PPAP Automotive Limited
The Directors have pleasure in presenting the Twenty First Annual Report together with the audited financial statements for the year ended 31st March, 2016.
(Rs, in crores)
For the year ended
31st March, 2016
31st March, 2015
31st March, 2016
Earnings before interest, tax, depreciation and amortization expense (EBITDA)
Depreciation & amortization
Profit / (loss) before extra-ordinary items and tax
Less: extraordinary items
Profit / (loss) before tax (PBT)
Less: Tax expenses current tax deferred tax
Profit / (loss) for the period
Add : profit brought forward from previous year
Total available profits
Less: transferred to reserved
Dividend amount including dividend distribution tax
Profits carried forward to the following year
Performance of your Company
Your Company recorded consolidated revenue from operations (net of excise) of Rs, 319.72 crores. The consolidated operating profit before finance costs, depreciation and tax was Rs, 54.06 crores. The consolidated profit after tax stood at Rs, 14.02 crores.
On a standalone basis, the revenue from operations (net of excise) was Rs, 304.06 crores in financial year 2015-16 as against Rs, 322.64 crores in financial year 2014-15. The operating profit before finance costs, depreciation and tax was Rs, 53.37 crores in financial year 2015-16, as against Rs, 44.50 crores in financial year 2014-15. Profit after tax was Rs, 15.27 crores in year 2015-16 as compared to Rs, 12.02 crores of preceding year.
During the financial year 2015-16, your Company declared and paid an interim dividend of Rs, 1/- per equity share of face value of Rs, 10/- each in the month of November, 2015. In addition, your Directors have recommend a final dividend of Rs, 1 per equity share of face value of Rs, 10/- each for the financial year 2015-16.
The final dividend, subject to approval of members, will be paid within statutory period, to the members whose names appear in the Register of Members, as per book closure. The total outgo for the current year, including proposed final dividend, amounts to Rs, 3.37 crores, including dividend distribution tax of Rs, 0.57 crore.
Transfer to reserve
Your Company has transferred Rs,1.50 crores to the General Reserve from the accumulated profits.
During the year under review, your Company has not accepted any deposits within the meaning of provisions of Section 73 of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.
The Company has technical collaborations with Tokai Kogyo Co. Limited, Japan, Nissen Chemitec Corporation, Japan and Tokai Kogyo Seiki Co. Limited, Japan and the Company is receiving the requisite support, as per the needs of the business.
Tokai Kogyo Co. Limited, Japan, Nissen Chemitec Corporation, Japan and Tokai Kogyo Seiki Co. Limited, Japan, extend their continuous support in terms of new product development, innovations, latest technology, etc. as per the needs of your Company.
Extract of annual return
Pursuant to Section 92(3) of the Companies Act, 2013 read with rule 12(1) of the Companies (Management and Administration) Rules, 2014, extract of annual return is annexed herewith as “Annexure - A” to this report.
Number of Board Meetings
The Board met five times during the financial year 2015-16. In terms of Section 173 of the Companies Act, 2013 and Regulation 17 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the gap between any two meetings did not exceed one hundred and twenty days, details of which are given in the Corporate Governance Report annexed herewith as “Annexure - D” to this report.
The Board has reconstituted the Audit Committee of the Company by appointing Mr. Ashok Kumar Jain, Non- Executive Director and Independent Director, as member of the Committee w.e.f 19th May, 2016. The Details of reconstitution of the Committee are given in the Corporate Governance Report, which is annexed herewith as “Annexure - D” to this report.
Directors and Key Managerial Personnel
In accordance with the provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mrs. Vinay Kumari Jain (DIN: 05313541), retires by rotation and being eligible, offers herself for re-appointment at the ensuing Annual General Meeting.
Statement on declaration given by 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 the Companies Act, 2013 and Regulation 16 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
Directors’ responsibility statement
Pursuant to Section 134(3)(c) of the Companies Act, 2013, the Directors confirm:
i. that in the preparation of annual accounts for the financial year ended 31st March, 2016, the applicable accounting standards have been followed along with proper explanations relating to material departures, if any;
ii. that the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at 31st March, 2016 and of the profit and loss of the Company for the financial year ended 31st March, 2016;
iii. that the proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013 for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;
iv. that the Annual Accounts for the financial year ended 31st March, 2016 have been prepared on a ‘going concern basis’;
v. that the internal financial controls are adequate and are operating effectively; and
vi. that proper systems to ensure compliance with the provisions of all applicable laws are adequate and operating effectively.
Evaluation of the Board’s performance / effectiveness
In compliance with the Companies Act, 2013 and Regulation 17 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the performance evaluation of the Board and its Committees were carried out during the year under review, details of which are given in the Corporate Governance Report annexed herewith as “Annexure - D” to this report.
