NRB Bearings Ltd Directors Report.

To

The Members

NRB BEARINGS LIMITED

Your Directors have pleasure in presenting their Fifty-fourth Report together with the standalone and consolidated Audited Financial Statements for the year ended March 31, 2019.

With deep and profound sorrow, your Directors inform you that our beloved Chairman Mr. Trilochan Singh Sahney, ceased to be a Director of the Company due to his sad demise on October 16, 2018. Mr. Trilochan Singh Sahney, the Founder Promoter was the Chairman and Managing Director of the Company for over four decades, since Companys inception in 1965.Your Directors place on record their sincere appreciation for the invaluable guidance provided by Mr. Trilochan Singh Sahney to the Company during his tenure with the Company.

1. Financial Results

Consolidated

Standalone

Year ended 31.03.2019 31.03.2018 31.03.2019 31.03.2018
Rs. lacs Rs. lacs Rs. lacs Rs. lacs
Revenue from operations (Net) 96,484.73 87,390.70 94,020.99 84,843.10
Profit before tax 15,709.92 13,530.51 14,268.11 12,030.96
Provision for taxation
Current (net) 4,049.35 4,163.52 3,725.31 3,739.98
In respect of earlier years -
Deferred tax 670.76 76.83 665.88 99.64
Profit after taxation 10,821.54 9,072.92 9,876.92 8,191.34
Add: Balance brought forward 20,892.83 14,635.93 22,922.42 17,558.68
Add: Other Comprehensive Income for the year (27.44) 67.14 (25.79) 55.56
31,686.93 23,775.99 32,773.55 25,805.58
Appropriation:
Dividend 1,163.07 1,356.92 1,163.07 1,356.92
Tax on distributed profits 211.80 276.24 211.81 276.24
General Reserve - - -
Debenture Redemption Reserve - 1,250.00 1,250.00
Capital Redemption Reserve -
Outside basis Tax - -
Profit & Loss Account 30,313.06 20,892.83 31,398.67 22,922.42
31,686.93 23,775.99 32,773.55 25,805.58

2. Dividend

Considering the profits for the year under review your directors are pleased to recommend a dividend of 130 per cent i.e. Rs. 2.60 per equity shares of Rs. 2.00 (Rs. 2.60 per share for the previous year including interim dividend of Rs. 1.40 per share), which shall be payable to the members/beneficial owners as applicable aggregating to Rs. 3038 lacs inclusive of tax.

3. Material changes and commitments, if any, affecting the financial position of the Company

There are no material changes and commitments, affecting the financial position of the Company which have occurred between the close of the financial year on March 31, 2019 to which the financial statements relate and the date of this Report.

4. State of Companys Affairs, Operations and Outlook:

Your Companys growth at 10.81 per cent is comparable with the industry. Global demand in the European and US markets has helped exports grow by 17.50 per cent. During the year under review, on a consolidated basis your Company recorded net revenue from operations of Rs. 96,485 lacs with a growth of 10.41 per cent over Rs. 87,391 lacs for the last fiscal. The Company recorded a net profit of Rs.10,990 lacs, an increase of 18.3 per cent over Rs. 9,290 lacs for the last fiscal on a consolidated basis.

On a standalone basis your Company recorded net revenue from operations (net of excise duty) of Rs. 94,020.99 lacs with a growth of 10.81 per cent over Rs. 84,843.10 lacs of the last fiscal. The Company recorded a net profit of Rs. 9,876.92 lacs, an increase of 20.5 per cent over net profit of Rs. 8,191.34 lacs for the last fiscal.

The Indian economy witnessed robust industrial growth during FY 2018-19 and the momentum is expected to continue next year as well. The Index of Industrial Production (IIP) with base 2011-12 for the April-January period for 2018-19 registered a 4.4 per cent increase over the corresponding period for the previous year.

