Menon Bearings Ltd Directors Report.

To,

The Members

Your Directors feel great pleasure in presenting the 29th Annual Report of your Company along with the Audited Financial Statements for the financial year ended 31st March, 2020.

FINANCIAL HIGHLIGHTS :

(Rs.in Lakhs)

Particulars No. For the Year ended 31st March, 2020 For the Year ended 31st March, 2019
1 Total Revenue (Net) 14,035.59 17,541.38
2 Profit before Depreciation & Amortization Expenses, Finance Cost and Tax 31,05.16 4,445.81
3 Less : Depreciation and Amortization Expenses 687.80 481.80
Finance Cost 456.69 353.81
4 Profit before Tax 1,960.67 3,610.20
5 Less: Provision for Tax 520.87 1,080.52
6 Profit after Tax 1,439.80 2,529.68
Other Comprehensive Income 3.48 5.47
7 Total Comprehensive Income 1443.28 2535.15
8 Balance of Profit as per last Balance Sheet 7,524.11 6,244.31
9 Balance Available for Appropriation 8,967.39 8,779.46
10 Rate of Paid Dividend 250% 150%
11 Dividend Paid 1,401.00 980.70
12 Tax on Dividend 285.21 199.65
13 T ransfer to General Reserve 75.00 75.00
14 Balance of Profit carried to Balance Sheet 7,206.18 7,524.11

COVID-19 PANDEMIC :

During the month of March the spread of COVID-19 pandemic increased expeditiously in India and across the world, this global crisis forced the Governments to enforce lock-down of all economic activities. In India the Government announced lock-down from third week of March, 2020 as a preventive measure against the COVID-19 pandemic. The Companys focus is always to ensure the health and well-being of all employees, accordingly the Company suspended its operational activities and implemented work from home policy from 23rd March, 2020 to minimize disruption to services for all our customers globally. From a well-equipped broad work space to coordinating the work from home the Company adapted the change very well as per the need of the hour. Further after ensuring compliance with all the safety measures directed by the Government like social distancing and maintaining hygiene, the Company resumed its operations from 5th May, 2020 with the permission from District Administration. The situation created by Covid-19 continues to hold some uncertainties for the future; however, the Board and the Management will do its best to address the same, as the situation evolves, in the interests of all stakeholders of the Company.

REVIEW OF OPERATIONS:

The Company is engaged in the business of manufacturing of "Auto Components". During the year under review, the Company has registered a turnover of Rs. 14,035.59/- Lakhs (previous year Rs. 17,541.38/-) and Net Profit after Tax of Rs. 1,439.80/- Lakhs (previous year Rs. 2,529.68/- Lakhs).

DIVIDEND:

The Companys overall performance during the year under review was satisfactory. Based on the performance, your directors had the pleasure of declaring payment of 1st interim dividend of Rs. 1.25/- per Equity Share and 2nd interim dividend of Rs. 1.25/- per Equity Share (previous year interim dividend of Rs. 1.50/- per Equity Share and final dividend of Re. 0.25/- per Equity Share), being 250% of the paid-up Equity Share Capital of the Company for the Financial Year ended on 31st March, 2020.

SHARE CAPITAL OF THE COMPANY:

During the financial year under review, there was no change in paid up share capital of the Company. As on 31st March, 2020, the paid up capital of the Company was Rs. 5,60,40,000/- divided into 5,60,40,000/- equity shares of Re. 1/- each.

CHANGE IN THE NATURE OF BUSINESS OF THE COMPANY:

There was no change in the nature of business activities of the Company during the financial year under review.

RESERVES:

During the financial year under review Rs. 75 Lakhs (previous year Rs. 75 Lakhs) were transferred to the General Reserve.

SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES:

The Company does not have any subsidiary, associate or joint venture companies.

PUBLIC DEPOSITS:

During the financial year under review, the Company has not accepted or renewed any deposits from public within the meaning of Section 73 and 76 of the Companies Act, 2013 read with Companies (Acceptance of Deposits) Rules, 2014.

EXTRACT OF ANNUAL RETURN:

As required under Section 92 of the Act and rules framed thereunder, the extract of annual return in Form MGT- 9 is given in "Annexure I" which forms part of this report.

