Mahindra EPC Irrigation Ltd Directors Report.

Your Directors are pleased to present the 37th Annual Report on business and operations of your Company Report alongwith the audited financial statements and accounts for the year ended 31st March, 2019.

FINANCIAL HIGHLIGHTS

Highlights for the financial year are as under:

(Rs. in Crores)
For the Year ended 31st March, 2019 For the Year ended 31st March, 2018*
Revenue from Operations 260.11 204.81
Other Income 1.06 1.79
Total Income 261.17 206.60
Profit Before Interest, Depreciation & Tax 21.40 14.00
Finance Cost 1.39 0.51
Depreciation 3.07 3.14
Profit Before Tax 16.94 10.36
Tax expense 5.50 5.49
Profit After Tax 11.44 4.94
Other Comprehensive Income/ (loss) for the year (0.07) 0.01
Profit for the year attributable to owners of the Company 11.37 4.95

* Figures have been regrouped as per Indian Accounting Standards ("IND AS").

Operations and Financial Overview

In this challenging environment, your Company delivered a strong performance. During the year under review, your Companys turnover was at Rs. 260.11 Crores as compared to Rs. 204.8 Crores for the previous year reflecting a growth of 27% over previous year. The Company made a Profit Before Tax of Rs. 16.94 Crores for the year 2018-19 as compared to Rs. 10.4 Crores in the previous year reflecting a growth of 62.88%. The Profit After Tax was at Rs. 11.44 Crores as compared to Rs. 4.9 Crores in the previous year.

The year under review, saw amplifying growth in Micro Irrigation System in agriculture across all project market. The effective implementation of Pradhan Mantri Krishi Sinchai Yojana ("PMKSY Scheme") has brought more than 10 million hectares of land under irrigation during the year. The increasing awareness of micro irrigation amongst the farmer community and increasing allocation for micro irrigation under the PMKSY Scheme helped creation of steady demand for MI system. States like Andhra Pradesh, Chhattisgarh, Gujarat, Karnataka, Tamilnadu and Telangana have accelerated their implementation of Micro Irrigation projects.

The penetration of micro irrigation in different States is different and the average penetration at all India level is at around 7% with most of the cultivable land still being rain-fed. There is mammoth potential for promotion of micro irrigation in India.

A detailed analysis of the financial results is given in the Management Discussion and Analysis Report which forms part of this Report.

Dividend

Your Directors are pleased to recommend a dividend of 10% i.e. Rs. 1.00 per equity share of Rs.10 each for the year ended on 31st March, 2019 payable to those shareholders whose names appear in the Register of Members as on the Book Closure Date. The dividend, if approved by the members, would involve a cash outflow of Rs. 3.34 Crores (inclusive of tax on dividend) as against Rs. 1.67 Crores comprising the dividend of Rs. 0.50 per equity share of Rs. 10 each and tax thereon paid for the previous year. Further, the Board of Directors of your Company decided not to transfer any amount to the General Reserve for the year under review.

Change of Name of the Company

The Company is in the business of manufacture and sale of Micro Irrigation Equipment and Systems. In order that the name of the Company reflects this in a clear and concise manner, during the year under review, the name of the Company has been changed to ‘Mahindra EPC Irrigation Limited with effect from 28th February, 2019.

Joint Venture

During the year under review, your Company has entered into Joint Venture arrangements with TOP Greenhouses Limited, Israel to set up Mahindra Top Greenhouses Private Limited for the Geenhouse / Polyhouse business. It will provide an opportunity for both Joint Venture partners to draw on the strengths of each other and grow protected cultivation business by providing access to hi-tech and relevant solutions to protected cultivation customers both large and small. With more evident impact of climate change on agriculture, protected cultivation is an important method to raise agricultural productivity in the country.

Corporate Governance & Management Discussion and Analysis Report

Your Company believes that sound practices of good Corporate Governance, Transparency, Accountability, and Responsibility are the fundamental guiding principles for all decisions, transactions, and policy matters of the Company. A_ Report on Corporate Governance, alongwith a certificate from the Statutory Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, (the "LODR Regulations") forms part of this Annual Report. Further, the Management Discussion and Analysis Report for the year under review, as stipulated under LODR Regulations, forms part of this Report.

Stock Options

The Nomination and Remuneration Committee of the Board of Directors, inter alia, administers and monitors the Employees Stock Option Scheme of the Company "the ESOS". The ESOS is in compliance with the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 and there have been no material changes in the said scheme during the year under review.

During the year under review 35,871 nos. of Stock Options got vested under the ESOS and were exercised immediately after vesting. Accordingly, the Company made the allotment of 35,871 Equity Shares.

The Nomination and Remuneration Committee of the Board of Directors further granted 80,110 Stock Options during the year under review, comprising about 0.28% of the current paid up capital.