The automobile industry in India is currently the worlds fourth largest and the Indian automotive industry (including component manufacturing) is expected to reach Rs. 16.16-18.18 trillion (US$ 251.4-282.8 billion) by 2026. Two- wheelers dominate the industry and made up 81 per cent share in the domestic automobile sales. Domestic automobile production increased at 7.08 per cent CAGR between FY 2013-18 with 29.09 million vehicles manufactured in the country in FY 2018. During April 2018-March 2019, automobile production at 30.91 million vehicles increased by approx. 7 per cent.

In FY19, commercial vehicles recorded the fastest pace of growth in domestic sales at 17.55 per cent year-on-year, followed by three-wheelers at 10.27 per cent year-on-year. The passenger vehicle sales in India crossed the 3.3 million units in FY18, and is further expected increase to 10 million units by FY20. Automobile exports grew 15.54 per cent during April 2018-February 2019.

The auto-components industry accounts for 2.3 per cent of Indias Gross Domestic Product (GDP). The auto components sector has been observing robust growth and turnover is anticipated to reach US$ 200 billion by FY26. Indias exports of auto components could account for as much as 26 per cent of the market by 2021.

The Indian economy is likely to sustain the rebound in FY2019-20 and growth is projected to be approx. in the 7.5 per cent range. Improving macroeconomic fundamentals supported by the implementation of reform measures, shall help foster an environment to boost investments and ease banking sector concerns. Together, these augur well for a healthy growth path for the economy. Favourable government policies such as Auto Policy 2002, Automotive Mission Plan 2016-2026, National Automotive Testing and R&D Infrastructure Projects (NATRiPs), have helped the Indian auto components industry achieve considerable growth. The government has also extended the FAME Scheme from September 2018 to March 2019. India is emerging as global hub for auto component sourcing. A cost-effective manufacturing base keeps costs lower by 10-25 per cent relative to operations in Europe and Latin America. Relative to Chinese suppliers, India is geographically closer to key automotive markets like the Middle East and Europe.

5. Finance

The company has been rated by Crisil A1+ for short term and AA- (stable) for long term borrowings.

The Company continues to focus on judicious management of its working capital. Receivables, inventories and other working capital parameters are continuously monitored.

a. Public Deposits

The Company has not taken fixed deposits during the year. There are no unclaimed deposits.

b. Non Convertible Debentures

During the year the Company has raised an amount of Rs. 30,00,00,000/- (Rupees Thirty crores only) by way of non-convertible debentures issued on a private placement basis for general corporate purposes.

c. Particulars Loans, Guarantees or Investments

As on March 31, 2019 the outstanding principal amount from its wholly owned subsidiary NRB Bearings (Thailand) Limited is THB 80.00 million and outstanding Interest is THB 12.82 million which has been paid on April 2, 2019.

Details of loans, guarantees and investments covered under the provisions of section 186 of the Companies Act, 2013 are given in the notes to the financial statements.

6. Directors

During the year under review, Mr. Satish Rangani, was appointed as an Executive Director of the Company for a period of one (1) year with effect from January 24, 2019 vide a special resolution passed by the shareholders through postal ballot on April 26, 2019, which was also approved by the Board of Directors at its meeting held on January 17, 2019 upon the recommendation of the Nomination and Remuneration Committee.

Mr. Satish Rangani, was also appointed as an Additional Director by the Board of Directors with effect from January 24, 2019 and shall hold office up to the date of the ensuing Annual General Meeting. However, the Company has received a notice from a member proposing the appointment of Mr. Rangani as a Director and such appointment has been recommended by the Nomination and Remuneration Committee. Accordingly, it is proposed to appoint Mr. Rangani as a Director of the Company, liable to retire by rotation.

Ms. Vishakha R.M. was appointed as an Additional Director (Independent Director) by the Board of Directors at its meeting held on November 2, 2018, upon the recommendation of the Nomination and Remuneration Committee for a term of five (5) consecutive years with effect from November 2, 2018. The Company has received a notice from a member proposing the appointment of Ms. Vishakha as a Director and such appointment has been recommended by the Nomination and Remuneration Committee. Accordingly, it is proposed to appoint Ms. Vishakha as an Independent Director of the Company for a term of five (5) consecutive years with effect from November 2, 2018.