DIRECTORS AND KMP:

a) Retirement by rotation

In accordance with the provisions of Section 152 of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014 and Articles of Association of the Company, Mr. Nitin Menon (DIN:00692754), Director of the Company, retires by rotation at the ensuing Annual General Meeting and being eligible, has offered himself for re-appointment and your Board recommends his re-appointment.

b) Appointment

No new director was appointed during the financial year under review.

c) Cessation

Mr. Ram Menon, Emeritus Chairman of the Company, passed away on 17th July, 2019. He was the promoter and founder of the Company. The Company owes its existence and dominant position to his vision and foresight, which saw the Company attain market leadership in its businesses. His qualifications and experience, research oriented bent of mind, and passion for developments resulted in the continuous adoption of new technologies, and saw the Company enter several new business areas. The fact that your Company is widely recognised today is almost entirely due to his work and guidance.

The Board places on record its sincerest gratitude to the Founder and Promoter of your Company and assures the Members that it will strive to continue in the pursuit of these lofty principles.

d) Declaration from Independent Directors

The Company has received declaration from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed both under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and pursuant to Regulation 25 of the said Regulations that they are not aware of any circumstance or situation, which exist or may be reasonably anticipated, that could impair or impact their ability to discharge their duties with an objective independent judgment and without any external influence.

e) Number of Directors

As per Regulation 17 (c) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to appoint minimum six (6) directors including one women director on its Board. At present your Company has seven directors consisting of four Independent Directors including a woman Director and three Executive Directors.

f) Annual Performance and Board Evaluation

The Board has devised a policy pursuant to the provisions of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, for performance evaluation of the Chairman, Board and individual Directors (including Independent Directors) and Committees which includes criteria for performance evaluation of Non-executive Directors and Executive Directors.

The Board has devised questionnaire to evaluate the performances of Board, Board Committees and individual Directors and Chairperson. The Chairman of respective Board Committees shared the report on evaluation with the respective Committee members. The performance of each Committee was evaluated by the Board, based on report on evaluation received from respective Board Committees. The reports on performance evaluation of the individual directors were reviewed by the Chairman of the Board.

The evaluation framework for assessing the performance of directors comprises of the following key areas:

i. Attendance at Board Meetings and Committee Meetings;

ii. Quality of contribution to the deliberations;

iii. Strategic perspectives or inputs regarding future growth of Company and its performance;

iv. Providing perspectives and feedback going beyond information provided by the management.

g) Key managerial Personnel (KMP)

The details of Key Managerial Personnel of the Company are as follows:

Sr. No. Name of the Director Designation
1 Mr. R. D. Dixit Chairman & Managing Director
2 Mr. Nitin Menon Vice Chairman & Joint Managing Director
3 Mr. Arun Aradhye Whole Time Director & CFO
4 Mr. Suraj Patil Company Secretary and Compliance Officer

Apart from the above, no other Director or KMP were appointed or retired or resigned during FY 2019-20.

Brief resume of the director retiring by rotation proposed to be re-appointed as stipulated under Regulation 36(3) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and Secretarial Standard - 2 on General Meetings is given in the Notice convening the 29th Annual General Meeting of the Company.

MEETINGS OF THE BOARD:

The Board meets at regular intervals to discuss and decide on Company / business policies and strategy apart from other Board business. A tentative annual calendar of the Board and Committee meetings is informed to the directors in advance to facilitate them to plan their schedule accordingly and to ensure meaningful participation in the meetings. However, in case of a special and urgent business need, the Boards approval is taken by passing resolutions through circulation, as permitted by law, which are noted in the subsequent meeting of the Board of Directors.

The notice of meeting of the Board of Directors and Committees is given well in advance to all the Directors of the Company. Usually, meetings of the Board are held in Kolhapur, Maharashtra. The agenda of the Board / Committee meetings is circulated atleast 7 days prior to the date of the meeting. The agenda for the Board and Committee meetings includes detailed notes on the items to be discussed at the meeting to enable the directors make informed decisions.

