PPAP Automotive Ltd Directors Report.

Dear Members,

PPAP Automotive Limited

Your Directors have pleasure in presenting the Twenty Fourth Annual Report of your Company along with the audited standalone and consolidated financial statements and the auditors report thereon for the year ended 31 st March, 2019.

Financial highlights and state of Companys affairs

(र in lacs)

Particulars For the year ended
Standalone Consolidated
31st March, 2019 31st March, 2018 31st March, 2019 31st March, 2018
Revenue from operations (net of excise) 41,098.04 39,762.33 41,098.04 39,762.33
Other income 107.06 258.56 107.06 258.56
Profit / (loss) before depreciation, finance costs, exceptional items and tax expense 7,827.02 8,746.46 7,859.24 8,746.46
Less: depreciation / amortization / impairment 2,599.53 2,598.96 2,599.53 2,598.96
Profit / (loss) before finance costs, exceptional items and tax expense 5,227.49 6,147.50 5,259.71 6,147.50
Less: finance costs 404.71 442.39 404.71 442.39
Profit / (loss) before tax expense 4,822.78 5,705.11 4,855.01 5,705.11
Less: tax expense (current & deferred) 1,481.15 1,963.94 1,481.15 1,963.94
Profit / (loss) for the year 3,341.63 3,741.17 3,373.85 3,931.05
Total comprehensive income / (loss) (42.44) 6.55 (42.82) 11.39
Total 3,299.19 3,747.72 3,331.03 3,942.44

Pursuant to the provisions of Regulation 33 of the Securities and Exchange Board of India (SEBI) (Listing Obligations and Disclosure Requirements) Regulations, 2015 and applicable provisions of the Companies Act, 2013 read with the Rules issued thereunder, the consolidated financial statements of the Company for the financial year 2018-19 have been prepared in compliance with applicable Indian Accouting Standards (Ind AS) and on the basis of audited financial statements of the Company, joint venture and associate companies, as approved by the respective board of directors of the companies.

The consolidated financial statements together with the auditors report form part of this annual report.

Dividend

During the financial year 2018-19, your Company declared and paid to the shareholders, an interim dividend of र 2.00 (Rupees two only) per equity share (20%) of face value of र 10 (Rupees ten) each. An amount of र 57.57 lacs was paid as dividend distribution tax on the interim dividend. The Board of Directors of the Company are pleased to recommend dividend ofafinal र 2.50 (Rupees Two and fifty paisa only) per equity share (25%) of face value of र 10 (Rupees ten) each for approval of the shareholders at the ensuing Annual General Meeting (AGM). On approval, the total dividend (interim and final) for the financial year 2018-19 will be र 4.50 (Rupees Four and fifty paisa only) per equity share (45%) of theface र 10 (Rupees ten) each as against the total dividend of र 4.50 (Rupees Four and fifty paisa only) per equity share of the face value ofर 10 (Rupees ten) paid for the previous financial year 2017-18. The dividend outflow of र 421.25 lacs including dividend distribution tax of र 71.25 lacs for the financial year 2018-19.

Transfer to reserves

During the year under review, no amount has been transfered to general reserve for the financial year 2018-19.

Share capital

During the year ended 31st March, 2019 there was no change in the issued and subscribed capital of the Company. The issued, subscribed and paid-up share capital of the Company stood at र 14,00,00,000 comprising of 1,40,00,000 equity shares of र 10 each as on 31st March, 2019.

Share capital audit as per SEBI (Listing Obligations and Disclosure Requirements), Regulations, 2015 is conducted on a quarterly basis by N.K.J. & Associates, Company Secretaries. The share capital audit reports are duly forwarded to stock exchanges where the securities of the Company are listed.

Deposits

Your Company has not accepted any deposit within the meaning of provisions of Chapter V of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014 for the year valueof ended 31st March, 2019.

Technical collaboration

The Company has technical collaborations with Tokai Kogyo Co. Limited, Japan; Nissen Chemitec Corporation, Japan; and Tokai Kogyo Seiki Co. Limited, Japan. Your Company is receiving the requisite support as per the needs of the business. The technology partners of your Company have extended their continuous support in terms of new product development, innovations, design, latest technology, quality, productivity, etc. as per the needs of your Company.