The applicable disclosures as stipulated under the SEBI Guidelines as on 31st March, 2019 (cumulative position) with regard to the ESOS are provided in Annexure II to this Report. Voting rights on the shares issued to employees under the ESOS are either exercised by them directly or through their appointed proxy.

Share Capital

During the year, with the allotment of 35,871 equity shares on exercising of Stock Options by employees, the total paid up equity share capital of the Company increased from 2,77,09,950 equity shares of Rs. 10 each to 2,77,45,821 equity shares of Rs. 10 each. The said equity shares have been listed on the Bombay Stock Exchange Limited and they rank pari passu with the existing equity shares in all respects. Accordingly, the Paid-up Share Capital of the Company stood at Rs. 27,74,58,210 divided into 2,77,45,821 equity shares of Rs.10 each as on 31st March, 2019.

Holding Company

The promoters of the Company i.e. Mahindra and Mahindra Limited ("M & M") hold 1,51,44,433 equity shares which represent 54.58% of the total paid up capital of the Company. Your Company continues to be a subsidiary company of M & M. The Company does not have any subsidiary company.

Contracts and arrangements with Related Parties

During the financial year, all contracts/arrangements/ transactions entered by the Company with related parties were in the ordinary course of business and on an arms-length basis. During the year, the Company had not entered into any contract/arrangement/ transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions. All related party transactions are placed before the Audit Committee for approval, wherever applicable. Prior omnibus approval is also obtained from the Audit Committee for the related party transactions which are of repetitive nature as well as the transactions which cannot be foreseen and accordingly, the required disclosures are made to the Committee on quarterly basis for approval of the Committee. The Companys major related party transactions are generally with its holding and associate companies. The related party transactions are entered into based on considerations of various business exigencies, such as synergy in operations, sales transactions through tenders or otherwise. All related party transactions are negotiated on an arms-length basis, and are intended to promote the Companys interests. The Policy on materiality of related party transactions and dealing with related party transactions as approved by the Board of Directors may be accessed on the Companys website at the link: http://www.mahindrairrigation.com/pdf/ EPC_Policy_on_Related Party_Transactions.pdf. The related party transactions have been set out in the Note No. 31 to the financial statement.

Risk Management

The Company has constituted a Risk Management Committee comprising Mr. Nikhilesh Panchal, Mr. Ashok Sharma and Mr. Anand Daga. Mr. Nikhilesh Panchal is the Chairman of this Committee. The Company has adopted the Risk Management Policy. The Committee is entrusted with the responsibility to assist the Board of Directors in (a) overseeing and approving the Companys enterprise wide risk management framework; and (b) overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed.

There is an adequate mechanism in place about risks and uncertainties that can impact its ability to achieve its strategic objectives, risk assessment, risk mitigation and minimization procedures and its periodical review.

Industrial relations

The Company believes that sustainable growth can only be achieved in an organisation which focuses on a performance culture and where employees are engaged and empowered to be the best they can be.

Employees at all levels have contributed to the performance of your Company. Your Directors place on record the Co-operation of employees during the year under report. The Directors also place on record the unstinted Co-operation extended by the staff members during the period under review.

Our mission is to protect and enhance the well-being of our employees, visitors and other stakeholders. A safe work environment is non-negotiable, for which we follow strict safety standards in all our facilities. Our safety practices ensure all possible safety hazards are identified and eliminated, not only at the workplace but also during employee travel. We promote holistic safety culture to improve safety beyond work.

The Management Discussion and Analysis Report gives an overview of the developments in Human Resources / Industrial Relations during the year.

Safety, Health and Environmental Performance

Your Companys commitment towards safety, health and environment is being continuously enhanced and your Company encourages involvement of all its employees in activities related to safety, including promotion of safety standards. This is also demonstrated by the fact that there has been no single incidence of accident for the last 1625 days. The Safety Committee, constituted for the same, regularly reviews the adherence of safety norms. Some of the programs undertaken by the Company include behaviour based safety training, knowledge based fire extinguisher training, fire fighting training and safety awareness, etc. Various health checkup programs for employees were regularly undertaken by the Company during the year. Requirements relating to various environmental legislations and environment protection have been duly complied by your Company.

Directors and Key Managerial Personnel

a) Key Managerial Personnel ("KMP")

In accordance with the provisions of Section 203 of the Act, the following persons have been designated as KMP of the Company as on 31st March, 2019:

Name of the KMP Designation
Mr. Ashok Sharma Managing Director
Mr. Sanjeev Mohoni * Chief Executive Officer (CEO)
Name of the KMP Designation
Ms. Sunetra Ganesan Chief Financial Officer (CFO)
Mr. Ratnakar Nawghare Company Secretary (CS)

* The Board of Directors in the meeting held on 30th April, 2019 re-appointed Mr. Sanjeev Mohoni as Chief Executive Officer.

b) Directors

Pursuant to the provisions of Section 149 of the Companies Act, 2013 (the "Act"), the Non independent Director Mr. S Durgashankar would retire and, being eligible, has offered himself for re-appointment.