During the year under review the Board of Directors met 5 (five) times, the details of which are given in the Report on Corporate Governance, forming part of this report. The intervening gap between two consecutive meetings was within the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

DIRECTORS RESPONSIBILITY STATEMENT:

Your directors to the best of their knowledge and belief and according to the information and explanations obtained by them and as required under Section 134 (3) read with Section 134 (5) of the Companies Act, 2013, state that:

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

b. they 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 31st March, 2020 and of the profit of the company for that period;

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

d. they have prepared the annual accounts on a going concern basis;

e. they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

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

COMMITTEES OF THE BOARD:

In accordance with the provisions of the Companies Act, 2013 and Listing Regulations, the Company has constituted four committees of the Board, namely:

1. Audit Committee

2. Stakeholders Relationship Committee

3. Nomination and Remuneration Committee

4. Corporate Social Responsibility Committee

Details of all the Committees along with their charters, composition and meetings held during the year are provided in the Report on Corporate Governance, forming part of this Annual Report.

AUDIT COMMITTEE:

The Audit Committee is duly constituted as per the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

As on 31st March, 2020, the Audit Committee comprised of Mr. Mukund L. Shinde, Mr. Gajendra Vasa, Mrs. Kailash A Nevagi and Mr. R. D. Dixit. Mr. Mukund L. Shinde is the Chairman of Audit Committee and the Company Secretary and Compliance Officer of the Company, acts as the Secretary to the Audit Committee.

The Audit Committee of the Company reviews the reports to be submitted to the Board of Directors with respect to auditing and accounting matters. It also supervises the Companys internal control and financial reporting process and vigil mechanism.

All the recommendations made by the Audit Committee were accepted by the Board of Directors of the Company.

WHISTLE BLOWER POLICY / VIGIL MECHANISM:

The Company has adopted Vigil Mechanism / Whistle Blower Policy as per the provisions of Section 177 of Companies Act, 2013 and Regulation 22 of the Listing Regulations to deal with instance of fraud. It also provides adequate safeguards against victimization of directors or employees or any other person who avail the mechanism and its provides for direct access to the Chairman of the Audit Committee in exceptional cases. The details of the Vigil Mechanism is explained in the Report on Corporate Governance and also posted on the website of the Company at

https://static1.squarespace.com/static/54df3692e4b0d9caed7742ae/t/55681f95e4b0f3550bf6e656/143288

7189523/Whistle+Blower+Policy.pdf

We affirm that during the financial year 2019-20, no employee or director was denied access to the Chairman of the Audit Committee.

PARTICULARS OF EMPLOYEES:

The information 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, is given in Annexure II, forming part of this report.

The 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) Rule, 2014 is provided in this Report as Annexure III, forming part of this report.

REMUNERATION POLICY:

Pursuant to the provisions of Section 178 of the Companies Act, 2013 and Regulation 19 of the Listing Regulations and on recommendation of Nomination and Remuneration Committee, the Board of Directors has adopted policy for selection and appointment of Directors, Senior Management and their remuneration. The Remuneration Policy has been placed on the website of the Company and is available on https://menonbearings.in/investorrelations.

STATUTORY AUDITORS:

As per provisions of Section 139 of the Act read with the Companies (Audit and Auditors) Rules, 2014, the Members of the Company in their 26th Annual General Meeting held on 29th June, 2017 appointed M/s. ARNa & Associates (FRN: 122293W), Chartered Accountants, Kolhapur, as the Statutory Auditors of the Company for a term of consecutive 5 years i.e. from the conclusion of 26th Annual General Meeting till the conclusion of 31st Annual General Meeting of the Company to be held for the financial year ending 31st March, 2022, subject to ratification by the members every year. However, after the amendment in Section 139 of the Act, effective 7th May, 2018, ratification by shareholders every year for the appointment of the Statutory Auditors is no longer required.

M/s. ARNA & Associates, Chartered Accountants have furnished a certificate of their eligibility under Section 141 of the Act and the Companies (Audit and Auditors) Rules 2014, confirming that they are eligible for continuance as Statutory Auditors of the Company.

The Statutory Auditors Report for FY 2019-20 on the financial statements of the Company forms part of this Annual Report.

The Statutory Auditors report on the financial statements for FY 2019-20 does not contain any qualifications, reservations or adverse remarks or disclaimer.

The Statutory Auditors of the Company have not reported any fraud as specified under the second proviso to Section 143(12) of the Act.

