| Dear Members,
The Directors are pleased to present herewith the Thirty-second Annual
Report and the Audited Accounts for the year ended 31st March, 2014 of
your Company.
1. FINANCIAL RESULTS:
(Rupees in Lakhs)
Year ended Year ended
31 st March, 2014 31st March, 2013
Gross income 7380.43 5680.63
Profit/(Loss) before
depreciation and interest 280.48 190.07
Interest 102.52 112.43
Depreciation 202.96 172.50
Profit/(Loss) before tax (24.99) (94.86)
Provision for taxation:
* Current - -
* Deferred (7.00) 3.00
* Short provision for
earlier years - -
(7.00) 3.00
Exceptional item 96.19 -
Net profit/(loss) after tax 78.20 (97.86)
Balance in profit & loss
account - B/F 759.08 856.94
837.28 759.08
Appropriation recommended by
the Directors:
Proposed dividend Nil Nil
lncom,e tax on distributed
profit Nil Nil
Transfer to general reserve - -
Balance in profit &
loss account 837.28 759.08
837.28 759.08
2. OPERATIONS:
Sales of Company has grown by 30% in F14 inspite of slowdown in
switchgear, construction and automotive industry. This was possible due
to customer engagement in Electrical switch gear industry and strongly
connecting with meter manufacturers for Electra.
Company produces SMC/DMC compounds and sells them to Electrical
Switchgear OEMs and their moulding vendors. The Company itself moulds a
portion of these compounds to produce automotive components and own
products like 'electra' and 'Sarovar'. The Compound business has grown
up 27% and major growth in compound has received from DMC which has
grown 36%. The sales to Legrand has gradually increased to 45T per
month in F14.
Though the component business was flat compared to previous year,
Electra received better orders and as a result its sales grew by 69%.
Last year's investment to increase product range is giving results.
Elowever some of the orders received have been postponed to next year
due to slow movement in infrastructural development in the country.
Company has launched new product, SMC Panel Water Tank with brand name
'Sarovar' on Mahindra Group's founder day 2nd October, 2012. The F14
sales for Sarovar was Rs.143 Lacs.
Rising input cost and rupee depreciation continue to reduce margins.
Although initiatives of using alternative materials and sources
resulted in limiting this impact, reduced volumes in market did not
allow passing on all the cost increase to customers.
The Company has emphasized sustainability and both the plants have been
certified for ISO 14001 & OHSAS 18001. This is helping to control
wastages. The Company has been also certified TS16949 during F14.
3. DIVIDEND:
To conserve the resources of the Company your Director's do not
recommend any payment of dividend.
4. DIRECTORS:
The Board has appointed Mr. Antonio Maria Pradera Jauregui, Mr. Ignacio
Artazcoz Barrena, Mr. Jesus Maria Herrera Barandiaran, Mr. Jose Ramon
Berecibar Mutiozabaland, Mr. Jose VelaSco as an Additional Directors of
the Company on 4th October, 2013. They hold office up to the forth
coming Annual General Meeting.
The Company has received notices from members signifying their
intention to propose Mr. Antonio Maria Pradera Jauregui, Mr. Jesus
Maria Herrera Barandiaran, Mr. Jose Ramon Berecibar Mutiozabaland Mr.
Jose Velasco as Directors of the Company.
Mr. Ignacio Artazcoz Barrena resigned as Director of the Company. Your
Board wish to place on record the valuable contribution made by him
during his tenure as Director of the Company.
The Board has appointed Mr. Pedro Jesus Echegaray Larrea as an
Additional Director of the Company on 10th February, 2014. He holds
office up to the forth coming Annual General Meeting.
The Company has received notice from member signifying his intention to
propose Mr. Pedro Jesus Echegaray Larrea as Director of the Company.
Mr.Hemant Luthra, Mr. R. R. Krishnan and Mr. B. M. Kataria , Directors
of the Company retire by rotation and being eligible, offer themselves
for re-appointment.
Mr. Dhananjay Mungale who is an independent director on the Board has
expressed his intention for reappointment as Director of the Company at
the forthcoming Annual General Meeting of the Company to comply with
SEBI guidelines.
The Company has received notice from member signifying the intention to
propose Mr. Dhananjay Mungale as Director of the Company.
5. AUDITORS:
M/s. Deloitte Haskins & Sells, Chartered Accountants, Mumbai retire and
are eligible for re-appointment.
6. COST AUDIT REPORT:
Messrs. Dhananjay V. Joshi & Associates, Cost Accountants, Pune, (Firm
Registration No.000030) conducted the audit of Cost Accounting Record
maintained by the Company for the Financial Year 2012-13 and submitted
their report to the Central Government, Ministry of Corporate Affairs,
New Delhi. They were reappointed to conduct the Audit of the cost
Accounting Records maintained by for Company for the Financial Year
2013-14. The Cost Auditors shall forward their report to the Central
Government, Ministry of Corporate Affairs, New Delhi for the Financial
Year 2013-14 within the prescribed time.
As required under the provisions of Section 224(1 B) read with Section
233B(2) of the Companies Act, 1956, the Company has obtained a written
confirmation from Messrs. Dhananjay V. Joshi & Associates to the effect
that they are eligible for re-appointment as Cost Auditors under the
above-mentioned sections. The Audit Committee has also received a
certificate from the Cost Auditor certifying their independence and
arm's length relationship with the Company.