The first term of five years of all three independent directors would be expiring on the conclusion of this ensuing Annual General Meeting and Mr. Anand Daga and Mr. Nikhilesh Panchal, independent directors would retire, and being eligible have offered themselves for reappointment for a further period of five years. Mr. Vinayak Patil would cease to hold office as an independent director from the conclusion of the ensuing Annual General Meeting, upon completion of his tenure as approved by the shareholders at 32nd Annual General Meeting and the Resolution dated 8th February, 2019 passed by Postal Ballot for continuation of his current term on attaining age of 75 years.

Mr. Vinayak Patil was appointed as a director on the Board of Directors on 8th July, 2003. He has made significant contributions towards effective functioning of the Board of Directors and has been acting as the chairman of the Audit Committee and Stakeholders Relationship Committee and member of Corporate Social Responsibility Committee of the Company. The Board of Directors places on record its sincere appreciation and recognition of the valuable contribution and services rendered by Mr. Vinayak Patil during his tenure as a Director on the Board of Directors of the Company. The Nomination and Remuneration Committee, based on the policy formulated to determine the criteria for determining qualifications, positive attributes and independence of a director, as required under Section 178(4) of the Companies Act, 2013 and on the basis of performance evaluation of independent directors and taking into account business knowledge, experience and the significant contribution made by Mr. Anand Daga and Mr. Nikhilesh Panchal during their tenure, has recommended to the Board of Directors that continued association of Mr. Anand Daga and Mr. Nikhilesh Panchal as independent directors of the Company would be beneficial to the Company. Based on the above and performance evaluation of independent director, the Board of Directors recommends re-appointment of Mr.Anand Daga and Mr. Nikhilesh Panchal as independent directors of the Company, not liable to retire by rotation, to hold office for a second term of 5 (five) consecutive years on the Board of Directors of the Company. The Company has received the requisite Notices from a member in writing proposing their appointment as independent directors.

The Company has received declarations from all the eligible independent directors of the Company as prescribed both under the Act and the LODR Regulations. The information required pursuant to Section 197(12) read with Rule 5 (1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (the "Rules of 2014") in respect of ratio of remuneration of a director to the median remuneration of the employees of the Company for the financial year is annexed herewith and marked as Annexure III to this Report.

During the year under review, the independent directors were paid the Commission of Rs. 3.45 lakhs each for the year 2017-18.

The Company has devised a Policy for performance evaluation of independent directors, Board of Directors, Committees and other individual Directors, which includes criteria for performance evaluation of the non-executive directors and executive director. Pursuant to the provisions of the Companies Act, 2013, and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out an annual evaluation of its own performance and that of its Committees as well as performance of the Directors individually. Feedback was sought by way of a structured questionnaire covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance and the evaluation was carried out based on responses received from the Directors.

The details of programme for familiarisation of independent directors with the Company, their roles, rights, responsibilities in the Company, nature of the industry in which the Company operates, business model of the Company and related matters are put up on the website of the Company. During the year, the independent directors of the Company met on 3rd May, 2018.

Your Company has adopted the following Policies which, inter alia, include criteria for determining qualifications, positive attributes and independence of a Director. The following policies of the Company are annexed herewith and marked as Annexure IV and Annexure V respectively and forms part of this Report: a) Policy on Appointment of Directors and Senior Management and Succession Planning for Orderly Succession to the Board of Directors and the Senior Management. b) Policy for Remuneration of the Directors, Key Managerial Personnel and other employees.

Directors Responsibility Statement

Pursuant to section 134 (5) (e) of the Act, your Directors, based on the representations received from the Operating Management, and after due enquiry, state that:

a) in the preparation of the annual accounts for the year ended 31st March, 2019, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same;

b) the Directors have selected such accounting policies and applied them consistently and made judgements 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 31st March, 2019 and of the profit of the Company for the year ended on that date;

c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the 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 are operating effectively; and

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

Corporate Social Responsibility Committee

The Corporate Social Responsibility Committee ("CSR Committee") has formulated and recommended to the Board, a Corporate Social Responsibility Policy ("CSR olicy") indicating the activities to be undertaken by the Company, which has been approved by the Board.

The CSR Policy may be accessed on the Companys website at the link: http://www.mahindrairrigation.com/pdf/EPC_ CSR_Policy.pdf

The key philosophy of all CSR initiatives of the Company is guided by three core commitments of Scale, Impact and Sustainability.

The Company has identified few focus areas of engagement, which are as under:

Rural Transformation: Creating sustainable livelihood solutions, addressing poverty, hunger and malnutrition.

Health: Affordable solutions for healthcare through improved access, awareness and health seeking behaviour.

Education: Access to quality education, training and skill enhancement.

