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Your Directors have pleasure in presenting the 55th (Fifty–fifth) Annual Report on the business and operations of the Company and the audited financial statement for the Financial Year ended March 31, 2016.
2. EXTRACT OF ANNUAL RETURN
The extract of the Annual Return of the Company in Form MGT–9 is annexed herewith as Annexure “A” to this report.
3. NUMBER OF MEETINGS OF THE BOARD
During the Financial Year 2015–16, 5 (Five) Board Meetings were held. The details of which are given in Corporate Governance Report.
. DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(5) of the Companies Act, 2013 with respect to Directors' Responsibility Statement, it is hereby confirmed that:
a) i n the preparation of the annual accounts for the year ended March 31, 2016, the applicable Accounting Standards have been followed and there were no material departures;
b) t he Directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2016 and of the profit of the Company for that period;
c) t he Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
d) the Directors had prepared the annual accounts on a going concern basis;
e) the Directors had laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and
f) t he Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
. NOMINATION AND REMUNERATION POLICY
The Board has, on the recommendation of the Nomination and Remuneration Committee, framed a policy for selection and appointment of Directors, Key Managerial Personnel and Senior Management Personnel and their remuneration. The Nomination and Remuneration policy is annexed herewith as Annexure "B" to this report.
. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013
Particulars of Loans, guarantees or investments covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statement provided in this Annual Report. These loans/guarantees are primarily granted for the furtherance of business of the borrowing companies.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts or arrangements entered into by the Company with Related Parties have been done at arm's length and are in the ordinary course of business.
The policy on Related Party Transactions as approved by the Board has been displayed on the Company's website at the link – <http://bharatforge.com/images/PDFs/policies/> BFL.RPT%20Policy.pdf
Pursuant to Section 134 of the Companies Act, 2013 read with Rule 8(2) of the Companies (Accounts) Rules, 2014, the particulars of such transactions are provided in Form AOC–2 which is annexed herewith as Annexure "C" to this report. Related Party disclosures as per AS–18 have been provided in Note–33 to the financial statement.
STATE OF COMPANY'S AFFAIRS
Discussion on state of Company's affairs has been covered as part of the Management Discussion and Analysis (MDA). MDA for the year under review, as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, is presented in a separate section forming part of the Annual Report.
DIVIDEND & RESERVES
Your Company paid first Interim Dividend of Rs. 3.00 per Equity Share (150%) of the face value of Rs. 2/– each on February 25, 2016, aggregating to Rs. 840.56 Million (inclusive of tax on dividend of Rs. 142.17 Million) and second Interim Dividend of Rs. 4.00 per Equity Share (200%) of the face value of Rs. 2/– each on March 29, 2016, aggregating to Rs. 1120.74 Million (inclusive of tax on dividend of Rs. 189.56 Million) for the financial year ended on March 31, 2016.
Your Directors are pleased to recommend a Final Dividend of Rs. 0.50 per Equity Share (25%) of the face value of Rs. 2/–each, aggregating to Rs. 140.09 Million (inclusive of tax on dividend of Rs. 23.70 Million) for the financial year ended on March 31, 2016 for your consideration. Total Dividend paid for the year ended on March 31, 2016 was Rs. 7.50 per Equity Share (375%).
During the year under review, it is proposed to transfer Rs. 100.00 Million (previous year – Rs. 719.00 Million) to the General Reserves. An amount of Rs. 23,408.23 Million is proposed to be retained as surplus in the Statement of Profit & Loss.
The dividend payout for the year under review has been formulated in accordance with shareholders' aspirations and the Company's policy to pay sustainable dividend linked to long term growth objectives of the Company to be met by internal cash accruals.
10. SHARE CAPITAL
The paid–up Equity Share Capital as on March 31, 2016 stood at Rs. 465.59 Million. During the year under review, the Company has not issued shares with differential voting rights nor has granted any stock options or sweat equity. As on March 31, 2016, none of the Directors of the Company hold instruments convertible into equity shares of the Company.
11. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE COMPANY
There are no adverse material changes or commitments occurred after March 31, 2016 which may affect the financial position of the Company or may require disclosure.
12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are annexed herewith as Annexure "D" to this report.
13. RISK MANAGEMENT POLICY
The Company has a robust risk management framework comprising risk governance structure and defined risk management processes. The risk governance structure of the Company is a formal organisation structure with defined roles and responsibilities for risk management.
The processes and practices of risk management of the Company encompass risk identification, classification and evaluation. The Company identifies all strategic, operational and financial risks that the Company faces, by assessing and analysing the latest trends in risk information available internally and externally and using the same to plan for risk management activities.
