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The Directors of your Company take pleasure in presenting the 31st Annual Report on the business and operations of the Company together with financial statements for the financial year ended on March 31, 2019.
1. Financial results & appropriations
a. Financial results
( Rs. in Million)
|Financial Year 2018-19||Financial Year 2017-18||Financial Year 2018-19||Financial Year 2017-18|
|Revenue from operations||25,731.53||20,954.75||1,20,364.65||1,03,784.57|
|Profit before finance cost, depreciation, exceptional items and extraordinary expenses||3,205.94||2,469.21||11,796.97||9,194.41|
|Less: Depreciation and amortization||1,075.19||1,016.11||5,656.42||3,864.65|
|Less: Finance cost||392.01||401.50||968.45||861.70|
|Add: Share of Net Profit of Investment accounted for using the equity Method||-||-||314.54||690.27|
|PROFIT BEFORE TAX||1,738.74||1,051.60||5,486.64||5,158.33|
|Less: Current tax expense||381.92||232.97||1,444.66||1193.75|
|Less: Deferred tax||161.42||120.33||-455.81||-543.19|
|NET PROFIT FOR THE YEAR||1,195.40||698.30||4,497.79||4,507.77|
|Less: Profit attributable to Non-controlling interest||-||-||34.59||5.19|
|Profit attributable to owners of the Company||1,195.40||698.30||4,463.20||4,502.58|
|Add: Profit brought forward from last year||1,818.60||1,182.23||9,639.98||5,135.42|
|Less: Re-measurements of defined benefit plans, net of tax||11.81||-10.82||46.84||4.89|
|Less: Imapact of change in accounting policy||-||-||689.92||-|
|Less: Transfer to Debenture Redemption Reserve (DRR)||-||-||-||125|
|Add: On Account of Capital Reduction||-||-||-||205.95|
|Dividend on Equity Shares||5.84||61.56||5.84||61.56|
|Tax on Dividend||1.19||11.19||2.55||12.52|
|Balance carried forward to Balance Sheet||2,995.16||1,818.60||13,358.03||9,639.98|
b. Companys Performance
Continuing the resilient revenue growth, on a consolidated basis, the revenue from operations for the Financial Year 2018-19 stood at Rs. 120,364.65 million as against Rs. 103,784.57 million in previous year representing a growth of 16% on a reported basis, driven equally by the Indian and Overseas business. On standalone basis, the gross revenue for the Financial Year 2018-19 stood at Rs. 25,731.53 million as against Rs. 20,954.75 million in previous year representing a growth of 23%.
The Net Profit, on a consolidated basis, for the Financial Year 2018-19 remained stagnant at Rs. 4,497.79 million as against Rs. 4507.77 million in previous year. On standalone basis, the Net Profit for the financial year 2018-19 stood at Rs. 1,195.40 million as against Rs. 698.30 million in previous year representing a growth of 71% mainly on account of improved performance.
c. Dividend and transfer to reserve
The Board has recommended a dividend of Rs. 4/- (Rupees Four only) (i.e. @ 400%) per equity share of Rs. 1/- each for the Financial Year 2018-19. The total cash outflow on account of payment of Dividend would be Rs.650.09 million including Dividend Distribution Tax of Rs.109.80 million. The said recommendation of Dividend is in compliance with Dividend Distribution Policy adopted by the Company.
The Board of Directors has considered it appropriate not to transfer any amount to the General Reserve before declaration of Dividend.
As per Regulation 43A of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 201 5 (hereinafter referred to as Rs. SEBI LODR Regulations), your Company has formulated a Dividend Distribution Policy which is available on the website of the Company at weblink http://www.varrocgroup.com/corporate_governance under the tab Policies.
d. Credit Rating
During the year under review, ICRA changed the outlook on the credit ratings for the Companys long term borrowing to Rs. AA-(Negative) from Rs. ICRA AA-(Stable) and maintained ratings for short term borrowings at Rs. ICRA A1+.
e. Details of Internal Financial Controls with reference to the Financial Statements
The management guide the conduct of affairs of your Company and clearly delineates the roles, responsibilities and authorities at each level and key functionaries involved in the governance.
The management is commited to govern financial and accounting policies, systems and processes. Your Companys Financial Statements are prepared on the basis of the Significant Accounting Policies that are carefully selected by the Management. These Accounting policies are reviewed and updated by the Management from time to time.