Environment: Environmental sustainability, ecological balance, conservation of natural resources.

Disaster Response: Managing and responding to disaster.

During the year under review, your Company initiated few projects such as supply of drinking water pipe line, upgradation of the toilet facilities of a school in the rural area, medical check-up camps. These projects were mainly implemented directly through employee participation. During the year under review, the Company has spent Rs._20.47 lacs, which is over 2% of the average net profits of last three financial years, on CSR activities.

The Annual Report on CSR activities is annexed herewith, and marked as Annexure VI.

Disclosures under Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules framed thereunder

The Company has complied with provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules framed thereunder.

Vigil Mechanism/Whistle Blower policy

In order to ensure that the activities of the Company and its employees are conducted in a fair and transparent manner by adoption of highest standards of professionalism, honesty, integrity and ethical behaviour, the Company has adopted a vigil mechanism policy. Whistle Blower or Complainant, as the case may be under the said Policy, shall be entitled to direct access to the Chairperson of the Audit Committee in appropriate or exceptional cases. This policy is explained in the Report on Corporate Governance and also posted on the website of Company.

Auditors

The Auditors, M/s. Deloitte Haskins & Sells, Chartered Accountants, Baroda holds office under second term of five years until the conclusion of the Annual General Meeting to be held in the year 2021 as per the resolution passed by the shareholders on 29th July, 2016 subject to the ratification by members in every Annual General Meeting. Pursuant to Notification issued by the Ministry of Corporate Affairs on 7th May, 2018 amending section 139 of the Act and the Rules framed there under, the mandatory requirement for ratification of appointment of Auditors by the members at every Annual General Meeting ("AGM") has been omitted, and hence the Company is not proposing an item on ratification of appointment of Auditors at the ensuing AGM.

The Auditors Report is unmodified i.e. it does not contain any qualification, reservation or adverse remark or disclaimer.

Cost Auditors

The cost accounting records of the Company are maintained and the Company had filed the Cost Audit Report as per the Companies (Cost Accounting Records) Rules, 2011 prescribed under Section 148 (6) of the Act, and Rule 6(6) of the Companies (Cost Records and Audit) Rules, 2014 pertaining to the financial year 2017-18 before the due date of filing.

Pursuant to section 148 of the Act, the Board of Directors, on the recommendation of the Audit Committee appointed M/s_ Shilpa & Company, Cost Accountants, as the Cost Auditors of the Company for the financial year 2019-20. M/s Shilpa & Company have confirmed that their appointment is within the limits of section 139 of the Act, and have also certified that they are free from any disqualification specified under sections 141(3) and 148(5) of the Act.

The Audit Committee has also received a Certificate from the Cost Auditor certifying their independence and arms-length relationship with the Company.

The Directors recommend the remuneration payable to the Cost Auditors of the Company for the year 2019-2020. The approval from shareholders for the remuneration payable to the Cost Auditors is being sought at the ensuing Annual General Meeting.

Secretarial Auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Rules framed thereunder, the Secretarial Audit Report for the financial year ended on 31st March, 2019 issued by Mr. Sachin Bhagwat, Practising Company Secretary is annexed herewith and marked as Annexure VII to this Report. The Secretarial Audit Report does not contain any qualification, observation, reservation or adverse remark or disclaimer.

Public Deposits & Loans / Advances

During the year, the Company did not accept any fixed deposit. There were unclaimed/unpaid deposits and unclaimed/ unpaid interest warrants outstanding as on 31st_March, 2019 amounting to Rs. 0.36 lacs. Your Company has neither made any loans or advances nor provided any guarantees or securities, or made any investments which are required to be disclosed in the Annual Accounts of the Company.

Energy Conservation and Technology Absorption and Foreign Exchange Earnings and Outgo

The particulars relating to energy conservation, technology absorption, foreign exchange earnings and outgo as required to be disclosed under sub-section(3) (m) of Section_134 of the Act, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 are annexed herewith and marked as Annexure VIII to this Report.

DISCLOSURES: Audit Committee

The Audit Committee comprises Independent Directors namely M/s. Vinayak Patil (Chairman), S Durgashankar and Anand Daga as other members. All the recommendations made by the Audit Committee were accepted by the Board of Directors.

CSR Committee

The CSR Committee comprises M/s Ashok Sharma (Chairman), S Durgashankar and Vinayak Patil as other members.

Nomination and Remuneration Committee

The Nomination and Remuneration Committee comprises Directors namely M/s. Anand Daga (Chairman), S urgashankar and Vinayak Patil as other members.

Meetings of the Board of Directors

Four meetings of the Board of Directors were held during the year. For further details, please refer the Report on Corporate Governance of this Report.

Extract of Annual Return

Pursuant to Sub-section 3(a) of Section 134 and Sub-section_3 of Section 92 of the Act, read with Rule 12(1) of the Companies (Management and Administration) Rules 2014, the extracts of Annual Return of the Company as on 31st_March, 2019 is annexed herewith and marked as Annexure IX to this Report.