Mr. Tashwinder Singh was appointed as an Independent Director of the Company on August 11, 2014. His first term as an Independent Director ends on August 10, 2019. Considering his active participation and invaluable advice during Board/ Committee proceedings, the Nomination and Remuneration Committee has recommended and the Board of Directors at its meeting held on May 29, 2019 has approved his appointment for a second term of five (5) consecutive years. Accordingly, it is proposed to appoint Mr. Tashwinder Singh as an Independent Director for a second term of five (5) consecutive years with effect from August 10, 2019.

All independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and Regulation 16 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. The composition of the Board duly meets the criteria stipulated in Section 52 of the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

In accordance with the Companies Act, 2013 and the Articles of Association of the Company, Mr. D. S. Sahney retires by rotation and being eligible offers himself for re-appointment.

Familiarisation Programme for Independent Directors

In order to familiarize the Independent Directors with the business, the Company makes a presentation covering nature and scope of business, nature of industry in which Company operates, profitability and future scope. Regularly at meetings updates are given to the Board, by the Companys Senior Management in areas of operations, industry and regulatory trends, competition and future outlook. The familiarization programme is posted on the website of the Company at www.nrbbearings.com.

Board Evaluation

The Board has carried out an annual performance evaluation of its own performance and that of its Committees and Director the Directors individually. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

The process endorsed the confidence of the Directors in the ethical standards of the Company and its strategies for growth. In the coming year, the Board intends to enhance focus on exploring new drivers for continuing growth.

The Independent Directors have also met separately on March 13, 2019.

Remuneration Policy

The Board has on the recommendation of the Nomination and Remuneration Committee framed a policy for selection and appointment of Directors, senior management and their remuneration. As part of its policy the company strives to ensure that the remuneration to Directors, Key Managerial Personnel 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. The remuneration policy is posted on the company website www.nrbbearings.com. Details of remuneration paid to Executive Directors and KMP and the Independent Directors form part of the Corporate Governance Report attached to this Report.

Meetings

During the year five (5) Board meetings were convened and held (details in Corporate Governance Report). The intervening gap between the meetings was less than one hundred and twenty (120) days. The date for the next meeting is fixed in advance at the previous meeting both for board and committee meetings.

7. Subsidiaries

As of March 31, 2019, the Company has three subsidiaries viz. SNL Bearings Limited, NRB Bearings (Thailand) Limited and NRB Bearings Europe GmbH.The consolidated results include the working of these subsidiaries.

SNL Bearings Limited (SNL), in which your Company holds 73.45 per cent equity, has reported profit after tax of Rs. 814.36 lacs (previous year Rs. 822.02 lacs), lower by 0.93 per cent in spite of higher volumes, on account of higher operational and administrative costs. Dividend at Rs.5/- per share has been maintained at same level as paid in previous year. Net Sales during the year at Rs.4,064 lacs are higher by 3.46 per cent over the previous year. SNL is working on projects to improve its financial results in FY2019-20 by enhancing operational efficiencies and scaling up manufacturing capacities.

NRB Bearings (Thailand) Limited (NRBT), a wholly owned subsidiary, has increased its sales by 23 per cent to THB 237.81 million (approx. Rs. 51.60 crores) (previous year THB 193.23 million - approx. Rs. 40.19 crores). The share of manufacturing revenues out of total revenues has increased to at THB 195.63 million (approx. Rs. 42.45 crores) (previous year at THB 144.25 million) and trading revenues are at THB 42.18 million (previous year at THB 48.98 million). Consequently, the Companys EBITDA has grown from THB 39.10 million to THB 41.38 million (approx. Rs. 8.97 crores). The Company has recorded a jump in profit of almost 24 per cent for the year at THB 19.60 million (approx. Rs. 4.25 crores) from THB 15.82 million (approx. Rs. 3.29 crores) in previous year, mainly due to higher manufacturing volumes and lower exchange losses.