The internal audit function prepares annual audit plan with the aim of evaluation of the efficacy and adequacy of internal control system and compliance thereof, robustness of internal processes, policies and accounting procedures, compliance with laws and regulations. Based on the reports of internal audit function, process owners undertake corrective action in their respective areas. Significant audit observations and corrective actions thereon are presented to the Audit Committee.
The Company uses best IT system to record data for accounting, consolidation and management information purposes and connects to multiple locations for efficient exchange of information. The Audit Committee reviews reports submitted by internal auditors regularly and suggests the improvements for implementation by the Company.
The internal financial control with reference to the financial statements were adequate and operating effectively as endorsed by Statutory Auditors in their report.
f. Details in respect of frauds reported by Auditors
During the year under review, there have not been any instances of fraud and accordingly, the Statutory Auditors have not reported any frauds either to the Audit Committee or to the Board under Section 143(12) of the Companies Act, 2013 ("the Act").
2. Industry Outlook and Business Overview
Details on economic outlook, industrial outlook, business overview and SWOT analysis of the company is covered in the Management Discussion and Analysis report.
3. Financial Information and Disclosures
a. Report on Performance of Subsidiaries, Associates and Joint Venture Companies
Your Company has 23 subsidiaries including step-down subsidiaries and 5 joint ventures companies as on March 31, 2019. During the year, the Board of Directors ("the Board") reviewed the affairs of material subsidiaries. In accordance with Section 129(3) of the Act and SEBI LODR Regulations, the Consolidated Financial Statements of the Company including the financial details of the subsidiaries and associats forms part of the Annual Report. Further, the report on the performance and financial position of each of the subsidiary and joint venture companies and salient features of their financial statements are provided in the prescribed Form AOC-1 and it forms part of the Financial Statements of the Company.
Update on Varroc Lighting Systems entities
Consequent upon completion of 100% acquisition of shares and integration of management and operations under the overseas lighting business or for the statutory reasons, the name of the following entities were changed during the year under review:
|Sr. No.||Old name of the Company||New name|
|1||TRI.O.M., S.p.A., Italy||Varroc Lighting Systems, Italy S.p.A.|
|2||Electromures SA, Romania||Varroc Lighting Systems, Romania S.A.|
|3||TRI.O.M Vietnam Co., Ltd||Varroc Lighting Systems, Vietnam CO. Ltd.|
|4||Sa-Ba Endustriyel Urunler Imalat Ve Ticaret Anonim Sirketi||Varroc Lighting Systems Turkey Endustriyel Urunler Imalat Ve Ticaret Anonim Sirketi|
|5||Sa-Ba Bulgaria EOOD||Varroc Lighting Systems Bulgaria, EOOD|
|6||Varroc do Brasil Comercio, Importacao e Exportacao de Maquinas, Equipamento e Pecas Ltd., Brazil||Varroc do Brasil Industria E Commercia LTDA|
As reported in last Annual Report, VarrocCorp Holding BV, a WoS has acquired 100% stake in SA-BA Endustriyel Urunler imalat ve Ticaret Anonim Sirketi, (name changed to Varroc Lighting Systems Turkey Endustriyel Urunler Imalat Ve Ticaret Anonim Sirketi) a Turkey based company engaged in the business of manufacturing and supply of automotive lighting for four wheelers along with its wholly owned subsidiary company in Bulgaria at an aggregate consideration of Euro 43 million in June 2018.
During the year under review, Varroc Lighting Systems has formed small and two-wheeler lighting division under its umbrella. Aries Mentor Holding B.V., The Netherlands has acquired balance 20% stake in Varroc Lighting Systems, Italy S.p.A. (erstwhile TRI.O.M., S.p.A., Italy) as per the Option Agreement with its erstwhile promoters. With the acquisition of said stake, Varroc Lighting Systems, Italy S.p.A. has became wholly owned subsidiary of Aries Mentor Holding B.V., The Netherlands.
In September, 2018, Varroc Lighting Systems has signed a joint venture agreement with ELBA Electronics SRL, a privately-held lighting and electronics company based in Romania. By virtue of the said JV agreement, in the month of January, 2019, a new Joint Venture Company under the name and style of Varroc ELBA Electronics SRL, Romania was formed for manufacture of electronic components and sub-assemblies (modules). The manufacturing facility is being set up at Timisoara, Romania. VarrocCorp Holding B.V., The Netherlands a WoS is holding 70% stake in the said entity.
