Profit

NSE Symbol: | BSE Code: | ISIN: | Sector:

  • Add to Portfolio
  • Add to Watchlist
  • Add to Alert
  • Add to Message
Add to Portfolio
NSE
745.40
Change Change %
-20.65 -2.70%

Updated:21 May, 2019, 15:56 PM IST

BSE
743.25
Change Change %
-19.75 -2.59%

Updated:21 May, 2019, 16:01 PM IST

DIRECTORS' REPORT

The Directors take pleasure in presenting the Fifty–Fifth Annual Report together with the audited financial statements for the year ended March 31, 2016. With the challenging economic conditions of the previous year continuing into 2015, your Company has focused on improving productivity, eliminating waste, re–aligning the cost structure and increasing market share.

2. DIVIDEND:

Your Directors have recommended a final dividend of Rs. 9 /– per equity share of Rs.  2/– each fully paid–up, in addition to the interim dividend of Rs. 5/– per equity share of Rs.  2/– each fully paid–up share declared on February 2, 2016, aggregating to Rs.  14/– (i.e. 700%) per equity share of Rs.  2/– each fully paid–up share for the year ended March 31, 2016 (last year Rs.  14/– per equity share i.e. 700%). The final dividend payout is subject to approval of the Members at the ensuing annual general meeting.

The paid up share capital of the Company is Rs. 554,400,000/– divided into 277,200,000 equity shares of Rs.  2/– each. Your Company has not come out with any issue (public, rights or preferential) during the Financial Year.

3. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATES:

Your Board is pleased to provide details of the following subsidiary, joint ventures and associate as on March 31, 2016 : –

a) Cummins Sales & Service Private Limited (CSSPL):

The Board of Directors of your Company at their meeting held on May 28, 2015 approved the proposal to increase its existing shareholding in Cummins Svam Sales & Service Private Limited (originally incorporated as 'Cummins Svam Sales & Service Limited') from 50% to 100% by way of purchasing 6,000,000 equity shares of Rs.  10/– each held by Svam Power Plants Private Limited and effective October 1, 2015, CSSPL (now known as,

Cummins Sales & Service Private Limited) became a wholly–owned subsidiary of the Company further strengthening our distribution capabilities in India. CSSPL focuses on sales and service of Cummins engines and generator sets in parts of Northern India close to NCR. Your Company is benefited with better integrated customer insights received from CSSPL into product planning, supply chain and customer facing processes of your Company. CSSPL generated net revenue of Rs. 7,542 Lacs from its operations for the year ended March 31, 2016, as compared to Rs. 6,940 Lacs during the previous year (8.67% higher).

b) Cummins Research and Technology India Private Limited (CRTI):

The net revenue from the operations of Cummins Research and Technology India Private Limited (CRTI), a 50:50 joint venture between Cummins Inc., U.S.A. and your Company for the year ended March 31, 2016, was Rs.  3,084 Lacs as compared to Rs.  3,372 Lacs during the previous year (8.53% lower). CRTI was formed in 2003 with an intent to provide Information Technology enabled Mechanical Engineering development services primarily to Cummins Inc., U.S.A., its subsidiaries and joint ventures in all parts of the world. In order to enhance efficiency, optimize the response time, reduce the administrative procedures, and avoid duplication of efforts, your Board of Directors decided that the Company would run the activity which is carried out by CRTI for your Company, in–house by absorbing the appropriate number of employees from CRTI in your Company. This will result in simplicity in running the same activities in a more effective manner. On completion of absorption of appropriate number of employees, your Company would exit from the operations of CRTI and its shareholding.

c) Valvoline Cummins Private Limited (VCPL):

VCPL, a 50:50 joint venture with Valvoline International Inc., U.S.A., a global leader in lubricants and engine oils, generated net revenue of Rs.  102,914 Lacs from its operations for the year ended March 31, 2016, as compared to Rs.  100,614 Lacs during the previous year.

d) Cummins Generator Technologies India Private Limited (CGT):

Your Company owns approx. 48.50% shareholding in the Associate Company namely CGT which is in the business of manufacturing, marketing, sales and service of alternators and related spare parts. CGT generated net revenue of Rs.  49,564 Lacs from its operations for the year ended March 31, 2016, as compared to Rs.  51,565 Lacs during the previous year (3.88% lower).

