Nelcast Ltd Directors Report.

Your Directors are pleased to present the Thirty Ninth Annual Report along with the audited financial statements for the financial year ended 31st March, 2021:

PERFORMANCE (Rs. in Lakhs)
FINANCIAL RESULTS 2020-21 2019-20
Total Income 61985.13 58035.49
PBIDT 5127.15 6185.81
Profit Before Tax (PBT) 1228.79 3080.77
Less: Provision for Tax 324.61 -519.74
Profit After Tax (PAT) 904.18 3600.51
Add: Profit brought forwarded from previous year 9004.16 6500.84
Other Comprehensive Income 86.99 -48.34
Total Comprehensive Income
Appropriation available for Appropriations: 9995.33 10053.01
General Reserve - -
Dividend on Equity Shares - 870.01
Distribution Tax on Dividend - 178.84
Surplus Carried to Balance Sheet 9995.33 9004.16

DIVIDEND

Your Directors recommend a dividend of 10% (0.20/- per share) for the financial year 2020-21. Payment of dividend is subject to the approval of shareholders at the ensuing Annual General Meeting.

TRANSFER TO RESERVES

No transfer to the General Reserves has been proposed for the financial year 2020-21.

SHARE CAPITAL

The paid up quity share capital as on 31st March 2021 was Rs.1740.02 Lakhs.

OPERATIONS

During the year, the Company recorded Revenue from Operations by way of Net Sales of Rs.610.96 Crores as against Rs.566.76 Crores in 2019-20, an increase of about 8%. Our Exports business registered a growth of 12% compared with previous year and stood at Rs.126.29 Crores. Profit After Tax made during the year is Rs.9.04 Crores as against Rs.36.01 Crores in 2019-20. The production during the year was 55706 MT, compared to the previous years 52175 MT.

The reduction in Profit was primarily due to the impact of the Covid-19 pandemic and the associated mitigation measures undertaken especially in the first two quarters of the year. There were also some additional costs due to the initial ramp-up of phase-2 of the Pedapariya plant which was commissioned in September 2020.

OUTLOOK

The automotive industry in India has been witnessing a slowdown over the last three years and the challenges in 2020-21 were amplified by the outbreak of Cov-SARS-2 virus which spread rapidly around the globe and was declared a global pandemic. To battle the Covid-19 pandemic, lockdowns and various other restrictions were imposed by the Central and State Governments which resulted in temporary suspension of operations of the entire industry. The Medium & Heavy Commercial Vehicle industry was severely impacted in the first half of the year and despite a recovery in the second half, the Total Industry Volume declined by 21% for the full financial year 2020-21. The Tractor industry bounced back strongly starting in the second quarter and recorded an excellent growth of 27%.

The Commercial Vehicle industry expects a moderate growth in the current year. Driven by the infrastructure spend proposed in the budget for the financial year 2021-22 and the growth in e-Commerce, there is moderate growth forecast for the current year led by sales of Tippers & ICVs. The sales of Multi-Axle Vehicles for haulage are expected to recover gradually as demand picks up and freight prices increase. The medium-term outlook appears very positive as the scrappage policy introduced by the Government of India takes shape. The Tractor industry expects a strong growth in the year 2021-22 also due to good rainfall in the previous year and normal monsoon expected in the current year. As India experiences the second wave of Covid-19 infections and is possibly at risk of a third wave, there is a possibility of some impact to the industry in the first half of the year. However, the long-term outlook remains positive for the Automotive Industry with most major global players having a base in India for manufacturing, sourcing and engineering.

CONSOLIDATED FINANCIAL STATEMENTS

The Company has prepared Consolidated Financial Statements of Nelcast Limited and its subsidiary NC Energy Limited as at 31st March 2021, in accordance with the provisions of Section 129(3) of the Companies Act, 2013 and SEBI Listing Regulations and prepared in accordance with the Indian Accounting Standards prescribed by the Institute of Chartered Accountants of India. As required by the Listing Regulations, the audited Consolidated Financial Statements are circulated with the Annual Report.