In January, 2019, Varroc do Brasil Industria E Commercia LTDA has started commercial production in Sorocaba, Sao Paulo, Brazil. The said plant is manufacturing automotive lighting products to cater to the requirements of north American customers.
In January, 2019, Varroc Lighting Systems, Bulgaria EOOD has started production facility in Dimitrovgrad, Bulgaria. This facility is initially producing a variety of small lighting products, including centre high-mounted stop lights, fog lamps, and turn indicators. It is part of Varroc Lightings newly formed small and two-wheeler lighting division, which leverages the global Varroc network to bring state-of-the-art mass-market lighting technology into lower-volume vehicle market segments through right-sized processes and dedicated lower-volume facilities. The Dimitrovgrad facility increases Varroc Lightings presence in Europe, joining the existing European facilities in the Czech Republic, Italy, Romania and Turkey.
Varroc Lighting Systems SA, Morocco has completed the construction of first phase of the facility and started commercial production in February, 2019. It is a green field manufacturing facility located in Tangier, Morocco. The said facility produces headlamps, rear lamps, and daytime running lamps for the customers located in Morocco, Spain and France.
In March, 2019, Varroc Lighting Systems S.p.Z.o.o., Poland opened a new research and development office in Krakow, Poland and has planned to tap the best engineering resources in cooperation with AGH University of Science and Technology and Krakow University of Technology. The said Company has also started construction of a new manufacturing plant in Niemce, Poland which is planned to be completed by third quarter of 2019.
Update on Indian entities/plants
As reported last year, the Company has partnered with DellOrto S.p.A., Italy for equal co-ownership of IP rights of Electronic Control Unit (ECU) to be used in electronic fuel injection system and signed a Joint Venture Agreement for setting up 50:50 joint venture company for manufacturing and sale of electronic fuel injection system mainly for two wheelers in India. By virtue of the said JV agreement, a private limited company under the name and style of Varroc DellOrto Private Limited was incorporated on January 10, 2019.
Further, the Company has commenced commercial production at Halol, Dist.: Panchmahal, Gujarat State in January, 2019. The said plant is catering the requirements of two-wheeler OEM Hero MotoCorp Ltd. The said plant is at present producing electrical items for two wheelers viz.; Blinkers, head lamps and tail lamps.
The Company has partnered with Heraeus, a globally leading technology group founded in 1851 and headquartered in Hanau, Germany for development of cutting-edge and cost-effective solutions for catalytic converters in automotive applications which will be compliant with the stringent emission norms of BS-6, EURO-V as well as an future emission norms. This would enable the Comapny to provide innovative emission solutions to automotive OEMs to help them remain competitive while complying with the aforesaid emission norms.
In March, 2019, the Company through its wholly owned subsidiary Varroc Polymers Pvt. Ltd. has acquired additional 5% stake in Bangalore based Company Team Concepts Pvt. Ltd. As on March 31, 2019, Varroc Polymers Pvt. Ltd. is currently holding 95% of the paid-up share capital of Team Concepts Pvt. Ltd.
The Companys wholly owned subsidiary Varroc Polymers Pvt. Ltd. has decided to merge the operations of Pathredi Plant into Binola Plant as both plants are catering to the requirement of customer Hero Motorcycle & Scooters India Pvt. Ltd. This will enable the Company to optimise the existing resources and reduce costs.
In accordance with Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements, financial statements of Subsidiary Companies and related information of the Company will be available on Companys website at web link http:// www.varrocgroup.com/financial_results . These documents will also be available for inspection during business hours at the registered office of the Company. A Copy of these financial statements shall be made available to any Member of the Company, on request.
The changes in subsidiaries, joint ventures or associate companies during the year under review are as follows:
Companies which have become Subsidiaries: Varroc ELBA Electronics, SRL, Romania (70:30 JV Company)
Companies which have ceased to be Subsidiaries of the Company: Nil
Companies which have become a Joint Venture of the company: Varroc DellOrto Pvt. Ltd.
Companies which have ceased to be a Joint Venture of the company: Nil
Entities which have ceased to be an Associate of the Company: Nil
Entities which have become an Associate of the Company: Nil
Details of subsidiaries and joint ventures of the Company and their performance are covered in Management Discussion and Analysis Report forming part of this Annual Report.
b. Share Capital
During the year under review, the following corporate actions were executed resulting in change in the paid-up share capital of the Company.