COST AUDITORS:

As per the provisions of Section 148 of the Companies Act, 2013 read with Companies (Audit and Auditors) Rules, 2014, the Board of Directors of the Company has appointed M/s. C. S. Adawadkar & Co., Cost Accountants, Pune (FRN: 100401) as Cost Auditors of the Company to conduct audit of cost records for the Financial Year 2020-21, at a remuneration of Rs. 1,25,000/- (Rupees One Lakh Twenty Five Thousand Only) plus taxes, as applicable and out of pocket expenses on actual basis. A resolution seeking approval of the members for ratifying the remuneration payable to the Cost Auditors for FY 2020-21 is provided in the Notice of the ensuing 29th Annual General Meeting.

COST RECORDS:

The Cost accounts and records as required to be maintained under Section 148 (1) of Act are duly made and maintained by the Company.

SECRETARIAL AUDITORS:

Pursuant to the provisions of Section 204(1) of the Companies Act, 2013, read with Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s. M Baldeva Associates, Company Secretaries, Thane to undertake Secretarial Audit of the Company for the year 2019-20. The Secretarial Audit Report is annexed to this report as Annexure IV and forms part of this report.

With respect to observations made by the Secretarial Auditors in their report, we would like to state as follows:

Sr. No. Observations Explanation of Board of Directors
1. Delay in filling of e-forms DPT-3 with the Registrar of Companies: Delay was due to non-functioning of MCA (Ministry of Corporate Affairs) Portal on which e-forms are filed.
2. Delay in giving intimation to the stock exchanges for loss of share certificates / issue of duplicate share certificates in some cases: Delay was due to heavy rains and flood in Kolhapur district in month of August 2019.
3. Delay in furnishing prior intimation about the meeting of the Board of Directors for declaration of interim dividend: The delay was inadvertent. The Board has instructed the management of the Company to ensure timely compliance in future as per applicable Acts / Rules / Regulations / Notifications / circulars thereof from time to time.

Your Company always endeavor to comply with all applicable rules and regulations.

INTERNALAUDITOR:

Pursuant to the provisions of Section 138 of the Companies Act, 2013, read with Companies (Accounts) Rules, 2014, the Board on recommendation of the Audit Committee, re-appointed Mr. Abhay Golwalkar, Chartered Accountants, Kolhapur as Internal Auditor of the Company. Internal Auditor submits his reports to the Audit Committee on quarterly basis.

Based on the report of internal auditor, management undertakes corrective action in their respective areas and thereby strengthens the controls. Significant audit observations and corrective actions thereon are presented to the Audit Committee.

INTERNAL FINANCIAL CONTROL:

The Board has adopted the policies and procedures for ensuring the orderly and efficient conduct of its business, including adherence to Companys Policies, safeguarding of assets, prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and timely preparation of reliable financial disclosures.

The Audit Committee evaluates the efficiency and adequacy of financial control system in the Company, its compliance with operating systems, accounting procedures at all locations of the Company and strives to maintain the standard in Internal Financial Control.

RISKS AND AREAS OF CONCERN:

The Company has laid down a well defined Risk Management Policy covering the risk mapping, trend analysis, risk exposure, potential impact and risk mitigation process. A detailed exercise is being carried out to identify, evaluate, manage and monitoring of both business and non-business risk. The Board periodically reviews the risks and suggests steps to be taken to control and mitigate the same through a properly defined framework.

REPORT ON CORPORATE GOVERNANCE:

Pursuant to Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the following have been made a part of the Annual Report and are enclosed / annexed to this report:

• Management Discussion and Analysis

• Report on Corporate Governance

• Declaration on compliance with Code of Conduct

• Certificate from Practicing Company Secretary that none of the directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as directors of companies

• Auditors certificate regarding compliance of conditions of Corporate Governance.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVE:

Pursuant to the provisions of Section 135 read with Companies (Corporate Social Responsibility) Rules, 2014, the Company has constituted Corporate Social Responsibility (csR) Committee and has framed a policy on Corporate Social Responsibility. As part of its initiatives under CSR, the Company has identified various projects. These projects are in accordance with Schedule VII of the Companies Act, 2013.