NRB Bearings Europe GmbH, a wholly owned subsidiary was set up to support increasing exports to Europe. The Company provides marketing and customer support services. The income during the year is EURO 337,919 (Rs. 2.62 crores) and the resultant profit after tax is EURO 12,546 (Rs. 9.7 lakhs).

Pursuant to section 129 (3) read with rule 5 of Companies (Accounts) Rules, 2014 details of financial statements of subsidiary companies has been given in Annexure 1 (AOC1) forming part of this statement.

8. Business Risk Management

The Company has in place an enterprise risk management framework to identify risks and minimize their adverse impact on business and strives to create transparency which in turn enhances the Companys competitive advantage. The Company has identified the risks associated with its operations and an action plan for mitigation has been identified.

9. Conservation of Energy, Technology Absorption, Foreign Exchange Earnings and Outgo

Information pursuant to Section 134 (3) (m) of the Companies Act, 2013 and Rule 8 of Companies (Accounts) Rules 2014 has been given in the Annexure 2 forming part of this report.

10. Industrial Relations/Vigil Mechanism and Whistle Blower Policy

During the year, the Company maintained cordial relations with the workmens unions at all plants. Last year 2018-19 overall relations with the workmen and Union at all plants have been cordial and harmonious. There was no major issue /dispute between management and Union except at Jalna Plant, where minority union namely New Panther Kamgar Sena has not accepted wage agreement signed on December 13, 2017 between management and All Marathwada Kamgar Union. The matter is pending before the Industrial Tribunal, Jalna.

Our people approach is reflected in the team work and the implementation of the number of initiatives involving employees and their families to share and promote organizational values. Regular training programmes are conducted for imparting understanding of bearing and engineering principles, modern manufacturing practices and attitudinal and behavioral aspects.

The Company has a Vigil Mechanism and Whistle Blower Policy which provides for adequate safeguards to employees using such mechanism. It also allowed direct access to the Audit committee in appropriate cases. Details of the same, given in Annexure 3 forming part of this report, are posted on the website of the Company.

Your Company hereby affirms that no complaints were received during the year.

11. Safety, Health and Environment

The Company is committed to establishing and maintaining safe working environment that promotes good health and high performance of the employees, and simultaneously takes measures to protect the environment. We also ensure that safety behavior is well demonstrated by our employees while working on the shop floor by using personal protective equipments as required.

Your Company has been accredited with internationally acclaimed certification viz. ISO 14001:2004 to identify and control environmental impact and constantly improve the environmental performance; OHSAS: 18001:2007 occupational health and safety management systems; and ISO/TS: 16949:2009 for Quality Management Systems. Your Company has been recently audited and recommended for certification in all the above areas under the updated certification viz. ISO 14001:2015, ISO 9001:2015 and IATF 16949:2016.

The commitment towards the environment preservation extends beyond regulatory compliances andambient air and noise levels and waste monitoring through ETP/STP treatment is being carried out. Initiatives are taken across the Company to conserve natural resources by reduction and recycling of wastes and adherence to emission norms.

During the year there have been numerous initiatives by NRB towards safety and environment awareness among employees:

1. Awareness on environment preservation and protection through regular monitoring of environment parameters and employees engagement activities like environment sensitization programs, drawing competitions, tree plantation and landscape development are undertaken in association with local government bodies and NGOs. More than 500 trees were planted at our manufacturing units at different locations.

2. "Safety first and always first" is the highest priority of the Company. The Safety policy inter alia ensures safety of public, employees, plant, equipment and business associates, ensuring compliance with all statutory rules and regulations as an on-going process.