General

Your Directors have devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards and that such systems are adequate and operating effectively.

Further, your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

1. Details relating to deposits covered under Chapter V of the Act.

2. Issue of equity shares with differential rights as to dividend, voting or otherwise.

3. Issue of shares (including sweat equity shares) to employees of the Company under any scheme save and except ESOS referred to in this Report.

4. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and the Companys operations in future.

5. There were no frauds reported by auditors (including Secretarial and Cost auditor) to the Audit Committee or Board and also not reported to the Central Government.

6. There were no material changes and commitments, if any, affecting the financial position of the Company which had occurred between the end of the financial year and the date of this Report.

Particulars of Employees

Particulars of employees as required under Section 197 of the Act read with Rule 5(2) and 5(3) of the Rules of 2014 are annexed to this Report and marked as Annexure III (B) and (C). In accordance with the provisions of Section 136 of the Act, this Report and Accounts are being sent to all the Members of the Company excluding the aforesaid information and the said particulars will be made available on request and also made available for inspection at the Registered Office of the Company. Any Member interested in obtaining such particulars may write to the Company Secretary at the Registered Office of the Company.

Acknowledgements

Your Directors take this opportunity to place on record their sincere appreciation for the co-operation and continued support received from customers, vendors, suppliers, bankers, business associates and shareholders.

For and on behalf of the Board
Place : Mumbai Vinayak Patil Ashok Sharma
Dated : 30th April, 2019 Director Managing Director

Annexure - II TO DIRECTORS REPORT

Disclosures with respect to Employees Stock Option Scheme of the Company pursuant to the provisions of the Companies Act, 2013.

Particulars Employees Stock Option Scheme, 2014
(a) Options granted 3,08,323
(b) Options vested 1,01,457
(c) Options exercised 1,01,457
(d) The total number of shares arising as a result of exercise of option 1,01,457
(e) Options lapsed 37225
(f) Exercise price Rs. 10
(g) Variation of terms of options Nil
(h) Money realised by exercise of options Rs. 10,14,570
(i) Total number of options in force 1,69,641
(j) Employee wise details of options
(i) Key Managerial Personnel 1) Sanjeev Mohoni – 45,000
2) Ratnakar Nawghare – 7,029 & 8,722

 

(ii) Any other employee who receives a grant in any one year of option amounting to 5% or more of option granted during that year Year of Grant 1) Kiran Soman – 16,862
2014 2) Kedarnath Keskar – 4,688
3) Makarand Mallikar – 4,675
4) Ranveer Singh Malhotra – 4,644
5) Arvind Gulghane – 4,024
2015 1) G. Ragupathi – 3,228
2016 1) Padamkumar Gandhi – 7,896
M & M Deputies
1) Abhijit Page – 28,658
2) Milind Khapre – 22,320
3) Tejas Joshi – 9,972
2017 1) Sudheendra Katti – 3,432
2) Shivaji Sangle – 3,345
2018 1) Kiran Soman – 13,431
2) G Dayakar – 8,170
3) Sankar Maiti – 8,066
4) Arvind Gulghane – 9,332
5) Kedarnath Keskar – 5,423
6) G Ragupathi – 10,176
(iii) Identified employees who were granted options, during any one year, equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the company at the time of grant Nil
(k) Basic and Diluted Earnings Per Share (EPS) pursuant to issue of shares on exercise of option calculated in accordance with Indian Accounting Standard (INDAS) 33 ‘Earnings Per Share Basic Earnings per Share -Rs. 4.13 &
Diluted Earnings per Share -Rs. 4.11 respectively.
(l) Where the Company has calculated the employee compensation cost using the intrinsic value of the stock options, the difference between the employee compensation cost so computed and the employee compensation cost that shall have been recognized if it had used the fair value of the options, shall be disclosed. The Company has calculated the employee compensation cost, using the fair value method been used, in respect of stock options granted under the Employees Stock Option Scheme, 2014.
The impact of this difference on profits and on EPS of the Company shall also be disclosed

 

Exercise Price (Rs.) Fair Value (Rs.)
(m) Weighted-average exercise prices and weighted-average Options Grants Date fair values of options shall be disclosed separately

for options whose exercise price either equals or exceeds or is less than the market price of the stock

28th October, 2014 and 31st ctober, 2015, 22nd November, 2016 170.97
10 131.75
22nd November, 2017 169.43
28th February, 2019 83.51

 

(n) A description of the method and significant assumptions used during the year to estimate the fair values of options, including the following weighted-average information: The fair value of the Stock Options granted on 28th October, 2014, 31st October, 2015, 22nd November, 2016, 22nd November, 2017 and 28th February, 2019 have been calculated using Black-Scholes Options Pricing Formula and the significant assumptions made in this regard are as follows:
(i) risk-free interest rate 8.06%, 6.33%, 6.68% and 7.06% respectively
(ii) expected life 3.50 yrs., 5.50 yrs., 3.5 yrs., and 3.5 yrs. respectively
(iii) expected volatility, 55%, 49% 44% and 39.15% respectively
(iv) expected dividends and Nil
(v) the price of the underlying share in market at the time of option grant. Rs. 177.75, Rs. 158.3, Rs. 135.4, Rs. 172.55 and Rs. 92.90 respectively.