Extract of annual return

The details forming part of the extract of the Annual Return as on 31st March, 2019 in form MGT-9 in accordance with Section 92(3) of the Companies Act, 2013 read with Companies (Management and Administration) Rules, 2014, annexed as "Annexure-A" to this report.

Meetings of the Board of Directors

The Board of Directors met five times during the financial year 2018-19, the details of which are given in the corporate governance report that forms part of this annual report. The intervening gap between any two meetings was in compliance with the period prescribed under the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

Audit committee

The audit committees purpose is to oversee the quality and integrity of accounting, auditing and financial reporting process including reviewing of the Companys statutory and internal audit reports. The audit committee also gives recommendations for enhancement in scope and coverage of internal audit for specific areas wherever it is felt necessary. The audit committee is provided with all the necessary documents and information to carry out its function effectively. All the members of the audit committee have the requisite financial, legal and management The details of composition of the audit committee, its terms of reference and the number of meetings held during the year under review, are given in the corporate governance report.

The corporate governance report has been detailed in a separate section and is attached separately to this annual report.

Directors and key managerial personnel

Mr. Ajay Kumar Jain (DIN: 00148839) is on the Board of the Company since 18th October, 1995 as Managing Director and was also appointed as Chairman of the Company on 10th February, 2014. Mr. Ajay Kumar Jain, as Chairman & Managing Director has re-appointed for another tenure of five years with effect from 01st November, 2018 upto 31st October, 2023, by the shareholders at the 23rd AGM of the Company held on 23rd August, 2018.

Pursuant to the provisions of the Companies Act, 2013, Mr. Bhuwan Kumar Chaturvedi (DIN: 00144487) has been re-appointed as a Non-Executive Independent Director for another term of five consecutive years, from 26th December, 2018 upto 25th December, 2023, by the shareholders at 23rd AGM of the Company held on 23rd August, 2018.

Pursuant to the provisions of the Companies Act, 2013, Mr. Pravin Kumar Gupta (DIN: 06491563) has been re-appointed as a Non-Executive Independent Director for another term of five consecutive years, from 01st April, 2019 upto 31st March, 2024, by the shareholders at 23rd AGM of the Company held on 23rd August, 2018. Pursuant to the provisions of the Companies Act, 2013, Mr. Ashok Kumar Jain (DIN: 06881412) has been re-appointed as a Non-Executive Independent Director for another term of five consecutive years, from 27th May, 2019 upto 26th May, 2024, by the shareholders at 23rd AGM of the Company held on 23rd August, 2018. In accordance with the provisions of the Companies Act, 2013 and in terms of Articles of Association of the Company, Mr. Abhishek Jain (DIN: 00137651), Chief Executive Officer and Managing Director (CEO & MD) of the Company will retire by rotation at the ensuing AGM of the Company. He is being eligible, has offered himself for re-appointment as a Director.

Brief profile of Mr. Abhishek Jain (DIN: 00137651), CEO & MD, seeking re-appointment is given in the corporate governance report attached to this report and the other details as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulation, 2015, are given in the notice of 24th AGM.

Declaration by Independent Directors

The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

During the year, Independent Directors of the Company had no pecuniary relationship or transactions with the Company other than sitting fees incurred by them for the purpose of attending . Board and Committee meetings.

The terms and conditions of appointment of the Independent Directors are placed on the website of the Company under the link:http://ppapco.in/Template-of-Letters-of-Appointment-to-Independent-Directors.pdf.

Credit rating

During the year under review, the credit rating agency CRISIL has reaffirmed the credit rating of your Company on 11th September, 2018:

Long term bank loan facilities CRISIL A+ / Stable
Short term bank loan facilities CRISIL A1

Directors responsibility statement

In terms of and pursuant to Section 134(3)(c) of the Companies Act, 2013, as amended from time to time, in relation to the financial statements for the year ended 31st March, 2019, to the best of their knowledge and belief your Directors confirm the following: i. that in the preparation of annual financial statements the financial year ended 31 st March, 2019, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any; ii. that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a "true and fair view" of the state of affairs of the Company as at 31st March, 2019 and of the profit and loss of the Company for the financial year ended 31st March, 2019; iii. that the proper and sufficient care has been taken 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; iv. that the financial statementsforthefinancialyear ended 31 st March, 2019 have been prepared on a "going concern basis"; v. controls are that the adequate and are internal financial operating effectively; and vi. that proper systems to ensure compliance with the provisions of all applicable laws are adequate and operating effectively.