Your Company announces consolidated financial results on an annual basis. As required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Consolidated Financial Statements of the Company, its subsidiary, joint ventures and associates, prepared in accordance with the applicable Accounting Standards issued by the Institute of Chartered Accountants of India, form part of the Annual Report and are reflected in the Consolidated Financial Statements of the Company.

Further, a statement containing the salient features of the joint ventures and associate in the prescribed Form AOC–1 is appended as Annexure '1' which forms part of this Report.

The Company will make available the said financial statements and related detailed information of CSSPL companies upon the request by any member of the Company. These financial statements will also be kept open for inspection by any Member at the Registered Office of the Company and of CSSPL. Pursuant to the provisions of section 136 of the Act, the financial statements of the Company, consolidated financial statements along with relevant documents and separate audited accounts in respect of CSSPL, are available on the website of the Company.

4. INITIATIVES AT PHALTAN:

Currently, the manufacturing plants of your Company operational at the Megasite Phaltan are the HHP Rebuild Center and Phaltan MidRange Upfit Center (PMUC) at the Domestic Tariff Area and the Low Horsepower Generator set plant at the Special Economic Zone (SEZ), along with the India Parts Distribution Center.

Due to economic slowdown, the global demand for B, C, L series engines and gas engines have reduced drastically requiring the existing PMUC factory to operate below 40% utilization. In order to optimize costs and better utilize the existing resources, it is proposed to outsource manufacturing of 'C' series engines and gas engines by way of contract

manufacturing and shift certain activities, resources and operations to other existing factories of Cummins group companies operating at Phaltan which results into closure of PMUC operations by December 2016. After closure, the empty plant will be made available for Cummins Technologies India Private Limited on rental basis at arm's length basis.

While the common facilities like the creche, administration office and health center have commenced operations since August 2014, the Training Center for employees comprising of an auditorium with a seating capacity of 250 people has become functional since June 2015.

The other training center that commenced operations in December 2015 at the Megasite Phaltan, is the Technical Training Center. With a capacity to train more than 550 engineers and 300 customers annually to service High Horsepower, Heavy duty and MidRange mechanical engines, the training center will further enhance your Company's capability to provide world–class service experience to the end–user.

In addition to manufacturing and related facilities, a residential campus to house Phaltan based employees of your Company in a high quality, safe and clean environment near the Megasite was inaugurated on August 5, 2015. This facility comprises of four buildings with 240 rooms, a cafeteria and a club house.

5. INDIA OFFICE CAMPUS (IOC):

The Company has shifted its Registered Office from Kothrud, Pune 411038, Maharashtra, India to Cummins India Office Campus, Tower A, 5th Floor, Survey No. 21, Balewadi, Pune 411045 with effect from July 1, 2015. India Office Campus at Balewadi, Pune – the headquarters for Cummins India, where close to 2,500 employees across all our business units and functions work, has become fully functional.

6. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:

Other than the unsecured loan given to Cummins Technologies India Private Limited (a subsidiary of Cummins Inc., USA) in 2011 in compliance with the Companies Act, 1956 and Rules thereunder, no other loan or guarantee is given or investment is made by your Company during the Financial Year 2015–16.

7. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES:

Particulars of contracts or arrangements with related parties referred to in Section 188 (1) of the Companies Act, 2013 in the prescribed Form AOC–2 is appended as Annexure '2' which forms part of this Report.