SUBSIDIARIES, ASSOCIATES AND JOINT VENTURES

In terms of Section 129(3) of the Companies Act, 2013 read with Rule 5 of the Companies (Accounts) Rules, 2014, the salient features of the financial statements of subsidiary company is set out in the prescribed form AOC-1, which is annexed with this report as Annexure-A. The Company will make available the audited annual accounts and related information of its subsidiary, upon request by any of its shareholders and it has also been placed on the website of the Company. The annual accounts of the subsidiary company will also be kept for inspection, by any member at the Registered Office of the Company and its subsidiary company. The consolidated financial statements presented by the Company, which form part of this annual report, include financial results of its subsidiary company.

QUALITY AND CUSTOMER SATISFACTION

TThe Company adheres to IATF 16949 quality standards and continuously strives to achieve world class quality by strictly adhering to the quality norms. The Company has also been awarded ISO 14001 & ISO 45001 certifications for implementing Health, Safety & Environmental Management Systems.

The Company is a supplier to several leading OEM customers like Tata Motors, Ashok Leyland, TAFE, Eicher Tractors (TMTL), Volvo-Eicher Commercial Vehicles, SAME Tractors, Escorts Tractors, International Tractors (ITL), Daimler India, Caterpillar, etc., Tier I customers like Automotive Axles, American Axles, Dana, Rane Madras, Rane-TRW, ZF India, etc., and Export customers like Meritor, American Axles, Daimler, Dana, Comer, ZF Industries etc., The Company is closely working with several of our customers in terms of new product development, improvement in quality, etc. to improve our products.

DEPOSITS

The Company has not accepted any public deposits during the year and as such, no amount on account of principal or interest on deposits from public was outstanding as at 31st March 2021.

DIRECTORS AND KEY MANAGERIAL PERSONNEL

Composition

The Corporate Governance Report annexed to this Boards Report contains the composition of the Board of Directors of the Company.

Directors appointed during the year

Ms. Maheswari Mohan (DIN: 07156606) was appointed as an Additional (Non-Executive & Independent) Director of the Company with effect from 30th November 2020. On recommendation of the Nomination and Remuneration Committee, the Board of Directors have proposed appointment of Ms. Maheswari Mohan as a Non-Executive and Independent Director, not liable to retire by rotation, for a period of five (5) years from 30th November 2020 to 29th November 2025. In the opinion of the Board, Ms. Maheswari Mohan fulfils the conditions specified in the Companies Act, 2013, and Rules made thereunder for appointment as Independent Director and is independent of the management of the Company. The resolution seeking shareholders approval for her appointment forms part of the Notice.

Mr. P. Deepak, Director is due to retire by rotation and being eligible offers himself for reappointment.

Mr. P. Deepak, Managing Director and Mr. S.K. Sivakumar, Chief Financial Officer & Company Secretary hold the office of Key Managerial Personnel.

Independent Directors

The Independent Directors have fulfilled the criteria of Independence as defined under Section 149(6) and requisite declarations in terms of Section 149(7) of the Companies Act, 2013 have been received. During the year under review a separate meeting of independent directors was held on 10th February 2021.

COMMITTEES

Composition of all the committees are furnished in the Corporate Governance Report which is attached to this report.

MEETINGS OF THE BOARD AND COMMITTEES

During the year, four meetings of the Board of Directors were held. The details of the meetings of the Board and its Committees are furnished in the Corporate Governance Report which is attached to this report.

COMPANYS POLICY RELATING TO DIRECTORS APPOINTMENT, PAYMENT OF REMUNERATION AND DISCHARGE OF THEIR DUTIES

The provisions of Section 178(1) of the Companies Act, 2013 relating to constitution of Nomination and Remuneration Committee are applicable to the Company and hence, the Company has devised a policy relating to appointment of Directors, payment of managerial remuneration, Directors qualifications, positive attributes, independence of Directors and other related matters as provided under Section 178(3) of the Companies Act, 2013. The said policy is posted on the Companys website www.nelcast.com.