Compliance with secretarial standards

Your Company has complied with the applicable Secretarial Standards issued by the Institute of Companies Secretaries of India (SS-1 and SS-2) respectively relating to meetings of the board of directors and general meeting.

Evaluation of the Boards performance / effectiveness

Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors has carried out annual evaluation of its own performance, Directors, Chairman and its Committees. The manner in which the evaluation has been carried out has been explained in the corporate governance report attached to this report.

Nomination and remuneration policy

The remuneration paid to the Directors is in accordance with the nomination and remuneration policy formulated in accordance with Section 178 of the Companies Act, 2013 and Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (including any statutory modification(s) or re-enactment(s) thereof for the time being in force). The Company has amended the nomination and remuneration policy to align it with SEBI (Listing Obligations and Disclosure Requirements) (Amendment) Regulations, 2018 in this regard. The salient aspects covered in the nomination and remuneration policy have been given hereunder: In accordance with the nomination and remuneration policy, the nomination and remuneration committee has, inter alia, the following responsibilities:

1. Ensure appropriate induction and training program: The committee shall ensure that there is an appropriate induction and training program in place for new directors, key managerial personnel (KMPs) and senior management personnel (SMPs) and review its effectiveness. for 2. Formulating the criteria for appointment as a director: The committee shall formulate criteria and review it on an ongoing basis, for determining qualifications, skills, experience, expertise, qualities, attributes, etc. required to be a director of the Company.

3. Identify persons who are qualified to be directors / Independent directors / KMPs / SMPs: The committee shall identify persons who are qualified to become directors / independent directors / KMPs / SMPs and who satisfy the criteria laid down under the provisions of the Companies Act, 2013, Rules made thereunder, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 or any other enactment, for the time being in force.

4. Nominate candidates for directorships subject to the approval of the Board: The committee shall recommend to the Board the appointment of potential candidates as non-executive director or independent director or executive director, as the case may be.

5. Evaluate the performance of the Board: The committee shall determine a process for evaluating the performance of the board, director, chairman and committees of the board, on an annual basis.

6. Remuneration of managing director / directors: The committee shall ensure that the tenure of executive directors and their compensation packages are in accordance with applicable laws and in line with the Companys objectives, shareholders interests and benchmarked with the industry.

7. Review performance and compensation of non-executive independent directors: The committee shall review the performance of non-executive independent directors of the company. The committee shall ensure that the non-executive independent directors may receive remuneration by way of sitting fees for attending the meetings of Board or committee(s), thereof provided that the amount of such fees shall be subject to ceiling / limits as provided under the Companies Act, 2013 and Rules made thereunder or any other enactment, for the time being, in force.

8. Review performance and compensation of KMPs / SMPs: The committee shall ensure that the remuneration to be - paid to KMPs / SMPs shall be based on their experience, qualifications and expertise and governed by the limits, if any, prescribed under the Companies Act, 2013 and Rules made thereunder or any other enactment, for the time being, in force.

9. ‘Directors and officers insurance: The committee shall ensure that the insurance taken by the Company on behalf of its Directors, KMPs / SMPs either for indemnifying them against any liability or any other matter as may be deemed fit, the premium paid on such insurance, shall not be treated as part of the remuneration payable, to any such personnel.

10. Succession plans: The committee shall address and review sufficiently in advance the succession plans in order to ensure smooth transition and maintain an ideal balance of skills, experience and expertise on the Board.

Particulars of employees

The information required under Section 197 of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 (including any statutory modification(s) time being in force) in respect of Directors / employees of the Company, annexed as "Annexure-B" to this report.

Joint ventures and associates

PPAP Automotive Chennai Private Limited has ceased to be an associate of your Company with effect from 18th February, 2019. In accordance with Section 129(3) of the Companies Act, 2013, your Company has prepared consolidated financial statements, which forms part of this annual report. Further, a statement containing the salient features of the financial statements of our associates and joint venture in the prescribed form AOC-1, annexed as "Annexure-C" to this report which covers the financial position of associates and joint venture companies and hence not repeated here for the sake of brevity.