ANNEXURE III TO DIRECTORS REPORT

A. DETAILS PERTAINING TO REMUNERATION AS REQUIRED UNDER SECTION 197(12) OF THE COMPANIES ACT, 2013 READ WITH RULE 5(1) OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

Requirements Disclosure
1 The ratio of the remuneration of each director to the median remuneration of the employees for the financial year. 5.97%
2 The percentage increase in remuneration of each Director, CEO,CFO & CS. MD – Nil%
CEO – 8%
CFO – 8%
CS – 6%
3 The percentage increase in the median remuneration of employees in the financial year. The median remuneration of the employees in the financial year was increased by 7.35%. The calculation of % increase in median remuneration is done based on comparable employees.
4 The number of permanent employees on the rolls of the company. There were 353 permanent employees as on 31st March, 2019.
5 Average percentage 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. The average percentage change in Managerial employees is 6.7% whereas the average percentage change in Non – Managerial employees is 5.2% in 2018-19.
6 Affirmation that the remuneration is as per the remuneration policy of the Company The Company affirms that the remuneration is as per the remuneration policy of the Company.

ANNEXURE IV TO DIRECTORS REPORT

POLICY ON APPOINTMENT OF DIRECTORS AND SENIOR MANAGEMENT AND SUCCESSION PLANNING FOR ORDERLY SUCCESSION TO THE BOARD AND THE SENIOR MANAGEMENT DEFINITIONS

The definitions of some of the key terms used in this Policy are given below.

"Board" means Board of Directors of the Company. "Company" means Mahindra EPC Irrigation LTD.

"Committee(s)" means Committees of the Board for the time being in force.

"Employee" means employee of the Company whether employed in India or outside India including employees in the Senior Management Team of the Company.

"HR" means the Human Resource department of the Company "Key Managerial Personnel" (KMP) refers to key managerial personnel as defined under the Companies Act, 2013 and includes: (i) Managing Director (MD), or Chief Executive Officer (CEO); or Manager; or Whole time Director (WTD) (ii) Chief Financial Officer (CFO); and (iii) Company Secretary (CS).

"Nomination and Remuneration Committee" (NRC) means Nomination and Remuneration Committee of Board of Directors of the Company for the time being in force. "Senior Management" means personnel of the Company who are members of its Core Management Team excluding Board of Directors comprising of all members of management one level below the executive directors including the functional heads.

I. APPOINTMENT OF DIRECTORS

The NRC reviews and assesses Board composition and recommends the appointment of new Directors. In evaluating the suitability of individual Board member, the NRC shall take into account the following criteria regarding qualifications, positive attributes and independence of director:

1. All Board appointments will be based on merit, in the context of the skills, experience, independence and knowledge, for the Board as a whole to be effective.

2. Ability of the candidates to devote sufficient time and attention to his professional obligations as Independent Director for informed and balanced decision making.

3. Adherence to the Code of Conduct and highest level of Corporate Governance in letter and in spirit by the Independent Directors.

Based on recommendation of the NRC, the Board will evaluate the candidate(s) and decide on the selection of the appropriate member. The Board through the Whole Time Director will interact with the new member to obtain his/her consent for joining the Board. Upon receipt of the consent, the new Director will be co-opted by the Board in accordance with the applicable provisions of the Companies Act 2013 and Rules made thereunder.

REMOVAL OF DIRECTORS

If a Director is attracted with any disqualification as mentioned in any of the applicable Act, rules and regulations thereunder or due to non - adherence to the applicable policies of the Company, the NRC may recommend to the Board with reasons recorded in writing, removal of a Director subject to the compliance of the applicable statutory provisions.

SENIOR MANAGEMENT PERSONNEL

The NRC shall identify persons who are qualified to become directors and who may be appointed in senior management team in accordance with the criteria laid down above.

Senior Management personnel are appointed or promoted and removed/relieved with the authority of Whole Time Director based on the business need and the suitability of the candidate. The details of the appointment made and the personnel removed one level below the Key Managerial Personnel during a quarter shall be presented to the Board.

II. SUCCESSION PLANNING:

Purpose

The Talent Management Policy sets out the approach to the development and management of talent in the Mahindra Group to ensure the implementation of the strategic business plans of the Group and the Group Aspiration of being among the Top 50 globally most-admired brands by 2021.