The Policy on materiality of related party transactions and dealings with related party transactions as approved by the Board may be accessed on the Company's website at the link: 'http://www.cumminsindia.com/MAIN/corporate.html'

8. CONSERVATION OF ENERGY:

Your Company continued to undertake various energy conservation initiatives during the year, some of which are given below:

Industrial Engine Business Unit Plants (Kothrud):

¦ Reduction of 68% in power consumption achieved by way of:

– Replacement of 2x36 watt lamps in the new cylinder head machining section by efficient 2x28 watt lamps (50 nos.);

– Replacement of 400 watt Metal Halide lamps in the KV Assembly Test Paint Unit section by 100 watt LED Lamps (46 nos.);

– Replacement of 2x36 watt lamps by 20 watt LED tubes (46 nos.); which also improved lux level and energy efficiency of illumination devices at NH NT Assembly section;

¦ Reduction of 45% in power consumption achieved by way of upgrading ventilation blowers and water pumps at the unit 4 Power House;

¦ Reduction of 10% in power consumption each in BU01, BU04 and BU–06 against standard man hours;

¦ Reduction of 37% in the installed rated energy consumption of EMA Machines (3 nos.) pumping system from 12,319 kWh per month to 7,662 kWh per month; and

¦ Use of energy review tool & energy balance tool for identifying energy saving projects. Phaltan Midrange Upfit Center, Phaltan:

¦ Reduction of 10% in electrical energy consumption for all external utility lights which saves approx. 200 units per month;

¦ Reduction of 5% in electrical energy consumption for lights and fans at the Plant;

– Installed the automated day timer for operation (Switching ON/OFF) of street lights on timely basis as per the pre–set timings;

– Installed the automated timers for operation (Switching ON/OFF) of shop lights & fan on timely basis as per the pre–set timings.

Power Generation Business Unit Plant, Pirangut and Phaltan SEZ:

¦ Saved 43% energy by way of,

– using LED tube fittings (saving of 42,345 kWh);

– setting up timers in office and canteen (saving of 75,029 kWh);

¦ Reduction of 31% of energy consumption at paint booth by making it to be utilized at full load capacity; and

¦ Reduction of 21 % of energy consumption at HVAC unit.

Distribution Business Unit Plants (Erandwane, Pune and HHP Rebuild Center, Phaltan):

¦ Maintaining a unity power factor at the HHP Rebuild Centre;

¦ Alternate switching off of the street lights after duty hours;

¦ Use of VRV air conditioners for the administrative building at Phaltan thereby achieving energy savings;

¦ Use of sky lights on roofs to ensure minimal use of lights on the shop floor during day time; and

¦ Optimizing use of heater tanks used for cleaning of cylinder blocks and crank–cams through one of initiative from six sigma.

India Parts Distribution Center, Phaltan:

¦ Regular testing of capacitor bank introduced to ensure power factor remains in range of 0.99 throughout the year;

¦ Dock levelers electrical circuit modified to control wastage;

¦ Installation of a solar water heater for dish cleaning at the cafeteria. Quarterly preventive maintenance plan is in place to validate effectiveness;

¦ Use of motion activated sensors in the racking aisles and the office area and dock station. Quarterly preventive maintenance plan is to check working conditions of all sensors;

¦ Use of sky lights in the factory premises to reduce need for lighting during daytime; and

¦ Use of motion sensors in rest rooms to reduce electricity consumption.

Your Company has made an overall capital investment of f 6.32 Lacs on energy conservation equipment at various plants during the year ending March 31, 2016.

IMPACT OF THE ABOVE MEASURES:

The above initiatives resulted in savings of about f 101 Lacs in addition to Greenhouse Gas (GHG) emission reduction by 20% as compared to FY 2014–15. The energy units saved during the year were about 990,085 kWh.

9. RESEARCH & DEVELOPMENT AND TECHNOLOGY ABSORPTION:

Your Company is committed to introducing new products and improving existing products to have better performance levels, lower life cycle costs, excellent safety, recyclability characteristics, meet stringent emission norms and specific needs of the Indian customer.

The Technical Center of your Company continues in this endeavour by indigenizing components and developing the next generation of components and systems in collaboration with the parent company – Cummins Inc.

In order to improve technical productivity, new methodologies and technologies have been introduced and enhancements in capabilities are being continuously pursued to reduce the costs associated with new product development and customer support. An example of this is the enhanced use of analysis–led design computer models that help minimize hardware testing and therefore accelerate product development cycle times. Continued implementation of Six Sigma initiatives have resulted in significant cost savings and improved operating efficiency.