Special initiatives have been taken up such as theme base walk, leading and lagging indicators, mock drills, up- gradation of fire protection systems, safety training to employees including top management, organizing safety awareness week, Womens day celebration, reporting of near-miss incidents and first aid across the plant. NRB strives to achieve "Zero-Accident Tolerance".

3. To save energy we have adopted some projects by implementing energy efficient motors which can consume less energy.

To minimize the risk with respect to use of LPG gas of 10 MT in bullet storage, we have replaced the bullet with manifold at our Chikalthana Plant.

4. To keep track on the health condition of employees we conduct health check program every year which give us preliminary information about the health of all employee. We have controlled all hazardous processes which could have impact on the health of employees.

5. Water conservation through re-use of waste water and rain water harvesting at plants - capacity to harvest upto 50 lacs litres rain water every year to increase ground water levels.

6. Strict policy for non-consumption of tobacco and intoxicating materials to protect the mental and physical health of employees. Regular awareness programs like "Vyasan Mukti" &"Yoga Classes" conducted to educate employees to get rid of evils of intoxication and stressful work life; and embrace good health and work-life balance.

12. Corporate social responsibility

In line with the activities specified in schedule VII relating to the provisions of sections 135 of the Companies Act, 2013, your company has been focusing on:

• Promotion of education

• Promoting gender equality and empowering woman

• Employment enhancing vocational skills

• Promotion of social business projects

• Ensuring environmental sustainability, ecological balance, protection of flora and fauna, animal welfare, conservation of natural resources

In terms of the above the Company has been contributing for primary education, secondary education (study of sciences, maths and engineering) and to engineering colleges.

The Company has continued its support to IIT-Bombay which is a renowned and reputed institute for engineering studies.

The Company has continued its support to the Ashoka University which is devoted to transforming Indian higher education based on the principles of multi disciplinary education delivered by exceptional faculty members and providing ivy-league quality education at an affordable price. The liberal education helps develop intellect, nurture critical thinking and provides specialisation with a broader foundation of knowledge.

The Company extended further support to Aseema, an NGO, to encourage expression and creativity in the children studying in municipal schools in Mumbai and make the curriculum more meaningful and fun. Aseemas centre at Igatpuri set up for development of tribal children learning needs, also provides vocational training to help them join mainstream society.

The Company also extended support to 321 Foundation. They are currently present in Hyderabad, Bangalore and Mumbai, and offer two (2) year-long programs to school teachers/ Management staff with their training skills to achieve their goal of creating model schools. They train teachers through a systematic program with workshops, coaching sessions, prestige and motivation events.

The Company supported social causes and impactful projects like Akshay Patra for mid-day meal for school children and the Light of Life Trust and the Navjeevan society for research and rehabilitation of mentally retarded.

The Annual Report on CSR activities in pursuance of the Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed herewith as Annexure 4.

During the year under review, the Company has spent an amount of Rs. 182.00 lacs on CSR projects.

13. Corporate Governance

Pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Management Discussion and Analysis Report, Corporate Governance Report and Auditors Certificate regarding compliance of conditions of Corporate Governance are made part of the Annual Report. Details of Board meetings held during the year under review and the composition of the various committees are included therein.

The Code of Conduct for Directors and Senior Management of the Company, as approved by the Board, has been affirmed on an annual basis by all the Directors and the Senior Management personnel of the Company.

The relevant certification on the various matters specified under Regulation 17(8) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 has been done by the Vice Chairman & Managing Director and the Chief Financial Officer of the Company.

During the year under review the Company has complied with all the applicable Secretarial Standards.

All pecuniary relationships or transactions of the Non-executive directors vis-a-vis the Company along with criteria for such payments and disclosures on remuneration of Directors along with their shareholding are disclosed in Form MGT-9, which forms a part of this Report.

There are no relationships between the Directors inter-se except between Ms. Harshbeena Zaveri and Mr. D. S. Sahney. Mr. Sahney is the brother of Ms. Harshbeena Zaveri.