Corporate governance report

Your Company is committed to maintain high standards of corporate governance and adhere to the corporate governance requirements set out by SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. At the Company, we constantly strive to evolve and follow up on the corporate governance guidelines and its best practices.

The compliance report on corporate governance and a certificate from M/s VLA & Associates, Company Secretaries, secretarial auditors of the Company, regarding the compliance of the conditions of corporate governance, as stipulated under Chapter IV of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is annexed to this annual report.

Management discussion and analysis report

As required under Regulation 34(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, a detailed management discussion and analysis report is presented in a separate section forming part of the annual report.

Material changes and commitments affecting financial position between end of the financial year and date of report

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

Particulars of loans, guarantees and investments

During the year under review, your Company has not given any loan or guarantee which is covered under the provisions of Section 186 of the Companies Act, 2013. However, details of investments are given under note 6 of the standalone financial the Company.

Related party transactions

During financial year 2018-19, all contracts / transactions entered by your Company with related parties under Section 188(1) of the

Companies Act, 2013 were in the ordinary course of business and on an arms length basis. During financial year 2018-19, your Company has not entered into any contracts / arrangements / transactions with related parties which could be considered ‘material in accordance with its policy on materiality of related or re-enactment(s) thereof for the party transactions. Thus, there are no transactions required to be reported in form AOC-2.

The details of the related party transactions as per Ind AS 24 are set out in note 38 to the standalone financial statements of the Company.

Auditors and Auditors report

Statutory auditors

During the year under review, statutory auditors of the Company M/s O P Bagla & Co. has converted itself into a Limited Liability Partnership (LLP) under the provisions of the Limited Liability Partnership Act, 2008 and is now known as M/s O P Bagla & Co LLP with effect from 25th April, 2018. Pursuant to the provisions of Section 139(2) of the Companies Act, 2013, read with the Companies (Audit and Auditors) Rules, 2014, M/s O P Bagla & Co LLP (Registration No. 000018N / N500091), Chartered Accountants, New Delhi were reappointed as the statutory auditors of the Company at the 23rd AGM of the Company held on 23rd August, 2018 for the period of five years i.e. upto the conclusion of the 28th AGM to be held in the year 2023.

Statutory auditors report

The auditors report does not contain any qualification, reservation(s) or adverse remark(s). The notes on financial statements referred to in the auditors report are self-explanatory and do not call for further comments.

Secretarial auditors

Pursuant to the provisions of Section 204 of the Companies Act, 2013 and Rules framed thereunder, M/s VLA & Associates, Company Secretaries were appointed as secretarial auditors of the Company for the financial year 2018-19. The secretarial audit report for the financial year 31 st March, 2019 in form MR-3 is attached as "Annexure-D" to this report.

Secretarial auditors report

The report of secretarial auditors is forming part of this report and does not contain any qualification(s), reservation(s) or adverse remark(s).

Cost auditors

The Board of Directors, on recommendation of the audit committee, appointed M/s Rakesh Singh & Co., Cost Accountants, (Registration No. 000247) as cost auditors to audit the cost accounts of the Company for the financial statementsof year 2019-20 in terms of the provisions of Section 148 of the Companies Act, 2013. The remuneration payable to the cost auditors is required to be ratified by the shareholders at the ensuing AGM. Accordingly, resolution ratifying the remuneration payable to M/s Rakesh Singh & Co., Cost Accountants, (Registration No. 000247) forms a part of the notice dated 22nd May, 2019 convening the 24th AGM.

The Company had filed the cost audit report for financial year 2017-18 on 17th August, 2018, in compliance under the Companies (Cost Records and Audit) Amendment Rules, 2014.

Reporting of frauds by auditors

During the year under review, the auditors of the Company have not reported to the audit committee, under Section 143(12) of the Companies Act, 2013, any instances of fraud committed against the Company by its officers and employees.

Corporate social responsibility

Your Company has been taking initiatives under Corporate Social Responsibility (CSR) for the society at large. The Company has a well-defined policy on CSR as per the of the Companies Act, 2013. During the year, your Company has registered a trust in the name of "Vinay and Ajay Jain Foundation" for focused implementation of its CSR activities in the field of Environment, Education and Healthcare. Your Company thrives to constantly contribute towards the betterment of the local community in which it operates and the upliftment of the marginalised section of our society. CSR report, pursuant to Section 134(3)(o) of the Companies Act, 2013 and Rule 9 of the Companies (Corporate Social Responsibility) Rules, 2014, annexed as "Annexure-E" to this report.