To ensure the health and safety of employees, the Technical Center also pursued several initiatives to help drive towards the goal of zero–recordable incidents.

A. New Product Development:–The following new Products were developed as part of the above initiatives during the year:–

1. Emissions recipe to meet BSIII, BSIV and OBDII emission regulations for on–highway commercial vehicle ratings.

2. Advanced BSIII and BSIV electronic products to enhance competitiveness in the on–highway segment and drive towards lower fuel consumption and higher power density product offerings for customers.

3. Multiple stationary engine families to meet the upcoming CPCB II Power Generation regulations above 800 kW.

4. Key Industrial engine product families to support the growing Industrial Business.

5. Key Marine engine product families to support the increasing commercial Marine Business.

6. Fundamental electronics capability to help develop products that comply with OBD II (On Board Diagnostics) legislation.

7. Further enhancement of non–diesel product development capability.

8. Improved capability in intake air characteristic measurements to enhance understanding and control of the combustion process.

B. Benefits derived as a result of the above activities are:–

1. Enhanced development capabilities through use of electronic tools and simulation software to control the engine performance and combustion process.

2. Enhanced capability to tailor engine designs to improve the value proposition for customers through delivering superior power output, fuel economy, and transient response and reduced emissions.

3. Product and component availability to meet the new emission norms ahead of implementation.

4. More safe, recyclable, reliable, durable and performance–efficient products and critical components.

5. Component indigenization capability was improved through enhanced test capability, rig test, flow bench development and availability.

6. Significant enhancements in measurement capability were made to pursue business opportunities in non–diesel markets to serve both the rural and international communities.

C. Future plans include:–

1. Developing local 'fit for market' solutions to meet upcoming emission regulations, local and rural market needs.

2. Technological innovation to add value to the products in the areas of alternate fuels, recycle / re–use and hybrid engines.

3. Continued expansion of the product range to serve the local and global market needs.

4. Providing energy–efficient solutions to reduce carbon footprint and improve recyclability.

5. Continued focus on indigenization and partnering with suppliers for waste elimination initiatives.

6. Alternate source development for various engine components.

7. Expanding the coverage of our engine development for the Power Generation market.

8. Advanced common rail electronic fuel systems to meet market needs for upcoming BS IV emission norms in Commercial Vehicle market aimed at delivering better performance through globally tested Cummins Fuel Systems technology.

D. Your Company continues to draw benefits from Cummins Inc.'s technical capabilities and advanced technology. With continued support from Cummins Inc., your Company is committed to develop advanced fuel–efficient and emission–compliant engines that work on a variety of fuel sources and comply with forthcoming domestic and global emission regulations, to help reduce Greenhouse Gas emission, whilst also enabling the products to deliver superior performance, reliability, durability and recyclability.

11. MANAGEMENT DISCUSSION & ANALYSIS AND CORPORATE GOVERNANCE REPORT:

Pursuant to Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Management Discussion and Analysis Report and the Corporate Governance Report are appended as Annexure '3' and '4' respectively which form part of this Report.

The Company has obtained a Certificate from the Statutory Auditors confirming compliance with conditions of the Code of Corporate Governance as stipulated in Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 and the same is appended as Annexure '5' which forms part of this Report.

12. EXTRACT OF THE ANNUAL RETURN:

Extract of the annual return as prescribed under Section 92 (3) of the Companies Act, 2013 is appended as Annexure '6' which forms part of this Report.

13. RISK MANAGEMENT:

Business Risk Evaluation and Management is an ongoing process within the Organization. The Company has a robust risk management framework to identify, monitor and minimize risks as also identify business opportunities. As a process, the risk associated with the business are identified and prioritized based on severity, likelihood and effectiveness of current detection. Such risks are reviewed by the senior management on a quarterly basis. Process owners are identified for each risk and metrics are developed for monitoring and reviewing the risk mitigation through Six Sigma Projects.