Board:

The successors for the Independent Directors shall be identified by the NRC atleast one quarter before expiry of the scheduled term. In case of separation of Independent Directors due to resignation or otherwise, successor will be appointed at the earliest but not later than the immediate next Board meeting or three months from the date of such vacancy, whichever is later.

The successors for the Executive Director(s) shall be identified by the NRC from among the Senior Management or through external source as the Board may deem fit.

The NRC will accord due consideration for the expertise and other criteria required for the successor.

The Board may also decide not to fill the vacancy caused at its discretion.

Senior Management Personnel:

A good succession-planning program aims to identify high growth individuals, train them and feed the pipelines with new talent. It will ensure replacements for key job incumbents in KMPs and senior management positions in the organization. Significantly, we have a process of identifying Hi-pots and critical positions. Successors are mapped for these positions at the following levels :

1. Emergency successor

2. Ready now

3. Ready in 1 to 2 years

4. Ready in 2 to 5 years

5. Ready in more than 5 years in order to ensure talent readiness as per a laddered approach.

Policy Statement

The Talent Management framework of the Mahindra Group has been created to address three basic issues :

1) Given the strategic business plans, do we have the skills and competencies required to implement them? If not, how do we create them – by developing them internally or through lateral induction from outside?

2) For critical positions, what is the succession pipeline?

3) What are the individual development plans for individuals both in the succession pipeline as well as others?

The framework lays down an architecture and processes to address these questions using the 3E approach :

a) Experience i.e. both long and short-term assignments. This has 70% weightage

b) Exposure i.e. coaching and mentoring – 20% weightage

c) Education i.e. learning and development initiatives – 10% weightage The Talent Management process is applicable to all employees. Over the years, the Talent Management framework has become a well-structured and process-oriented system which is driven by an interactive and collaborative network of Talent Councils at the Group and Sector Levels. These Talent Councils, which consist mainly of Senior business leaders supported by HR, are a mix of Sector (Business) and Functional Councils coordinated by an Apex Talent Council, headed by the Group Chairman. The Apex Council reviews the work done by the Talent Councils and facilitates movement of talent across Sectors. The Sector / Functional Councils meet regularly throughout the year and the Apex Council interacts with each one of them separately once a year, and in addition conducts an integrated meeting where the Chairpersons of all the Councils are present.

The Talent Management process can be represented pictorially as under :

The talent pipeline is maintained and developed so as to ensure that there is a seamless flow of talent. An important part of this exercise is drawing up and implementing IDAPs (Individual Development Action Plans) for every Executive concerned using the 3E approach mentioned above.

ANNEXURE V TO DIRECTORS REPORT

POLICY FOR REMUNERATION OF THE DIRECTORS, KEY MANAGERIAL PERSONNEL AND OTHER EMPLOYEES

Purpose

This Policy sets out the approach to Compensation of Directors, Key Managerial Personnel and other employees in Mahindra EPC Irrigation Limited.

Policy Statement

We have a well-defined Compensation policy for Directors, Key Managerial Personnel and all employees, including the Chairman, Presidents and other Members of the Group Executive Board who are employees of the Company. The overall compensation philosophy which guides us is that in order to achieve global leadership and dominance in domestic markets, we need to attract and retain high performers by compensating them at levels that are broadly comparable with the median of the comparator basket while differentiating people on the basis of performance, potential and criticality for achieving competitive advantage in the business.

In order to effectively implement this, we have built our Compensation structure by a regular annual benchmarking over the years with relevant players across the industry we operate in.

NON-EXECUTIVE INCLUDING INDEPENDENT DIRECTORS:

The Nomination and Remuneration Committee (NRC) shall decide the basis for determining the compensation, both Fixed and variable, to the Non Executive Directors, including Independent Directors, whether as commission or otherwise. The NRC shall take into consideration various factors such as directors participation in Board and Committee meetings during the year, other responsibilities undertaken, such as membership or Chairmanship of committees, time spent in carrying out their duties, role and functions as envisaged in Schedule IV of the Companies Act 2013 and such other factors as the NRC may consider deem fit for determining the compensation. The Board shall determine the compensation to Non-Executive Directors within the overall limits specified in the Shareholders resolution.

Whole Time Director or Executive Director or CEO:

The remuneration to Whole Time Director or Executive Director or CEO shall be recommended by NRC to the Board. The remuneration consists of both fixed compensation and variable compensation and shall be paid as salary, commission, performance bonus, stock options (where applicable), perquisites and fringe benefits as approved by the Board and within the overall limits specified in the Shareholders resolution. While the fixed compensation is determined at the time of their appointment, the variable compensation will be determined annually by the NRC based on their performance or alternatively, the NRC may recommend to pay the consolidated remuneration.