DIRECTORS RESPONSIBILITY STATEMENT

In accordance with the provisions of Section 134(3)(c) of the Companies Act, 2013 the Board of Directors, to the best of their knowledge and ability, confirm that:

a) in preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanations relating to material departures, if any;

b) the Directors had 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 ended 31st March 2021 and of the profit of the Company for that period;

c) the Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) the Directors had prepared the annual accounts on a going concern basis;

e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively;

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

CORPORATE GOVERNANCE

The Company has been pro-active in following the principles and practices of good Corporate Governance. The Company has taken adequate steps to ensure that the conditions of Corporate Governance as stipulated in the Listing Regulations are complied with letter and spirit. A certificate issued by the auditors of the Company regarding compliance of conditions of Corporate Governance is also annexed to this report. The matters relating to Corporate Governance as per the Listing Regulations are attached to this report. The managements discussion and analysis report as required by the Listing Regulations is also annexed which forms part of this report.

CERTIFICATE FROM COMPANY SECRETARY IN PRATICE

L. Dhanamjaya Reddy, Practicing Company Secretary, has issued a certificate as required under the Listing Regulations, confirming that none of the directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as director of companies by the SEBI/Ministry of Corporate Affairs or any such statutory authority. The certificate is enclosed with this section as Annexure-B.

BUSINESS RESPONSIBILITY REPORT

In terms of Regulation 34 of the Listing Regulations, the Business Responsibility Report for the year 2020-21 describing the initiatives taken from an environment, social and governance perspectives, in the prescribed format is given as Annexure-C to this Report and is also available on the Companys website viz., www.nelcast.com.

RELATED PARTY TRANSACTIONS

All transactions entered by the Company with related parties were in the ordinary course of the business and at Arms Length basis. There are no materially significant related party transactions made by the Company with Promoters, Key Managerial Personnel or other designated persons which may have potential conflict with interest of the Company at large. The details of the transactions with related parties are given in the financial statements. The Related Party Transaction Policy is posted on the Companys website www.nelcast.com.

VIGIL MECHANISM/ WHISTLE BLOWER POLICY

The Company has adopted a Whistle Blower Policy, to provide a formal mechanism to the Directors and Employees to report their concerns about unethical behaviour, actual or suspected fraud or violation of the Companys Code of Conduct or ethics policy. The Policy provides for adequate safeguards against victimization of employees who avail of the mechanism and also provides direct access to the Chairman of the Audit Committee. It is affirmed that no personnel of the Company have been denied access to the Audit Committee.

REMUNERATION POLICY OF THE COMPANY

The Company has adopted a Remuneration Policy for the Directors, Key Managerial Personnel and other employees, pursuant to Section 178(3) of the Companies Act, 2013 and as per the Listing Regulations. The Company affirms remuneration is as per the remuneration policy of the Company. The said policy is posted on the Companys website www.nelcast.com.

PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES

The information required pursuant to Section 197(12) of the Companies Act, 2013 read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company forms part of this report.

Disclosures pertaining to remuneration and other details 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 forms part of this Report.

In terms of Section 136(1) of the Companies Act, 2013, the Annual Report and financial statements are being sent to the members and others entitled thereto, excluding the aforesaid information. The said information is available for inspection by the members at the Registered office of the Company during business hours on working days of the Company up to the date of ensuing Annual General Meeting and any member interested in obtaining such information may write to the company secretary and the same will be furnished.

INTERNAL FINANCIAL CONTROLS AND THEIR ADEQUACY

In terms of 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 in place adequate internal financial controls.

AUDITORS

At the Annual General Meeting of the Company held on 3rd August 2017, M/s. K.Nagaraju & Associates, Chartered Accountants (Firm Registration No.002270S) were appointed as Statutory Auditors of the Company for a term of 5 (five) consecutive years from conclusion of 35th Annual General Meeting till the conclusion of the 40th Annual General Meeting. They have confirmed that their appointment is in accordance with Section 139 read with Section 141 of the Companies Act, 2013.

SECRETARIAL AUDITOR

The Company has appointed M/s. L.D. Reddy & Co., Practicing Company Secretaries to conduct Secretarial Audit for the year 2020-21. The Secretarial Audit Report for the financial year ended 31st March 2021 is annexed with this report in Annexure-D.