Audit and Risk Management Committee of the Board of Directors of your Company assists the Board in (a) overseeing and approving the Company's enterprise wide risk management framework; and (b) overseeing that all the risks that the organization faces such as strategic, financial, credit, market, liquidity, security, property, IT, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. Your Directors would like to disclose pursuant to Section 134 (3) of Act that there was not any matter or decision where the Board had not accepted any recommendation of the Audit and Risk Management Committee.

14. INTERNAL FINANCIAL CONTROL:

Details of internal financial control and its adequacy are included in the Management Discussion and Analysis Report which is appended as Annexure '3' and which forms part of this Report.

15. VIGIL MECHANISM/ WHISTLE BLOWER POLICY:

Your Company is committed to fostering a physically and psychologically safe, integrity based, respectful, inclusive, high performance culture that breaks down hierarchies and organizational boundaries, and engaging the full talents of our diverse employees to delight all our stakeholders (employees, customers, partners, shareholders, suppliers, communities) consistently.

The Company has a 'Whistle Blower Policy' which inter alia provides adequate safeguards against victimization of persons who may blow the whistle. In addition, the Company also has constituted an Internal Complaints Committee (under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act 2013) and an Ethics Committee comprising of senior executives of the Company. Protected disclosures can be made by a whistle blower through an email or dedicated telephone line or letter to the Chairman & Managing Director of the Company or Letter to the Chairman of Audit and Risk Management Committee. Whistle Blower Policy may be accessed on the Company's website at the link: 'http://www.cumminsindia.com/MAIN/corporate.html'  Details of number of complaints filed and resolved by the Internal Complaints Committee during the year are provided in the Business Responsibility Report of the Company.

16. CODE OF CONDUCT COMPLIANCE:

A declaration signed by the Chairman & Managing Director affirming compliance with the Company's Code of Conduct by the Directors and Senior Management for the Financial Year 2015–16 as required under Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is included in the Corporate Governance Report which is appended as Annexure '4' and forms part of this Report.

17. DIRECTORS' RESPONSIBILITY STATEMENT:

Based on the framework of internal financial controls and compliance systems established and maintained by the Company, work performed by the internal, statutory, cost and secretarial auditors and external consultant(s) including audit of internal financial controls over financial reporting by the statutory auditors and the reviews performed by Management and the relevant Board Committees, including the Audit and Risk Management Committee, the Board is of the opinion that the Company's internal financial controls were adequate and effective during the Financial Year 2015­16.

Accordingly, pursuant to Section 134(5) of the Companies Act, 2013, the Board of Directors, to the best of their knowledge and ability, confirm that:

(i) in the preparation of the annual accounts for the year ended March 31, 2016, the applicable accounting standards have been followed and there was no material departure from the same;

(ii) they 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 on March 31, 2016 and of the profit for the period April 1, 2015 to March 31, 2016;

(iii) they have 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;

(iv) they have prepared the annual accounts on a going concern basis;

(v) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and were operating effectively during the year; and

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

18. DIRECTORS:

a) Changes in the composition of the Board of Directors:

During the year, Ms. Nicole McDonald (DIN: 07369062) has been appointed as an Alternate Director for Ms. Suzanne Wells (DIN: 06954891) w.e.f. November 15, 2015.

The Board, at its meeting held on May 28, 2015, noted the presence of Mr. Mark Smith (DIN: 06852777) in India during May 26, 2015 to May 28, 2015 and consequent cessation of Mr. Pradeep Bhargava (DIN: 00525234) as an Alternate Director for Mr. Smith effective May 26, 2015. The Board confirmed appointment of Mr. Bhargava as an Alternate Director for Mr. Smith effective May 29, 2015 upon return of Original Director (Mr. Mark Smith) to the U.S.A.

At its meeting held on August 6, 2015, the Board of Directors noted the presence of Mr. Edward Pence (DIN: 06577765) in India during August 3, 2015 to August 6, 2015 and consequent cessation of Mr. J. M. Barrowman (DIN: 00668324) as an Alternate Director for Mr. Pence effective August 3, 2015. The Board, at its meeting dated August 6, 2015 confirmed appointment of Mr. Barrowman, as an Alternate Director for Mr. Pence effective August 7, 2015 upon return of Original Director (Mr. Edward Pence) to the U.S.A.