Nomination and Remuneration Policy
In accordance with the Section 178 and other applicable provisions if any, of the Companies Act, 2013 read with the rules hereunder and Regulation 19 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors formulated the Nomination and Remuneration Policy on the recommendation of the Nomination and Remuneration Committee of the Company.
In accordance with the Nomination and Remuneration Policy, the Nomination and Remuneration Committee has, inter alia, the following responsibilities:
1. Ensuring appropriate induction & training program: The Committee shall ensure that there is an appropriate induction & training program in place for new Directors, KMPs and members of Senior Management and review its effectiveness;
2. Formulate the criteria for appointment as a Director: The Committee shall formulate criteria and review them on an ongoing basis, for determining qualifications, skills, experience, expertise, qualities, positive attributes required to be a Director of the Company.
3. Identify persons who are qualified to be Directors / Independent Directors / KMPs / SMPs: The Committee shall identify persons, who are qualified to become Directors / Independent Directors / KMPs / SMPs and who satisfy the criteria laid down under the provisions of the Companies Act, 2013, rules made there under, SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 or any other enactment, for the time being in force.
4. Nominate candidates for Directorships subject to the approval of Board: The Committee shall recommend to the Board the appointment of potential candidates as Non- Executive Director or Independent Director or Executive Director, as the case may be.
5. Evaluate the performance of the Board: The Committee shall determine a process for evaluating the performance of every Director, Committees of the Board and the Board, on an annual basis.
6. Remuneration of Managing Director / Directors: The Committee shall ensure that the tenure of Executive Directors and their compensation packages are in accordance with applicable laws, in line with the Company’s objectives, shareholders’ interests and comparable with industry standards.
7. Review performance and compensation of Non-Executive Independent Directors: The Committee shall review the performance of the Non-Executive Independent Directors of the Company. The Committee shall ensure that the Non- Executive Independent Director(s) may receive remuneration by way of sitting fees for attending the meetings of Board or Committee(s), thereof provided that the amount of such fees shall be subject to ceiling / limits as provided under Companies Act, 2013 and rules made there under or any other enactment, for the time being in force.
8. Review performance and compensation of KMPs / SMPs etc.: The Committee shall ensure that the remuneration to be paid to KMPs / SMPs shall be based on the experience, qualifications and expertise of the personnel and governed by the limits, if any, prescribed under the Companies Act, 2013 and rules made there under or any other enactment, for the time being in force.
9. Directors’ and Officers’ Insurance: The Committee shall ensure that where any insurance is taken by the Company on behalf of its Directors, KMPs / SMPs either for indemnifying them against any liability or any other matter as may be deemed fit, the premium paid on such insurance, shall not be treated as part of the remuneration payable, to any such personnel.
Disclosure relating to remuneration of Directors, Key Managerial Personnel and particulars of employees
The statement containing particulars of employees as required under Section 197(12) of the Companies Act, 2013 read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed herewith as “Annexure - B” to this report.
Names of Companies which have ceased / become subsidiaries / joint ventures / associate companies during the year
During the financial year 2015-16, M/s PPAP Automotive Systems Private Limited became wholly owned subsidiary of your Company and ceased to be the subsidiary by 31st March, 2016. Currently, your Company holds 40% stake in the equity share capital in the mentioned company.
A Report on the performance and financial position of the Joint Venture and associates Companies as per the provisions of Companies Act, 2013 is provided in the prescribed Form AOC-I is annexed herewith as “Annexure - C” to this report.
The Company has complied with the Corporate Governance requirements as stipulated under SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. A separate section on Corporate Governance, along with a certificate from M/s VLA & Associates, Company Secretaries, confirming the compliances is annexed herewith as “Annexure - D” to this report.
Management Discussion and Analysis Report
The Management Discussion and Analysis Report is annexed herewith as “Annexure - E” to this report and gives details of the overall industry structure, developments, performance and state of affairs of the Company’s business, internal controls and their adequacy.
Material changes and commitments affecting financial position between end of the financial year and date of report
No material changes and commitments have occurred after the close of the year till the date of this report, which affect the financial position of the Company.
Particulars of loans, guarantees and investments
The details of loans, guarantees and investments under Section 186 of the Companies Act, 2013 read with the Companies (Meetings of Board and its Powers) Rules, 2014 are as follows:
a) Details of investments made by the Company as on 31st March, 2016:
Investment in Equity Shares:
Name of the Companies
Amount as at 31st March, 2016
PPAP Tokai India Rubber Private Limited
PPAP Automotive Chennai Private Limited
PPAP Automotive Technology Private Limited
PPAP Automotive Systems Private Limited
b) There are no loans given and guarantees issued by your Company in accordance with Section 186 of the Companies Act, 2013 read with the rules issued there under.