Risk management policy

The Company has established risk management framework that enables regular and active monitoring business activities for identification, assessment and mitigation of potential internal or external risks. The respective functional / business unit head(s) are entrusted with the responsibility of identifying, mitigating and monitoring of risk in their respective areas. Risk management forms an integral part of the management and is an ongoing process integrated with the operations.

The Companys risk management processes focus on ensuring that these risks are identified promptly, mitigation action plan identified and executed timely. There are no risks which in the opinion of the Board, threaten the existence of the Company. However, some of the risks which may pose challenges are set out in the management discussion and analysis report which forms a part of this annual report.

Policy on sexual harassment of women at workplace

Your Company has in place a policy on prevention of sexual harassment at workplace. This policy is in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition and Redressal) Act, 2013. As per the said policy, an internal complaints committee is also in place to redress the complaints received regarding sexual harassment.

The Company is committed to provide equal opportunities without regard to their race, caste, sex, religion, colour, nationality, disability etc. All women associates (permanent, temporary, contractual and trainees), as well as, any women visiting the Companys premises or women service providers are covered under this policy. All employees are treated with dignity with a view to maintain a work environment free of sexual harassment whether physical, verbal or psychological.

During the financial year, the Company has not received any complaint on sexual harassments. The Company has also organized workshops and awareness programs against sexual harassment.

Details of significant and material orders regulators or courts or tribunals impacting the going concern status and Companys operations in future

No significant and material orders have been year under review by the regulators or courts or tribunals impacting the going concern status and Companys operations in future. requirement of Section 135

Details on internal financial controls related to financial statements

Your Company has a robust and well embedded system of internal controls. This ensures that all assets are safeguarded and protected against loss from unauthorized use or disposition and all financial transactions are authorized, recorded and reported correctly.

The internal auditors evaluate the efficacy and adequacy of the internal control system, its compliance with operating systems and policies of the Company at all the locations of the Company. Based on the report of internal audit function, the process owners undertake corrective action in their respective areas and thereby strengthen the controls. Significant audit corrective actions, thereon, are reported to the audit committee. The Company has an effective and reliable internal financial control system commensurate with the nature of its business, size and complexity of its operations.

This also identifies opportunities for improvement and ensures good practices imbibed in the processes that develop and strengthen the internal financial control systems and enhance the reliability of Companys financial statements.

The audit committee reviews the internal audit plan, adequacy and effectiveness of the internal control system.

Whistle blower policy

Your Company is committed to highest standards of ethical, moral and legal business conduct. Accordingly, the Board of Directors have formulated whistle blower policy which is in compliance with the provisions of Section 177(10) of the Companies Act, 2013 and Regulation 22 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

The whistle blower policy provides a vigil mechanism for the Director / employee to report, without fear of victimization, any unethical behavior, suspected or actual fraud, violation of the code of conduct of the Company, which are detrimental to the organizations interest and reputation. The mechanism protects whistle blower from any kind of discrimination, harassment, victimization or any other unfair employment practice.

The Directors and employees in exceptional cases have direct access to the Chairman of the audit committee. The said policy is placed on the website of the Company at www.ppapco.in.

Conservation of energy, technology absorption, foreign exchange earnings and outgo

The information as required under Section 134(3)(m) of the the Companies Act, 2013 read with Rule 8(3) of the Companies (Accounts) Rules, 2014, relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, annexed as "Annexure-F" to this report.

Acknowledgements

Your Directors wish to convey their appreciation to all the employees at all levels for their hard work, dedication and commitment during the year.

It has been a challenging year for the Indian economy externally as well as internally. The good news is that despite the challenges of volatile oil prices, rising interest rates and domestic uncertainties due to the impending general elections in India and slowing consumption demand, India remained the worlds fastest growing economy. Your Directors are thankful to your technology partners for sharing know how, suppliers as well as vendors, our shareholders for their assistance, business associates, banks, financial institutions for their continued support and confidence reposed in the

For and on behalf of the Board
Place: Noida Ajay Kumar Jain Abhishek Jain
Date: 22nd May, 2019 Chairman & CEO &
Managing Director Managing Director
DIN: 00148839 DIN: 00137651