ICC") for all its locations which are chaired by a female employee and senior management officials of the Company are its members along with representative of non-government organisation / association committed to the cause of women or a person familiar with the issues relating to sexual harassment. The ICC is responsible for redressal of complaints related to sexual harassment and follows the guidelines provided in the Policy.
During the year under review, there were no complaints received by the ICC under the Policy.
During the year under review, the industrial relations remained cordial. Wage settlement agreements were renewed with workmen unions that were due during the year.
INVESTOR EDUCATION AND PROTECTION FUND:
In accordance with the provisions of Sections 124 and 125 of the Act and Investor Education and Protection Fund (Accounting, Audit, Transfer and Refund) Rules, 2016 ("IEPF Rules"), dividends of a company which remain unpaid or unclaimed for a period of seven years from the date of transfer to the Unpaid Dividend Account shall be transferred by the company to the Investor Education and Protection Fund ("IEPF").
In terms of the foregoing provisions of the Act, no dividend amount or shares were required to be transferred to the IEPF by the Company during the year ended 31st March, 2019.
The Company has uploaded details of unpaid and unclaimed dividend amounts lying with the Company as on 10th December, 2018, on the Companys website www.endurancegroup.com/ investor/investor-relations and on the website of the Ministry of Corporate Affairs at www.iepf.gov.in.
The following table provides dates on which unclaimed dividend and their corresponding shares would become liable to be transferred to the IEPF:
|Financial Year||Date of declaration of dividend||Amount of unpaid dividend as on 31st March, 2019 (in र:)||Due date for transfer to IEPF|
|2016-17||28th July, 2017||47,795||31st August, 2024|
|2017-18||6th September, 2018||42,212||11th October, 2025|
Your Directors take this opportunity to express their sincere appreciation towards the commitment and hard work of all its employees during the year.
The Directors also express gratitude to the shareholders, employees & workmen, workmen unions, customers, vendors, dealers, bankers, government authorities of India and other countries where the Company operates and all other business associates for their continued support extended to the
Company and reposing their confidence in the management. The management looks forward to their continued support in future.
|For and on behalf of the Board|
|Date: 14th May, 2019||DIN: 00027696|