Related party transactions
During the financial year 2015-16, your Company has entered into transactions with related parties as defined under Section 2(76) of the Companies Act, 2013 read with Companies (Specification of Definitions Details) Rules, 2014, which were in the ordinary course of business and on arms’ length basis and in accordance with the provisions of the Companies Act, 2013 and rules issued there under. All related party transactions have been approved by the audit committee of the Company.
The Company has not entered into any material related party transaction during the year under review. Accordingly, no transactions are being reported in Form AOC-2 in terms of Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014. However, the details of the transactions with related parties are provided in the Company’s financial statements in accordance with the accounting standards.
The appointment of M/s O. P. Bagla & Co., Chartered Accountants (Firm Registration No. 000018N), was ratified by the members of the Company at the last Annual General Meeting of the Company held on 26th September, 2015. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Auditors is required to be ratified by members at every Annual General Meeting.
In this regard, the Company has also received a certificate from the auditors to the effect that if their appointment is ratified by the shareholders at the ensuing Annual General Meeting, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013.
The notes on the financial statements referred to in the Auditors’ Report are self-explanatory and do not call for any further comments.
Pursuant to Section 148 of the Companies Act, 2013, the Board of Directors on the recommendation of the audit committee appointed M/s Chittora & Co., Cost Accountants, as the Cost Auditors of the Company for the financial year 2016-17 and has recommended their remuneration to the shareholders for their ratification at the ensuing Annual General Meeting.
The audit committee has also received a certificate from M/s Chittora & Co., Cost Accountants, certifying their independence and arm''''s length relationship with the Company.
M/s VLA & Associates, Company Secretaries, was appointed as Secretarial Auditors of the Company, to conduct Secretarial Audit for the year under review, pursuant to the provisions of Section 204 of the Companies Act, 2013.
The Secretarial Audit Report for the year under review, does not contain any qualification, reservation or adverse remarks and is annexed herewith as “Annexure - F” to this report.
Corporate Social Responsibility
The brief outline of the Corporate Social Responsibility (CSR) initiatives undertaken by the Company during the financial year 2015-16 is annexed herewith as “Annexure - G” to this report in the format prescribed in the Companies (Corporate Social Responsibility Policy) Rules, 2014.
Risk Management Policy
Risk is an integral part of the business and your Company is committed to managing the risks in a proactive and efficient manner. Your Company periodically assesses risks in the internal and external environment along with the cost of treating risks and incorporates risk treatment plans in its strategy, business and operational plans.
The details of Risk Management, as practiced by the Company are provided in the Management Discussion and Analysis Report which is annexed herewith as “Annexure - E” to this report.
Policy on sexual harassment of women at workplace
The Company has zero tolerance towards sexual harassment at the workplace and towards this end, the Company has adopted a policy in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the rules made there under. All employees (permanent, contractual, temporary, trainees) are covered under the said policy. An internal complaints committee has been constituted under the above policy which provides a forum to all female personnel to lodge complaints (if any) therewith for redressal.
During the financial year under review, the Company has not received any complaint of sexual harassment.
Details of significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company’s operations in future
There are no significant and material orders passed by the regulators or courts or tribunals that would impact the going concern status of the Company and its future operations.
Details on internal financial controls related to financial statements
Your Company has put in place a mechanism to ensure that the effectiveness of its internal financial control framework is assessed on an ongoing basis and corrective steps are taken, wherever required. As part of this exercise, the design of internal control and its operating effectiveness, for the key business processes has been tested by independent experts. Based on the review carried out, independent experts have confirmed that they are satisfied with the effectiveness and adequacy of the internal financial controls.
Vigil Mechanism / Whistle Blower Policy
The Company has adopted a whistle blower policy and has established the necessary vigil mechanism for employees and Directors to report concerns about unethical behavior. No person has been denied access to the Chairman of the audit committee.
Conservation of energy, technology absorption, foreign exchange earnings and outgo
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014, as amended from time to time is annexed herewith as “Annexure - H” to this report.
Your Directors wish to convey their gratitude and place on record their sincere appreciation to all employees of the Company for their hard work, solidarity and continued value addition to the Company.
Your Directors wish to express their appreciation for the continued co-operation and the valuable assistance received from the technical collaborators viz. Tokai Kogyo Co. Limited, Japan, Nissen Chemitec Corporation, Japan and Tokai Kogyo Sciri Co. Limited, Japan.
Your Directors sincerely convey their appreciation to customers, shareholders, vendors, bankers, business associates, regulatory and government authorities for their continued support.
For and on behalf of the Board of Directors
Place: Noida Ajay Kumar Jain Abhishek Jain
Date : 19th May, 2016 Chairman & Managing Director Whole Time Director