7. PUBLIC DEPOSITS AND LOANS / ADVANCES :
Your Company has not accepted any deposits from the public or its
employees during the year under review.
8. INFORMATION UNDER SECTION 217(1)(e) THE COMPANIES ACT, 1956:
Information required to be disclosed in terms of Section 217 (1) (e) of
the Companies Act, 1956 read with Companies (Disclosure of particulars
in the report of Board of Directors) Rules 1988 and also forming part
of this report is given in the enclosed annexure 'A'.
9. PARTICULARS OF EMPLOYEES :
Information required in terms of Section 217 (2A) of the Companies Act,
1956, read with amended Companies (Particulars of employees) Rules,
1975 and forming part of this Report is not enclosed as none of the
employees is covered under these rules.
10. DIRECTORS RESPONSIBILITY STATEMENT :
Directors hereby state that:
i. In preparation of the annual accounts, the applicable accounting
standards have been followed.
ii. The Directors have selected such accounting policies and applied
them consistently and made judgment 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 and of the profit or
loss of the Company for that year.
iii. The Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the
provisions of the Companies Act, 1956 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.
11. CORPORATE GOVERNANCE :
The Company has obtained a certificate from the Auditors of the Company
regarding compliance of conditions of Corporate Governance. The same is
annexed to this Report.
12. COMPLIANCE CERTIFICATE:
As per the requirement of Section 383A of the Companies Act, 1956, a
Certificate from a Company Secretary stating that the Company has
complied with all the provisions of this Act is attached to this
report.
13. CHANGE IN SHAREHOLDING PATTERN AND PROPOSED SCHEME OF MERGER :
As a part of Mahindra Group Strategy to consolidate the auto components
business and formation of a global alliance with CIE Automotive,
Spain., the Board of Directors of the Company at their meeting held on
15th June, 2013, duly considering the recommendation of the Audit
Committee and subject to regulatory approvals, have approved a Scheme
of Amalgamation under Sections 391 to 394 of the Companies Act,1956,
involving the Company with Mahindra Forgings Limited- subsequently
renamed as Mahindra CIE Automotive Limited ("Transferee Company"), with
effect from 1st October, 2013.("the Scheme").
As part of the above arrangement and in accordance with the Share
Purchase Agreement dated 15th June, 2013, 1,341,203 equity shares
representing 29.95% of the paid up equity share capital have been
transferred by Mahindra & Mahindra Limited, and 220,000 equity shares
representing 4.91% of the paid up equity share capital have been
transferred by Mahindra Holdings Limited to Participaciones
Internacionles Autometal DOS, S.L. ("PIA 2") in October'2013.
Consequently PIA has become a promoter and the Board of Directors of
the company and the committees thereof have been reconstituted.
Also, PIA 2 (Acquirer) along with Autometal S.A, and CIE Automotive
S.A., in their capacity as "Persons acting in Concert" with the
Acquirer, made an open offer for acquisition of 1,164,616 equity shares
of Rs.10 each representing 26.01% of the Total Equity Capital
(including potential equity shares of ESOP scheme) from the public
shareholders of the Company at a price of Rs.74.70 per share as
described in Detailed Public Statement dated 15th June, 2013 and Letter
of Offer dated 13th September, 2013. Consequent to the Open Offer, the
Acquirer acquired 1,164,616 equity shares representing 26.01 % of the
paid up capital of the Company. Accordingly, the Acquirer now holds
60.87% of the total equity capital of the company (including potential
equity shares of ESOP scheme).
Securities and Exchange Board of India ("SEBI") vide its observation
letter dated 7th March, 2014 has conveyed its comments on the draft
Schemes to the BSE Limited ("BSE"), the designated stock exchange.
Pursuant to the above SEBI letter, the BSE vide its Observation letter
dated 7th March 2014 has conveyed its no-objection to file the Schemes
with the Hon'ble High Court of Bombay, subject to certain conditions
specified therein.
Accordingly, on 14th March, 2014, the Company has filed applications
under Sections 391 to 394 of the Companies Act, 1956 before the Hon'ble
High Court Of Judicature at Bombay, for seeking its directions for
holding meetings of its equity shareholders and holding/ dispensation
of meetings of its secured and unsecured creditors, to seek their
approvals to the said Scheme. The Company has also taken approval of
the public shareholders to the said scheme by holding Shareholders
Meeting on 6th June, 2014 and through a postal ballot/e-voting process
on 19th June, 2014 as required under the provisions of the relevant
circulars issued by SEBI.
14. STOCK OPTIONS :
The Remuneration / Compensation Committee of the Board of Directors of
the Company ("the Committee") has allotted 510 equity shares to the
permanent employee and 834 equity shares to non-executive Director of
the company under Employee's Stock Options Scheme. The Remuneration /
Compensation Committee of your Company has not granted any Stock
Options to the employees during the year under review.
Details required to be provided under the Securities and Exchange Board
of India (Employee Stock Option Scheme and Employee Stock Purchase
Scheme) Guidelines, 1999 are set out in Annexure 1 to this Report.
15. ENVIRONMENT & HEALTH :
Mahindra Composites Mangaon unit took measures to conserve Energy.
Successful efforts were taken to reduce hazardous waste by controlling
process loss.
16. INDUSTRIAL RELATIONS :
During the year under review industrial relations remained
satisfactory.
FOR AND ON BEHALF OF THE BOARD
HEMANT LUTHRA
Chairman
Mumbai: 29th July, 2014.
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