(i) Conversion of Preference Shares As per the terms of issue of Series C 0.0001% Compulsorily Convertible Preference Shares, 11,683,770 shares of Rs. 1 each were converted into 11,683,770 equity shares of Rs. 1 each and allotted to Mr. Tarang Jain on May 31,2018.
(ii) Initial Public Offering
As reported in the last Annual Report, during the year under review, the Company came out with its maiden Initial Public Offer ("IPO") by way of Offer for Sale ("OFS") under which 20,221,730 equity shares of Rs. 1 were offered to the public for subscription by Promoter, Mr. Tarang Jain (1,752,560 equity shares) and private equity investor Omega TC holdings Pte. Ltd. (16,917,130 equity shares) and Tata Capital Financial Services Limited (1,552,040 equity shares) at a price band of Rs. 965 to Rs. 967. The IPO of the Company was subscribed 3.6 times and the equity shares of the Company were listed on National Stock Exchange of India Limited and BSE Limited on July 6, 2018. As on March 31, 2019, 15% of the shareholding is held by public and balance 85% is held by the Promoter and Promoter group.
c. Utilisation of IPO Proceeds
The Companys IPO was by way of an Offer for Sale by existing shareholders and the proceeds were paid to the offering shareholders.
d. Fixed Deposits
During the year under review, the Company has not accepted any deposits from the public.
e. Disclosures under Section 134(3)(1) of the Act - Material Changes and Commitment
There has been no material change and commitment affecting the financial position of the Company which occurred between the end of the financial year to which these financial statements relate and on the date of this report.
f. Disclosure regarding significant and material orders passed by regulators or Courts or Tribunal
During the year under review, there were no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Companys operations in future.
g. Particulars of contracts or arrangements made with Related Parties
All related party transactions that were entered into during the financial year were on arms length basis and in the ordinary course of the business. 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.
h. Particulars of Loans, Guarantees or Investments
Particulars of loans, guarantees, investments and securities provided during the financial year under review along with the purposes of such loans, guarantees and securities is given in notes to the Financial Statements.
i. Disclosure under Section 43(a)(ii) of the Act
The Company has not issued any shares with differential rights and hence no information as per provisions of Section 43(a)(ii) of the Act read with Rule 4(4) of the Companies (Share Capital and Debenture) Rules, 2014 is required to be furnished.
j. Disclosure under Section 54(1)(d) of the Act
The Company has not issued any sweat equity shares during the year under review and hence no information as per provisions of Section 54(1)(d) of the Act read with Rule 8(13) of the Companies (Share Capital and Debenture) Rules, 2014 is required to be furnished.
k. Disclosure under Section 62(1}(b) of the Act
The Company has not issued any equity shares under Employees Stock Option Scheme during the year under review and hence, no information as per provisions of Section 62(1)(b) of the Act read with Rule 12(9) of the Companies (Share Capital and Debenture) Rules, 2014 is required to be furnished.
l. Disclosure under Section 67(3) of the Act
During the year under review, there were no instances of non-exercising of voting rights in respect of shares purchased directly by employees under a scheme pursuant to Section 67(3) of the Act read with Rule 16(4) of Companies (Share Capital and Debentures) Rules, 2014.
4. Disclosures related to Board, Committees, Remuneration and Policies
a. Directors and Key Managerial Personnel
Mr. Padmanabh Sinha (DIN 00101379), Investor Nominee Director has resigned w.e.f. May 28, 2018. The Board places on record its sincere appreciation for the services rendered and guidance provided to the management of the Company during his tenure.
Mr. Arjun Jain (DIN 07228175) was appointed as Additional Director/Whole-time Director of the Company by the Board on August 07, 2018 and his terms of appointment, including remuneration, was subsequently approved by special resolution passed at the Annual general meeting of the Company held on September 05, 2018.
Directors liable to retirement by rotation
The Independent Directors hold office for a fixed period of three years from the date of their appointment and are not liable to retire by rotation. Out of the remaining Non-Executive/ Non-Independent Directors, in accordance with the provisions of the Companies Act and the Articles of Association of the Company, Mr. Naresh Chandra (DIN: 00027696) being longest in office retire by rotation and being eligible, offer his candidature for reappointment as Director.
b. Declaration by Independent Directors and Boards Opinion on Independence
The Company has received declarations from all its Independent Directors, confirming that they meet the criteria of independence as prescribed under Section 149(6) of the Companies Act, 2013 and Regulation 16(1)(b) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.