The Board, at its meeting held on February 2, 2016, noted the presence of Ms. Suzanne Wells (DIN: 06954891) in India during January 30, 2015 to February 3, 2016 and consequent cessation of Ms. Nicole McDonald (DIN: 07369062) as an Alternate director of Ms. Wells effective January 30, 2015. The Board confirmed appointment of Ms. McDonald as an Alternate Director for Ms. Wells effective February 4, 2016 upon return of Original Director (Ms. Wells) to the U.S.A.

There was no cessation of any Director of the Company during the Financial Year 2015–16.

In accordance with the Companies Act, 2013 and Articles of Association of the Company, Mr. Mark Smith and Mr. Casimiro Antonio Vieira Leitao, Directors of the Company, retire by rotation and are eligible for re–appointment.

The details of number of meetings of the Board etc. are provided in the Corporate Governance Report which is appended as Annexure '4' and forms part of this Report.

b) Committees of the Board:

The Board of Directors have constituted following committees in order to effectively cater its duties towards diversified role under the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015: –

¦ Audit and Risk Management Committee;

¦ Stakeholders Relationship Committee;

¦ Nomination and Remuneration Committee; and

¦ Corporate Social Responsibility Committee.

Details of the constitution, terms of references of each Committee and number of meetings attended by individual director etc. are provided in the Corporate Governance Report which is appended as Annexure '4' and forms part of this Report.

c) Policy on Director's Appointment and Remuneration:

The Policy of the Company on Director's Appointment and Remuneration, including criteria for determining qualifications, positive attributes, independence of the directors and other matters provided under Section 178 (3) of the Companies Act, 2013, adopted by the Board is appended as Annexure '7' which forms part of this Report. Details of the remuneration paid to the Board of Directors are provided in the Corporate Governance Report. We affirm that the remuneration paid to the Directors is as per the terms laid down in the Nomination and Remuneration Policy of the Company.

d) Board Performance Evaluation Mechanism:

Pursuant to the provisions of the Companies Act, 2013 and Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board has carried out the annual performance evaluation of its own performance and the Directors individually, as well as the evaluation of the working of its Committees. Details of the evaluation mechanism is provided in the Corporate Governance Report which is appended as Annexure '4' and forms part of this Report.

e) Familiarization Programme for Independent Directors:

The Independent Directors of the Company are associated with the Company for many years and are very familiar with the Company. During the year, the Management provided various documents, background notes etc. to have a better insight of the Company. The Chairman & Managing Director also holds a one–to–one discussion with the newly appointed Directors. Details of initiatives for the Director to understand the Company, its business and the regulatory framework in which the Company operates and equips him/ her to effectively fulfil his/ her role as a Director of the Company are available at 'http://www.cumminsindia.com/MAIN/ corporate.html'.

On November 5, 2015, the Management conducted an interactive session for all Directors of your Company on Indian Accounting Standards (Ind ASs) which was facilitated through Mr. Sumit Seth, Head – IFRS India

(M/s Price Waterhouse, Mumbai) at Hotel Taj Mahal Palace, Apollo Bunder, Mumbai 400001 wherein the participants discussed different aspects of applicability and implementation of Ind ASs.

f) Declarations from the Independent Directors:

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

19. PARTICULARS OF EMPLOYEES:

The details in accordance with the provisions of Section 197 (12) of the Companies Act, 2013, read with Rule 5 (1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, is appended as Annexure '8' which forms part of this Report.

A statement containing the details as prescribed under Rule 5 (2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 forms part of this Report. Any shareholder interested in obtaining a copy of the statement, may write to the Company Secretary at the Registered Office of the Company.

20. INDUSTRIAL RELATIONS:

Industrial relations at the Company's plants continue to be cordial.

21. AUDITORS: STATUTORY AUDITORS:

The Company's auditors M/s. Price Waterhouse (Firm Registration No. 301112E) have already completed more than ten years as Statutory Auditors of the Company.