The details as required under Rule 8 of Companies (Corporate Social Responsibility) Rules, 2014 are annexed as Annexure V and forms part of this report.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arms length basis and are reported in the Notes to Accounts on the Financial Statements.

The details of material related party transactions as referred to in Section 188(1) of the Companies Act, 2013 in the prescribed Form AOC-2 under Companies (Accounts) Rules, 2014 are given in Annexure VI, which and forms part of this report.

In accordance with the provisions of Regulation 23 of Listing Regulations, the Company has formulated the Related Party Transaction Policy and the same is uploaded on the Companys website at https://static1.squarespace.com/static/54df3692e4b0d9caed7742ae/t/5d008e42360cb400017e598d/15603 17680147/Related+Party+Transaction+Policy.pdf.

MATERIAL CHANGES AND COMMITMENT, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY OCCURRED BETWEEN THE END OF THE FINANCIAL YEAR TO WHICH THE FINANCIAL

STATEMENTS RELATES AND THE DATE OF THE REPORT:

There have been no material changes or commitments affecting the financial position of the Company occurred between end of the financial year to which the financial statements relate and the date of this report.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

The details of loans or guarantees given or investments made by the Company under the provisions of Section 186 of the Companies Act, 2013 are given under Notes to Accounts on the Financial Statements forming part of this Annual Report.

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

There was no significant or material order passed by any regulator or court or tribunal, which impacts the going concern status of the Company or will have bearing on companys operations in future.

INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the provisions of Section 125 of the Companies Act, 2013, read with the IEPF Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 (the rules), all unpaid or unclaimed dividends are required to be transferred by the Company to the IEPF established by the Government of India which remained unpaid/unclaimed for seven years or more. Further, according to the said Rules, the shares on which dividend remained unpaid or unclaimed by the shareholders for seven consecutive years or more shall also be transferred to the demat account of the IEPF Authority. Accordingly, the Company has transferred 35852 shares to the IEPF Authority during the F.Y. 2019-20 on which dividends remained unpaid/unclaimed for seven consecutive years.

In terms of the provisions of Section 125 of the Companies Act, 2013 and read with Investor Education and Protection Fund (Accounting, Audit, Transfer & Refund) Rules, 2016, during the year an amount of Rs. 8,70,248.50/- remained unpaid and unclaimed dividend for the F.Y. 2011-12 was transferred to the IEPF.

Further the unpaid and unclaimed dividend amount lying with the Company for F.Y. 2012-13 is due to transfer to the IEPF in the month of September 2020.The details of the same are available on the Companys website viz. www.menonbearings.com/Investorrelations/IEPF.

The Board has appointed Mr. Arun Aradhye, Whole-Time Director & CFO of the Company as the Nodal officer effective from 21st October, 2016 to ensure compliance with the IEPF Rules.

INFORMATION UNDER THE SEXUAL HARRASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has constituted an Internal Complaint Committee as required under Section 4 of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the year, no complaint was filed before the said Committee. No compliant was pending at the beginning or end of the year under review.

CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO

Pursuant to the provisions of Section 134 (3) (m) of the Companies Act, 2013, read with Rule 8 of the Companies (Accounts) Rules, 2014 details regarding Conservation of Energy, Technology absorption, Foreign exchange earnings and outgo is given as in Annexure VII and forms part of this report.

COMPLIANCE WITH SECRETARIAL STANDARDS:

The Company has devised proper systems to ensure compliance with the provisions of all applicable Secretarial Standards issued by the Institute of Company Secretaries of India and your directors confirm compliance of the same during the year under review.

ACKNOWLEDGEMENTS:

Your Directors wish to place on record their gratitude for the continued co-operation and patronage extended by the esteemed customers both in OEM and Replacement Market segments. The Directors would also like to place on record their sincere appreciation for the continued co-operation, guidance, support and assistance extended during the year under report by our bankers, customers, suppliers and Government agencies. The Board of Directors wishes to express its appreciation for the valuable contribution made by the employees at all levels during the year under report.

For and on behalf of the Board of Directors
of Menon Bearings Limited
R.D.Dixit
Place : Kolhapur Chairman & Managing Director
Date : 26th May, 2020 DIN : 00626827