In the opinion of the Board, Independent Directors, fulfil the conditions specified in the SEBI LODR Regulations and are independent of the Management.
c. Information on Board Meeting procedure and attendance during the Financial Year 2018-19
During the year, eight Board Meetings were convened and held. Details of number of committee(s) and board meeting(s) held during the year along with attendance record of each director has been disclosed in the Corporate Governance Report which forms part of the Annual Report.
The Board meetings of the Company are conducted as per the provisions of the Companies Act,2013 and applicable Secretarial Standards. Information as mentioned in the Act and all other material information, as may be decided by the management, are placed for consideration of the Board thereof. The details on the matters to be discussed along with relevant supporting documents, data and other information are also furnished with the detailed agenda to the Board, to enable directors to take informed decisions and and give directions to the management.
d. Directors Remuneration Policy and Criteria for Matters under Section 178 of the Act and Payment of Commission
As stipulated under Section 178 of the Act, the Board has approved a Nomination and Remuneration Policy of the Company.
The Policy documents the mechanism for appointment, cessation, evaluation and remuneration of the Directors, Key Managerial Personnel and Senior Management of the Company. Information on the Policy and details of the criteria for determining qualifications, positive attributes and other matters in terms of Section 178 of the Act are provided in the Corporate Governance Report.
The Company has not paid any commission to Managerial Personnel during the financial year under review. The aggregate profit related commission of Rs. 10.15 million payable to the non-executive directors for the Financial Year 2018-19 (which is within 1% of profit approved by the shareholders) will be paid during FY 2019-20 and the details of the same are provided in Corporate Governance Report.
e. Formal annual evaluation of the performance of the Board, its Committees and Directors
Formal evaluation of performance of the board and its committees and directors is undertaken annually.
The Company has implemented a system of evaluating performance of the Board and of its Committees and Directors on the basis of a structured questionnaire which comprises evaluation criteria taking into consideration various performance related aspects. The said structured questionnaire was prepared after taking into consideration, inputs received from the Directors, covering various aspects of the Boards functioning such as adequacy of the composition of the Board and its Committees, Board culture, execution and performance of specific duties, obligations and governance.
The Board of Directors has expressed their satisfaction with the evaluation process.
f. Directors Responsibility Statement
Pursuant to Section 134(5) of the Act, the Directors, based on the representation received from the management, confirm that:
(i) in the preparation of the annual accounts for the year ended March 31, 2019, the applicable accounting standards have been followed along with proper explanation relating to material departures;
(ii) 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 at the end of the Financial Year 2018-19 and of the profit of the Company for that period;
(iii) the directors 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;
(iv) the directors have prepared the annual accounts on a going concern basis;
(v) the directors have laid down internal financial controls to be followed by the Company and such internal financial controls are adequate and operating effectively; and
(vi) the directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.
g. Corporate Governance
Corporate Governance Report along with General Shareholder Information and Management Discussion and Analysis are included in this Annual Report.
The CEO cum Whole-time Director and Group Chief Financial Officer have certified to the Board with regard to financial statements and other matters as required under Regulation 17(8) read with Schedule II to the SEBI LODR Regulations.
h. Corporate Social Responsibility and CSR Policy
Corporate Social Responsibility is an integral part of the Companys ethos and policy and the Company is pursuing it on a sustainable basis. In this endeavour, the Company has contributed funds for the CSR activities/project related to promoting rural and nationally recognized sports, promotion of education and employment, enhancing vocational skills, environment sustainability and promoting art and culture. During the year under review, the Company was required to spent Rs. 11.9 million towards CSR activities against which, the Company has spent Rs. 30.99 million.
The Annual Report on CSR activities as required to be given under Section 135 of the Companies Act, 2013 and Rule 8 of the Companies (Corporate Social Responsibility Policy) Rules, 2014 has been provided in an Annexure - I to this Report.
i. Enterprise Risk Management Policy
The Board of Directors has approved and adopted comprehensive Enterprise Risk Management Policy (ERM) for the Company.