Members desirous of receiving the full Report and Accounts of the subsidiaries will be provided the same on receipt of a written request from them or on submission of their e-mail IDs for forwarding documents through electronic mode. This will help save considerable cost in connection with printing and mailing of the Report and Accounts. This measure would be in line with the Green initiative for paperless communications. The same shall also be kept for inspection by any members at the registered office of the Company and of the respective subsidiary Company concerned and shall also be posted on the web site of the Company viz.www.nrbbearings.com.

14. Directors Responsibility Statement

In accordance with Section 134 of the Companies Act, 2013, the Directors state that:

i. in the preparation of annual accounts, all applicable accounting standards have been followed and no material departures have been made from the same;

ii. accounting policies selected were consistently applied. Reasonable and prudent judgements and estimates have been made so as to give a true and fair view of the state of affairs of the Company as on March 31, 2019 and of the profit of the Company for the accounting year ended on that day;

iii. proper and sufficient care for maintenance of adequate accounting records has been taken in accordance with the provisions of the Act so as to safeguard the assets of the Company and to prevent and detect fraud and other irregularities;

iv. the Annual Accounts have been prepared on a going concern basis.

v. the internal financial controls to be followed by the Company have been laid down and are adequate and were operating effectively.

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

15. Related Party transactions (RPT)

All RPT that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant RPT by the Company with promoters, directors, key managerial personnel or other designated persons, other than the same.

All RPT are placed before the audit committee as also the board for approval. Prior approval of the audit committee is obtained on periodic basis for transactions which are foreseen and repetitive in nature. The compliance of the transfer pricing norms in relation to such transactions is certified by the tax advisors.

The policy on RPTs as approved by the board is uploaded on the Companys website. Form AOC-2 for disclosure of particulars of contracts has been enclosed as Annexure 5.

16. Auditors Statutory Auditors

Appointment of M/s Walker Chandiok & Co. LLP, Chartered Accountants as statutory auditors was approved at the Annual General Meeting held on August 9, 2018 for a term of five (5) years upto March 31, 2023.

A certificate from the auditors has been received to the effect that their appointment, is within the limits prescribed under section 139 of the Companies Act, 2013.

Cost Auditors

Pursuant to the Rules issued by Ministry of Corporate Affairs under Companies (Cost records and Audit) Amendment Rules 2014, your Company is subject to cost audit during the year and M/s. R Nanabhoy & Co., Cost Accountants was appointed to undertake the same.

Secretarial Audit

Pursuant to the provisions of section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. U. C. Shukla, Practicing Company Secretary to undertake the Secretarial Audit of the Company. The report is annexed as Annexure 6.

Explanation or Comments on disqualifications, reservations, adverse remarks or disclaimers in the auditors reports

There have been no disqualifications, reservations, adverse remarks or disclaimers in any ofthe auditors reports.

17. Extract of Annual Return

The details forming part of the extract of the Annual Return in form MGT 9 is annexed herewith as Annexure 7.

18. Particulars of Employees

The information required pursuant to section 197(12) read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014, in respect of employees of the Company will be provided upon request. In terms of Section 136 of the Act the Report and Accounts are being sent to the members excluding this information.

19. Significant and Material Orders passed by the Regulators or Courts

There are no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations in future.

20. Change in nature of business

During the year under review there was no change in the nature of the business carried on by the Company.

21. Disclosure under Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013

In accordance with the provisions of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has set up four (4) Internal Complaints Committees (ICC) to redress complaints. During the year under review 1 complaint was received and resolved.

22. Acknowledgement

The Directors wish to record their appreciation of the contribution made by employees at all the levels by their hard work, solidarity and support, and for the confidence and loyalty shown by our customers. The Directors also wish to thank the shareholders, suppliers, bankers and all other business associates for the continuous support given by them to the Company and for their confidence in its management.

On behalf of the Board
Harshbeena Zaveri Satish Rangani
Vice Chairman & Managing Director Executive Director
Place: Mumbai
Date: May 29, 2019