Your Directors have pleasure in presenting the 46th Annual Report on the business andoperations of Apollo Tyres Ltd. ("the Company") together with the auditedfinancial statements for the financial year ended March 31 2019.
The financial performance of the Company for the financial year ended March 31 2019 issummarised below:
| || || || ||(` Million) |
| ||Year ended ||Year ended |
|Particulars ||March 31 2019 ||March 31 2018 ||March 31 2019 ||March 31 2018 |
| ||Standalone || ||Consolidated || |
|Net Sales ||120896 ||101332 ||172734 ||146741 |
|Other Income and Other Operating Income ||3756 ||2883 ||3986 ||2830 |
|Operating Profit (EBIDTA including Other Income) ||15906 ||13692 ||20818 ||17678 |
|Less: Depreciation/Amortisation Exp. ||4463 ||3644 ||8127 ||5926 |
|Finance Cost ||1379 ||1375 ||1811 ||1629 |
|Provision for Tax ||2143 ||2449 ||2083 ||2884 |
|Net Profit before share of Profit in Associate/ Joint Venture and Exceptional Items ||7921 ||6224 ||8797 ||7239 |
|Add: Exceptional Items ||(2000) ||- ||(2000) ||- |
|Add: Share of Profit in Associate/ Joint Venture ||- ||- ||1 ||- |
|Net Profit ||5921 ||6224 ||6798 ||7239 |
As the economy stepped back in the 7% plus zone and despite the slow growth by theoverall automotive sector the tyre industry had a good run during FY2019. As per theestimates by ICRA the revenue growth for tyre industry was pegged at 14-15% for thefiscal with operating margin and net margin of 14% and 7% respectively. The CommercialVehicle (CV) industry aided by good monsoon and an uptick in the economy followed agrowth path in line with the auto industry. The CV segment continues to account for thehighest value within the industry.
The European market witnessed a small increase (1%) in the replacement market forpassenger car tyres due to a strong increase in the growing market for all-season tyres.However the market for consumer tyres from the OEMs declined by 4%. Agricultural tyresales posted its fifth year of negative growth of 4%. Strong legislations hit the importsof Truck Bus Radial (TBR) tyres significantly and resulted in a strong 9% growth inaftermarket TBR tyres and 4% growth for the OEM TBR segment.
On a standalone basis your Company achieved a net sales of द 120896 million asagainst द 101332 million during the previous financial year. EBIDTA was at द 15906million as compared to द 13692 million during the previous financial year. The NetProfit for the year under review was द 5921 million as against द 6224 million inthe previous fiscal.
The consolidated net sales of your Company was द 172734 million during FY2019 ascompared to द 146741 million in FY2018. The consolidated EBIDTA was द 20818 millionfor FY2019 as compared to द 17678 million for the previous financial year. Onconsolidated basis Apollo Tyres earned a Net Profit of द 6798 million for FY2019 asagainst द 7239 million for the previous financial year.
This fiscal saw an increase in raw material cost by approx. 5% over last year with risein Carbon Black Synthetic Rubber Nylon Fabric Steel Cord Bead Wire and Chemicalsprices.
Oil based raw materials were on the increase due to the rise in crude oil prices. BrentCrude prices were 21% higher in FY2019 over FY2018. OPEC together with Russia agreed andimplemented production cuts which kept the crude prices buoyant during the year.
The weakening of the rupee against the US Dollar by 8% during the year under reviewalso added to the raw material cost push.
The strong demand in the first half of the year provided a solid momentum to domesticNatural Rubber (NR) requirement. The domestic NR production got impacted by theunfortunate Kerala floods in August 2018. However the entire NR production value chainbounced back quickly in a couple of weeks time. India had a shortfall of around 5.0 lakhsMT of NR in FY2019 which had to be met through imports. The inverted duty of 25% on NRcontinued through the year. The shortfall in domestic availability was met through importsfrom Thailand and Indonesia. The Company in order to improve the quality of domestic NRhas set up Dirt Free Centres where loose sheets are sourced inspected and graded usinginternational practices and made suitable for use in our radial applications. The portrestrictions on NR and also the pre import condition on NR imports under Advance Licencescontinued during the year.