COST AUDITORS

As per Section 148 and other applicable provisions, if any, of the Companies Act, 2013, read with Companies (Audit & Auditors) Rules, 2014, the Board of Directors of your Company has appointed M/s. Jayaram & Associates, Cost Accountants as the Cost Auditors of the Company for the year 2021-22 on the recommendations made by the Audit Committee.

SECRETARIAL STANDARDS

The Company have devised proper systems and processes for complying with the requirements of applicable Secretarial Standards issued by the Institute of Company Secretaries of India and that such systems were adequate and operating effectively.

EXTRACT OF ANNUAL RETURN

As required under Section 92(3) and 134(3)(a) of the Act and Rule 12(1) of the Companies (Management and Administration) Rules, 2014 (as amended), an extract of Annual Return in Form MGT-9 is available on the Companys website www.nelcast.com.

INDUSTRIAL RELATIONS

The employee relations have remained cordial throughout the year and industrial harmony was maintained. Measures for the safety, training and development of the employees continued to receive top priority. The Directors wish to place on record their appreciation of the valuable contribution made by the employees of the Company at all levels towards the performance and growth of the Company.

RISK MANAGEMENT POLICY

Pursuant to Section 134(3)(n) of the Companies Act, 2013 and Regulation 17(9) of SEBI (LODR) Regulations, 2015, the Company has implemented a mechanism for risk management and has formulated a Risk Management Policy. The company has devised its risk management policy commensurate with its size and operations. The Policy provides for identification of risks and mitigation measures. The Risk Management Policy includes identifying types of risks and its assessment, risk handling, monitoring and reporting. Your Company maintains an adequate and effective Internal Control System commensurate with its size. The internal control system is supplemented through an extensive internal audit program besides periodic review by the Management and the Audit Committee. Risk Management policy may be accessed on the Companys website www.nelcast. com.

PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIES ACT, 2013

The Company has not given any loans or guarantees covered under the provisions of Section 186 of the Companies Act, 2013. The details of the investments made by Company are given in the financial statements.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

The CSR Policy of the Company and details about the initiatives taken by the Company on CSR during the year as per the Companies (Corporate Social Responsibility Policy) Rules, 2014 have been disclosed as part of this report in Annexure-E. Further details of composition of the Corporate Social Responsibility Committee and other details are provided in the Corporate Governance Report which forms part of this report.

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

The Company has in place an Anti-Sexual Harassment Policy in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. An Internal Complaints Committee has also been constituted for this purpose. During the year under review, there were no cases filed pursuant to the above Act.

PERFORMANCE EVALUATION OF THE BOARD, ITS COMMITTEES AND DIRECTORS

Pursuant to the provisions of the Companies Act, 2013 and under regulation 25 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, during the year, the Board has carried out an evaluation of its own performance, performance of the Directors as well as the evaluation of the working of its Committees.

The Nomination and Remuneration Committee has defined the evaluation criteria, procedure, and time schedule for the Performance Evaluation process for the Board, its Committees and Directors.

Directors were evaluated on aspects such as attendance and contribution at Board/ Committee Meetings and guidance/ support to the management outside Board/ Committee Meetings.

Areas on which the Committees of the Board were assessed included degree of fulfilment of key responsibilities, adequacy of Committee composition and effectiveness of meetings.

The performance evaluation of the Independent Directors was carried out by the entire Board, excluding the Director being evaluated. The performance evaluation of Non-Independent Directors was carried out by the Independent Directors who also reviewed the performance of the Board as a whole. The Nomination and Remuneration Committee also reviewed the performance of the Board, its Committees and of the Directors.

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

The information pertaining to conservation of energy, technology absorption, research and development, foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is given in the Annexure-F forming part of this Report.

ACKNOWLEDGEMENTS

The Directors place on record their sincere appreciation for the dedicated efforts of the employees and co-operation of associates, suppliers and customers. We also express our sincere thanks to Companys Bankers namely State Bank of India, Standard Chartered Bank, The Hongkong and Shanghai Banking Corporation Ltd., Kotak Mahindra Bank Ltd. and HDFC Bank Ltd. for their trust and continued support.

For and on behalf of the Board
Place: Chennai D. Sesha Reddy
Date : 31st May 2021 Chairman