In view of the mandatory requirement of rotation of auditor under Section 139 of the Companies Act, 2013 and the Companies (Audit and Auditors) Rules, 2014, it is proposed to appoint S R B C & Co. LLP (Firm Registration No. 324982E) ("E&Y") from conclusion of this Annual General Meeting till the conclusion of the Sixtieth Annual General Meeting. E&Y have informed the Company vide letter dated May 2, 2016, that their appointment, if made, would be within the limits prescribed under Section 141 of the Companies Act, 2013.

S R B C & Co. LLP have confirmed that they have subjected themselves to the peer review process of Institute of Chartered Accountants of India (ICAI) and hold valid certificate issued by the Peer Review Board of the ICAI.

There are no qualifications, reservations or adverse remarks or disclaimers made by the auditors in the Audit Report for the year 2015–16.

SECRETARIAL AUDITOR:

Dr. K. R. Chandratre, Company Secretary in practice, was appointed to conduct the secretarial audit of the Company for the Financial Year 2015–16, as required under Section 204 of the Companies Act, 2013 and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Secretarial Audit Report in Form MR–3 for Financial Year 2015–16 is appended as Annexure '9' which forms part of this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

COST AUDITORS:

Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Amendment Rules, 2014, the cost audit records maintained by the Company in respect of its manufacturing activity is required to be audited. Your Directors had, on the recommendation of the Audit and Risk Management Committee, appointed Messrs. Ajay Joshi and Associates, Pune to audit the cost accounts of the Company for the Financial Year 2016–17 on a remuneration of Rs.  9 Lacs plus service tax as applicable and re–imbursement of out of pocket expenses. As required under the Companies Act, 2013, the Member's determination for the remuneration payable to Messrs. Ajay Joshi and Associates, Cost Auditors is being sought at the ensuing annual general meeting.

22. CORPORATE SOCIAL RESPONSIBILITY POLICY AND ITS REPORT:

Your Company is an early adopter of the corporate social responsibility (CSR) initiatives. Corporate Responsibility is one of the six core values of your Company, which focuses on 'serving and improving the communities in which we live'. Your Company works with 'Cummins India Foundation' towards three broad focus areas viz. Higher Education, Energy and Environment, and Social Justice and Infrastructure.

Details about the CSR Policy and initiatives taken by the Company during the year are available on our website 'http:/ /www.cumminsindia.com/CIF/about us.html'. The Annual Report on our CSR Activities, is appended as Annexure '10' which forms part of this Report.

23. BUSINESS RESPONSIBILITY REPORT:

As stipulated under the Regulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Business Responsibility Report describing the initiatives taken by the Company from environmental, social and governance perspective is attached as part of the Annual Report.

24. GENERAL:

Your Directors state that no disclosure or reporting is required in respect of the following items as there were no transactions on these items during the year under review:

a. Change in Key Managerial Personnel during the year;

b. Details relating to deposits covered under Chapter V of the Companies Act, 2013;

c. Issue of equity shares with differential rights as to dividend, voting or otherwise;

d. Issue of shares (including sweat equity shares) to employees of the Company under any scheme;

e. Neither the Managing Director nor the Whole–time Directors of the Company received any remuneration or commission from any of its subsidiaries;

f. No frauds reported by auditors under Section 143 (12) of the Companies Act, 2013;

g. No significant or material orders were passed by the Regulators or Courts or Tribunals which impact the going concern status and Company's operations (However, Members' attention is drawn to the Statement on Contingent Liabilities, commitments in the notes forming part of the Financial Statement); and

h. No material changes and commitments occurred during April 1, 2015 till the date of this Report which would affect the financial position of your Company.

ACKNOWLEDGEMENT:

Your Directors would like to express their sincere appreciation for the assistance and co–operation received from the financial institutions, banks, government authorities, customers, vendors and members during the year under review. Your Directors also wish to place on record their deep sense of appreciation for the committed services by the Company's executives, staff and workers.

On behalf of the Board of Directors,

Anant J. Talaulicar

Chairman & Managing Director

DIN: 00031051

Place : Pune

date : June 20, 2016

Top