Carbon Black supply situation improved over the last fiscal aided by capacityexpansion/ debottlenecking by the local industry towards the fourth quarter and alsomoderation in automobile demand in the later part of the year. The anti-dumping duty onimports of Carbon Black from China continues.
Nylon fabric and rubber chemicals showed an upward trend in FY2019 owing to increase incrude based derivatives. The customs duty on nylon fabric imports continues at 20%. Theanti-dumping duty continues on imports of nylon fabric from China and rubber chemicalsfrom China Korea and Europe. China's focus on pollution control and bank loan recoverieshas forced some companies out of business which will lead to consolidation in the supplierindustry in China in the medium term.
The anti-dumping duty imposed on imports of Styrene Butadiene Rubber from KoreaThailand and Europe in August 2017 continued during the year. The conventional grades ofSynthetic Rubber Styrene Butadiene Rubber (SBR) are being produced in India leadingto import substitution. The Solution SBRs used in the manufacture of tyres with lowrolling resistance and Ultra High Performance tyres are not produced in India and have tobe sourced from Europe and South East Asia.
Your Company has a consistent track record of dividend payment. In compliance with thelatest Dividend Distribution Policy of the Company the Directors are pleased to recommenda dividend of द 3.25 (325%) per share of Re. 1/- each on Equity Share Capital of theCompany for FY2019 for your approval. There will be no tax deduction at source on dividendpayments but certain specified shareholders (resident in India) receiving a dividendincome exceeding द 1 million would become liable to pay additional tax @ 10% (plusapplicable surcharge and cess). Your Company would continue to bear tax on dividend @20.56 % inclusive of surcharge and cess.
The dividend if approved shall be payable to the Members holding shares as on cut-offdate i.e. July 24 2019.
The amount available for appropriations including surplus from previous year amountedto द 39859 million. Surplus of द 36208 million has been carried forward to thebalance sheet. A debenture redemption reserve of द 410 million and general reserve ofRs. 1000 million has been provided.
BOARD OF DIRECTORS
A) Appointment/Re-appointment of Director
Mr. Neeraj Kanwar (DIN: 00058951) Managing Director was re-appointed for a period witheffect from May 28 2019 till March 31 2024 by way of a Postal Ballot on December 202018. The Company has received approval of Central Government dated April 30 2019 forappointment of Mr. Neeraj Kanwar as Managing Director of the Company.
Ms. Pallavi Shroff (DIN: 00013580) was re-appointed as an Independent Director of theCompany not liable to retire by rotation and to hold office for a second term of 5consecutive years with effect from May 15 2019 to May 14 2024 through Postal Ballot onMarch 18 2019. The Board noted that her continuous association would be of immensebenefit to the Company.
Pursuant to the provisions of Section 161(1) and 178 of the Companies Act 2013 andrules related thereto Mr. Satish Sharma (DIN: 07527148) was appointed as an AdditionalDirector (Non-Independent) of the Company with effect from April 1 2019 to hold office ofDirector upto the date of the ensuing Annual General Meeting of the Company. He was alsoappointed as Whole-time Director (Pursuant to the provisions of Sections 196 197 and anyother applicable provisions of the Companies Act 2013) of the Company for a period of 5years with effect from April 1 2019 to March 31 2024 for which the approval is beingsought in the ensuing AGM.
Pursuant to the provisions of Section 152(6) of the Companies Act 2013 Mr. RobertSteinmetz (DIN: 00178792) and Mr. Francesco Gori (DIN: 07413105) Directors of the Companyare liable to retire by rotation and being eligible offer themselves for re-appointment.