The Company has set–up a Finance and Risk Management Committee to review the risks faced by the Company and monitor the development and deployment of risk mitigation action plans. The Committee reports to the Board of Directors and the Audit Committee who provide oversight for the entire risk management framework of the Company.
As a part of the Company's strategic planning process, the Directors have reviewed the revised risk management policy and processes and also the risks faced by the Company and the corresponding risk mitigation plans deployed. The Company is on track in respect of its risk mitigation activities.
14. CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES
The Company has been carrying out various Corporate Social Responsibility (CSR) initiatives. These activities are carried out in terms of Section 135 read with Schedule VII of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014. During the year, the Company has spent X 124.98 Million on various CSR activities.
The CSR Committee of the Company comprises of Mr. P. G. Pawar (Chairman), Mr. B. N. Kalyani and Mr. Amit B. Kalyani.
The Annual Report on CSR activities that includes details about the CSR policy developed and implemented by the Company and CSR initiatives taken during the year is annexed herewith as Annexure "E" to this report.
15. AUDIT COMMITTEE
The Audit Committee comprises of Mr. P. G. Pawar (Chairman), Mr. S. M. Thakore, Mr. P. H. Ravikumar and Mr. P. C. Bhalerao. All the recommendations made by the Audit Committee were deliberated and accepted by the Board.
16. BUSINESS RESPONSIBILITY REPORT
The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ("Regulation") mandates inclusion of the Business Responsibility Report (BRR) as a part of Annual Report for Top 100 Listed entities based on market capitalization. In compliance with the Regulation, we have provided the BRR as a part of Annual Report.
17. BOARD EVALUATION
Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Board has carried out an annual performance evaluation of its own performance, the Directors individually as well as the evaluation of the working of its Committees. Performance evaluation has been carried out as per the Nomination and Remuneration Policy.
18. DETAILS OF APPOINTMENT AND RESIGNATION OF DIRECTORS
In terms of provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. P. C. Bhalerao and Mr. B. P. Kalyani, Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for re–appointment.
Mr. B. P. Kalyani and Mr. S. E. Tandale have been re–appointed as Executive Directors for a period of 5 (Five) years w.e.f. May 23, 2016 subject to the approval of Members.
The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under of Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
19. DETAILS OF APPOINTMENT AND RESIGNATION
OF KEY MANAGERIAL PERSONNEL
During the year under review, there have been no changes in any Key Managerial Personnel of the Company.
20. FAMILIARISATION PROGRAMME
The Board members are provided with necessary documents/brochures, reports and internal policies to enable them to familiarise with the Company's procedures and practices.
Periodic presentations are made at the Board Meetings, Board Committee Meetings and Independent Directors Meetings, on business and performance updates of the Company, global business environment, business strategy and risks involved.
The details of programmes for familarisation for Independent Directors are posted on the website of the Company and can be accessed at: <http://bharatforge.com/images/> Familiarisation_Programme–BFL.pdf
21. NAMES OF THE COMPANIES WHICH HAVE BECOME/CEASED TO BE SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR
During the year under review, the Company divested its 50% stake in David Brown Bharat Forge Gear Systems India Limited which was formed in the year 2011 as a joint venture (JV). The stake was held through the Company's wholly–owned subsidiary viz. BF Infrastructure Ventures Limited and was sold to the other JV partner, David Brown Systems India (Holdings) Limited.
CDP Bharat Forge GmbH, Germany (CDP BF), a direct subsidiary of the Company in Germany has undertaken a corporate re–organisation along with its subsidiaries. The manufacturing operations of CDP Bharat Forge have been transferred to a new subsidiary Company in Germany viz. Bharat Forge CDP GmbH (BF CDP), CDP BF has been re–named as "Bharat Forge Global Holding GmbH" (BFGH) and this entity will continue to serve as the Holding Company for the Company's investments in Europe.
During the year under review, Bharat Forge Global Holding GmbH has incorporated a limited liability Company viz. Bharat Forge CDP Trading in Russia.
A statement containing the salient features of the financial statement of our subsidiaries in the prescribed format AOC–1 is presented in a separate section forming part of the financial statement.
The Policy for determining 'Material' subsidiaries has been displayed on the Company's website at the link – <http://> bharatforge.com/images/PDFs/policies/Policy%20on%20 Material%20Subsidiary–BFL.pdf
During the year under review, the Company has not accepted deposits under Chapter V of the Companies Act, 2013.
23. SIGNIFICANT AND MATERIAL ORDERS
There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.
24. INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls with reference to financial statement. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.