The Enterprise Risk Management Policy is designed to manage risk within the risk threshold established by the Board and provide reasonable assurance over the achievement of strategic and operational objectives. The policy document covers the enterprise wide risk management aspects of all Business Units/Plants of the Company. The Policy will help in risk identification, risk measurement, define risk appetite and threshold limits and suggesting risk mitigation measures. The Company has with the professional help implemented ERM Policy by carrying out detailed risk identification, assessment and ranking in consultation with senior management of the Company. The process is ongoing and require continuous exercise across all locations and functions of the Company. As a part of risk mitigation measure, the Company has implemented Compliance Management Tool across all business units and functions to monitor compliance of all applicable laws in India. The Risk Management Committee will do the periodic review of implementation, assessment and mitigation measures under ERM. The Chief Internal Auditor has been appointed as Chief Risk Officer to monitor on-going basis risk and to suggest mitigation measures.
a. Statutory Auditor
In accordance with Sec 139 of the Companies Act, 2013, M/s S R B C & CO LLP, Chartered Accountants (Firm Registration No: 324982E/ E300003), were appointed by the shareholders of the Company at the Annual General Meeting held on September 5, 2018, as Statutory Auditors for a period of 5 years to hold office from the conclusion of 30th AGM till the conclusion of the 35th Annual General Meeting of the Company to be held in calendar year 2023.
The Ministry of Corporate Affairs vide its Notification dated May 7, 2018, has dispensed with the requirement of ratification of Auditors appointment by the shareholders, every year. Hence, approval of the Members for the ratification of Auditors appointment is not being sought at the ensuing Annual General Meeting.
The Auditors Report does not contain any qualification, reservation or adverse remark on the financial statements for the year ended March 31, 2019. The Notes on financial statement referred to in the Auditors Report are self-explanatory and do not call for any further comments. The auditors report is enclosed with the financial statements.
Total fees for all services paid by the Company and its subsidiaries, on a consolidated basis, to the statutory auditor and all entities in the network firm/ network entity of which the statutory auditor is a part is given below:
(Rs. in million)
|Particular||As at March 31,2019|
|Audit Fees (Including fees for Overseas Subsidiary entities)||53.95|
|Tax Audit Fees||1.45|
|Reimbursement of Expenses||6.77|
b. Cost Auditor
As per the provisions of Section 148 of the Act and Rule 3 of the Companies (Cost Records and Audit) Rules, 2014 ("the Rules"), the Company is required to maintain cost records with respect to certain products of the Company and get the same audited.
Based on the recommendation of the Audit Committee, the Board, at its meeting held on May 24, 2019, has appointed M/s S. R. Bhargave & Co., Cost Accountants as Cost Auditor of the Company for the financial year 2019-20 at a remuneration of Rs. 3,00,000 (Rupees Three Lakhs only). The said fee is exclusive of applicable taxes and reimbursement of out-of-pocket expenses, which shall be payable at actuals. A proposal for ratification of the cost audit fee for the audit of cost records for the financial year 2019-20 has been proposed at the forthcoming Annual General Meeting. The Cost Audit Report for the financial year 2018-19 will be filed within the stipulated period of 30 days after it is submitted by the Cost Auditors.
c. Secretarial Auditor
In terms of the provisions of Section 204 of the Act and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, M/s Uma Lodha & Co. (C.P. No.2593), Company Secretary in Practice, Mumbai was appointed by the Board as Secretarial Auditor to undertake the Secretarial Audit for the financial year 2018-19.
The Secretarial Audit Report for the financial year 2018-19 is annexed herewith as Annexure- II to this report. The comments made in the Secreterial Report regarding laps in filing of document with stock exchange was rectified subsequently by filing amended document and regarding filing of e-form is under process to file along with late filing fees or compounding fees as applicable.
6. Business Responsibility Report
The Rs. Business Responsibility Report of your Company for the year 2018-19 as required under Regulation 34(2)(f) of the SEBI LODR Regulations, is enclosed as Annexure III to this report.
7. Other Disclosures and Statutory Information
a. Compliance with Secretarial Standards
The Company complies with applicable secretarial standards.
b. Policies and code adopted by the Company
The Board of Directors has from time to time framed and approved policies as required by the SEBI LODR Regulations as well as under the Companies Act, 2013. These policies will be reviewed by the Board at periodic intervals. Some of the key policies that have been adopted are as follows:
(i) Policy for Board Diversity Appointment Remuneration Training and Evaluation of Directors and Employees (ii) Material Subsidiary Policy (iii) Policy for determination of materiality threshold for Disclosure of Events (iv) Code for Disclosure of Unpublished Price Sensitive Information (v) Code of Conduct for Insider Trading (vi) Policy on Preservation of Information and Archival of documents (vii) Policy on Related Party Transactions (viii) Code of Conduct for Directors and Senior Management Personnel (ix) Enterprise Risk Management Policy (x) Whistle Blower Policy (xi) Dividend Distribution Policy.