Key Managerial Personnel (KMPs)

The terms of remuneration of Chief Financial Officer (CFO) shall be determined by the Audit Committee from time to time. The terms of remuneration of the Company Secretary shall be finalised/revised by the Whole Time Director or such other person as may be authorised by the Board from time to time.

The remuneration shall be consistent with the competitive position of the salary for similar positions in the industry and their Qualifications, Experience, Roles and Responsibilities. Pursuant to the provisions of Section 203 of the Companies Act 2013 the Board shall approve the remuneration at the time of their appointment.

The remuneration to directors, KMPs and senior management involves a balance between fixed and incentive pay reflecting short and long-term performance objectives appropriate to the working of the Company and its goals.

Employees

We follow a differential approach in choosing the comparator basket for benchmarking, depending upon the level in the organization: a. For all employees from Operational to Executive Band, we benchmark with a set of comparators from the same industry. b. For Strategic band and above, we have a position-based approach and the comparator basket includes benchmarks from across relevant industries.

We have a CTC (Cost to Company) concept which includes a fixed component (Guaranteed Pay) and a variable component (Performance pay). The percentage of the variable component increases with increasing hierarchy levels, as we believe employees at higher positions have a far greater impact and influence on the overall business result. The CTC is reviewed once every year and the compensation strategy for positioning of individuals takes into consideration the following elements:

Performance

Potential

Criticality

Longevity in grade

Remuneration for the new employees other than KMPs and Senior Management Personnel will be decided by the HR, in consultation with the concerned business unit head at the time of hiring, depending upon the relevant job experience, last compensation and the skill-set of the selected candidate. The Company may also grant Stock Options to the Employees and Directors (other than Independent Directors and Promoter) in accordance with the ESOP Scheme of the Company and subject to the compliance of the applicable statutes and regulations.

ANNEXURE - VIII TO DIRECTORS REPORT

PARTICULARS AS PER SECTION 134 (3) (m) OF THE COMPANIES ACT, 2013 READ WITH RULE 8(3) OF THE COMPANIES (ACCOUNTS) RULES, 2014 AND FORMING PART OF THE DIRECTORS REPORT FOR THE YEAR ENDED 31st MARCH, 2019

A. Conservation of Energy

Your Company has always been giving priority to the conservation of energy and technology upgradation. To conserve energy and reduce energy cost, various initiatives were taken during the year.

(a) the steps taken or impact on conservation of energy:

- New designed extruders and downstream equipment for higher output in place of old one.

- Power factor is being maintained at unity.

- Improvement in productivity and savings in power consumption due to in-house technological innovations.

- Installation of newly designed moulds and high speed machines.

- Continuous raw material supply for higher productivity.

- Continuous improvements within production area, efficient production planning and improved preventive maintenance resulting into higher up time.

- Various measures to improve productivity thereby reduction in consumption of power.

- Replacement of existing lighting with energy efficient lighting.

- Energy efficient water chiller added as a standby with existing water chiller.

- Plant outside l HPMV 250 watt light replaced by 70 watt LED light.

(b) the steps taken by the Company for utilising alternate sources of energy:

The Company has explored the potential of using the alternate sources of energy through pilot projects which may be considered for implementation in future and your Company would continue to explore alternative sources of energy in future.

(c) the capital investment on energy conservation equipments:

Nil

B. Technology Absorption,

(i) the efforts made towards technology absorption

Technology is the key enabler and core facilitator to achieve goals of your Company. Since inception, your Company has been at the forefront of leveraging technology to provide better products and services to its customers. The Companys efforts are always focused on making in-house developments, improvement in products and processes, reduction in costs.

(ii) the benefits derived like product improvement, cost reduction, product development or import substitution

Technology has responded by being a true strategic partner with business. Many first mover implementations/developments have provided business, long lasting advantages to the Company. Apart from product development, product improvement and effective cost management, technology has played a major role in ensuring high level of customer satisfaction and providing competitive advantage.

(iii) in case of imported technology (imported during the last three years reckoned from the beginning of the financial year) - Nil

(a) the details of technology imported -NA (b) the year of import -NA

(c) whether the technology been fully absorbed - NA (d) if not fully absorbed, areas where absorption has not taken place, and the reasons thereof: NA

(iv) Expenditure of Research and Development:

(Rs. In Thousands)

2018-19 2017-18
(a) Capital Expenditure Nil Nil
(b) Recurring Expenditure 539.24 487
(c) Total 539.24 487
(d) Total R&D expenditure as a % of total turnover 0.02 0.02

C. Foreign Exchange Earnings & Outgo

The Company is assessing the potential countries where the exports business can be explored.

The details of foreign exchange earned and outgo during the year are as under:

(Rs. In Thousands)
Foreign Exchange earnings : 4,127.14
Foreign exchange outgo : 6,810.31

For and on behalf of the Board

Vinayak Patil Ashok Sharma
Director Managing Director
Place : Mumbai
Dated : 30th April, 2019