25. INFORMATION PURSUANT TO RULE 5 OF THE COMPANIES (APPOINTMENT AND REMUNERATION OF
MANAGERIAL PERSONNEL) RULES, 2014
Sr. Information Required Input No.
1 The ratio of the remuneration of each Director to the Please refer Annexure "F" median remuneration of the employees of the Company for the financial year.
2 The percentage increase in remuneration of each Please refer Annexure "F" Director, Chief Financial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year.
3 The percentage increase in the median remuneration 14.38% of employees in the financial year
4 The number of permanent employees on the rolls of 4,763 Company
26. VIGIL MECHANISM
The Company has in place Whistle Blower Policy, wherein the Employees/Directors/Stakeholders of the Company are free to report any unethical or improper activity, actual or suspected fraud or violation of the Company's Code of Conduct. This mechanism provides safeguards against victimization of Employees, who report under the said mechanism. During the year under review, the Company has not received any complaints under the said mechanism. The Whistle Blower Policy of the Company has been displayed on the Company's website at the link – <http://bharatforge>. com/images/PDFs/policies/BFL%20Whistle%20Blower%20 Policy–Signed.pdf
a. Statutory Auditors
At the 53rd (Fifty–third) Annual General Meeting held on September 4, 2014, M/s. S R B C & CO LLP, Chartered Accountants [Firm Registration No.: 324982E/ E300003], were appointed as Statutory Auditors of the Company to hold office till the conclusion of the 56th (Fifty–six) Annual General Meeting to be held in the year 2017. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the Statutory Auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s. S R B C & CO LLP, Chartered Accountants [Firm Registration No.: 324982E/E300003], as Statutory Auditors of the Company, will be placed for ratification by the Shareholders in the ensuing Annual General Meeting. In this regard, the Company has received a certificate from the Auditors to the effect that if their appointment is ratified, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.
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 does not contain any qualification, reservation or adverse remark.
b. Secretarial Audit
The Board has appointed M/s. SVD & Associates, Company Secretaries, Pune, to conduct Secretarial Audit for the Financial Year 2015–16. The Secretarial Audit Report for the financial year ended March 31, 2016 is annexed herewith as Annexure "H" to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.
c. Cost Auditors
The Board of Directors, on the recommendation of Audit Committee, has appointed M/s. Dhananjay V. Joshi & Associates, Cost Accountants, Pune, [Firm Registration No.: 00030] as Cost Auditors to audit the cost accounts of the Company for the Financial Year 2016–17. As required under the Companies Act, 2013, a resolution seeking Member's approval for the remuneration payable to the Cost Auditors forms part of the Notice convening the Annual General Meeting.
The Cost Audit report for the Financial Year 2014–15 was filed with the Ministry of Corporate Affairs on September 29, 2015.
28. CORPORATE GOVERNANCE
The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has also implemented several best Corporate Governance practices as prevalent globally. The report on Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 forms an integral part of this Report. The requisite certificate from the Auditors of the Company confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.
29. REDEMPTION OF DEBENTURES
• The 33.33% installment of Company's 11.95% Secured Redeemable Non–Convertible Debentures of Rs. 2,500 Million of face value of Rs. 1,000,000/– each was due for redemption on January 5, 2016 and the same has been paid on due date. As a result, after the said redemption, the aggregate paid up value of the said Debentures stands reduced to Rs. 333,400/– each at the end of 7th year from the date of allotment.
• The 35% installment of Company's 10.75% Secured Redeemable Non–Convertible Debentures of Rs. 1,760 Million of face value of Rs. 1,000,000/– each was due for redemption on April 28, 2015 and the same has been paid on due date. As a result, after the said redemption, the aggregate paid up value of the said Debentures stands reduced to Rs. 300,000/– each at the end of 5th year from the date of allotment. Third and Final installment @ 30% was paid on April 28, 2016. As a result, the said Debentures stand fully redeemed in accordance with the terms of issue i.e. at the end of 6th year from the date of allotment.
30. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
In terms of provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, the Company has formulated a Policy to prevent Sexual Harassment of Women at Workplace. During the year under review, there were no cases filed pursuant to the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.
Your Directors would like to express their sincere appreciation of the positive co–operation received from the Central Government, the Government of Maharashtra, Financial Institutions and the Bankers. The Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers, workers and staff of the Company resulting in the successful performance of the Company during the year.
The Board also takes this opportunity to express its deep gratitude for the continued co–operation and support received from its valued shareholders.
The Directors express their special thanks to Mr. B. N. Kalyani, Chairman and Managing Director, for his untiring efforts for the progress of the Company.
For and on behalf of the Board of Directors
B. N. KALYANI
Chairman and Managing Director
Place : Pune:
Date : May 17, 2016