The above policies are available on the Companys website on the link http://www.varrocgroup.com/corporate_governance .
c. Disclosure under code of conduct for Prevention of Insider Trading and Fair Disclosure of Unpublished Price Sensitive Information
In terms of the SEBI (Prohibition of Insider Trading) Regulations, 2015, the Company has adopted a Rs. Code of Conduct for Prevention of Insider Trading ("PIT Code"). Further, the Company has also adopted a Rs. Code of Practices and Procedures for Fair Disclosure of Unpublished Price Sensitive Information ("UPSI Code"). The required details have been disclosed in the Corporate Governance Report of the Company.
d. Particulars of employees and related disclosures
Disclosure of remuneration and other details 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 are annexed herewith as Annexure IV.
A 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) Rules, 2014 is provided as separate annexure forming part of this Report. In terms of Section 136 of the Act, the Annual Report and financial statements are being sent to the Members excluding the aforesaid annexure. The said annexure is available for inspection at the registered and corporate office of the Company during business hours and will be made available to any shareholder, on request.
The said statement is also available on your Companys website at the web link http://www.varrocgroup.com/financial_results .
I) None of the Whole-Time Directors received any commission nor any remuneration from any of the Companys subsidiaries except Managing Director who also serves as Managing Director and receives remuneration from Varroc Polymers Private Limited.
II) The following details are given in the Report on Corporate Governance forming part of this Annual Report:
(i) all elements of remuneration package of all the Directors;
(ii) details of fixed component and performance linked incentives of Managing Director, Whole-Time Directors along with the performance criteria;
(iii) service contracts, notice period, severance fees of Whole-Time Directors;
e. Conservation of Energy, Technology absorption, Foreign exchange earnings and Outgo
The information pertaining to conservation of energy, technology absorption, 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 are provided in Annexure - V to this report.
f. Extract of Annual Return
As required under section 92(3) of the Companies Act, 2013 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 companys website at the link http://www.varrocgroup.com/shareholders_ information#tab5.
g. Occupational Health & Safety
The organization believes in Rs. Zero Harm. The aim is to improve health and safety standards of people who are working with the organization in their capacity as employees, contractors or in any other role. Efforts are taken to minimize activities which may affect the health and safety in working place.
h. Disclosure as required under sexual harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013
Your Company is committed towards providing a healthy environment and thus does not tolerate any discrimination and/or harassment in any form. The Company has in place robust policy on prevention of sexual harassment at workplace which is in line with the requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. All employees (permanent, contractual, temporary, trainees) alongwith consultants are covered under this Policy. The Policy is gender neutral.
The employees are sensitized from time to time on matters relating to prevention of sexual harassment. Awareness programmes are conducted at unit levels to sensitize the employees to uphold the dignity of their colleagues at workplace. Further, the Company has constituted an Internal Complaints Committee to, inter-alia, prevent sexual harassment at the workplace and redress the complaints received in this regard.
Details of complaints with allegations of sexual harassment for Financial Year 2018-19 are as follows:
|a.||Number of complaints pending as on April 1, 2018||Nil|
|b.||Number of complaints filed during the financial year||Nil|
|c.||Number of complaints disposed of during the financial year||Nil|
|d.||Number of complaints pending as on March 31, 2019||Nil|
8. Corporate Governance Certificate
The Report on Corporate Governance as stipulated in the SEBI LODR Regulations, forms part of the Annual Report.
The requisite Certificate from M/s. Uma Lodha & Co., Practicing Company Secretaries, confirming compliance with the conditions of Corporate Governance as stipulated under the SEBI LODR Regulations, is annexed hereto as Annexure VI and forms part of this Report.
Your Directors place on record their acknowledgement for the co-operation received from the Central, State and Local Government Bodies, Government Authorities, Customers, Vendors, Bankers, Associates, Collaborators and the Employees of the Company without which it would not have been possible for the Company to achieve such performance and growth.
|For and on behalf of the Board of Directors|
|Varroc Engineering Limited|
|Tarang Jain||Ashwani Maheshwari|
|Date: May 24, 2019||Managing Director||CEO & Whole Time Director|
|Place: Mumbai||DIN: 00027505||DIN: 07341295|