None of the aforesaid Directors are disqualified under Section 164(2) of the CompaniesAct 2013. Further they are not debarred from holding the office of Director pursuant toorder of SEBI or any other authority.
B) Changes in Directors and Key Managerial Personnel
During the year under review and between the end of the Financial Year and date of thisreport the following are the changes in Directors and Key Managerial Personnel of theCompany:-
(i) Resignation of Mr. A. K. Purwar Independent Director with effect from August 12018 due to personal reasons.
(ii) Appointment of Mr. Satish Sharma (DIN: 07527148) President (APMEA) as Whole-timeDirector (Additional Director) with effect from April 1 2019.
(iii) Mr. Nimesh N. Kampani & Dr. S. Narayan Independent Directors tenure wouldend on August 5 2019. They have requested not to propose their re-appointment consideringtheir age and long association with the Company.
(iv) Re-appointment of Mr. Akshay Chudasama (DIN: 00010630) and Mr. Vikram S.Mehta (DIN: 00041197) Independent Directors for a further period of 5 years fromAugust 6 2019 to August 5 2024 for which the approval is sought at the ensuing AGM.
(v) The Company has received an order from Government of Kerala (GOK) withdrawingnomination of Dr. M. Beena IAS pursuant to her appointment as Chairperson Cochin PortTrust. She ceases to be a Director w.e.f. May 9 2019.
There are no changes in the Key Managerial Personnel of the Company.
C) Declaration by Independent Directors
In terms with Section 149(7) of the Companies Act 2013 Independent Directors of theCompany have submitted declarations that they meet the criteria of Independence. TheIndependent Directors have also complied with the Code for Independent Directors as perSchedule IV of the Companies Act 2013.
D) Formal Annual Evaluation
Pursuant to the provisions of the Companies Act 2013 the Board is required to carryout annual evaluation of its own performance and that of its Committees and individualDirectors. The Nomination and Remuneration Committee (NRC) of the Board also carries outevaluation of every Director's performance. Accordingly the Board and NRC of your Companyhave carried out the performance evaluation during the year under review.
For annual performance evaluation of the Board as a whole it's Committee(s) andindividual Directors including the Chairman of the Board the Company has formulated aquestionnaire to assist in evaluation of the performance. Every Director has to fill thequestionnaire related to the performance of the Board its Committees and individualDirectors except himself by rating the performance on each question on the scale of 1 to5 1 being Unacceptable and 5 being Exceptionally Good.
On the basis of the response to the questionnaire a matrix reflecting the ratings wasformulated and placed before the Board for formal annual evaluation by the Board of itsown performance and that of its Committees and individual Directors. The Board wassatisfied with the evaluation results.
E) Separate Meeting of Independent Directors
In terms of requirements under Schedule IV of the Companies Act 2013 and Regulation25(3) of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 aseparate meeting of the Independent Directors was held on March 26 2019.
The Independent Directors at the meeting inter alia reviewed the following:-
Performance of Non-Independent Directors and Board as a whole.
Performance of the Chairman of the Company taking into account the views ofExecutive Directors and Non-Executive Directors.
Assessed the quality quantity and timeliness of flow of information between theCompany Management and the Board that is necessary for the Board to effectively andreasonably perform their duties.
F) Remuneration Policy
The Board has on the recommendation of the Nomination
& Remuneration Committee laid down a Nomination & Remuneration Policy forselection and appointment of the Directors Key Managerial Personnel and Senior Managementand their remuneration. The extract of the Nomination and Remuneration Policy provided inthe Corporate Governance Report forms part of Board's Report.
The Nomination & Remuneration policy of the Company is available on the website ofthe Company and the weblink is : https://corporate. apollotyres.com/investors/corporate-governance/?filter=CodesPolicies
G) Code of Conduct for Directors and Senior Management
The Company has formulated a Code of Conduct for Directors and Senior ManagementPersonnel and has complied with all the requirements mentioned in the aforesaid code.
PRODUCT & MARKETING
In FY2019 the APMEA (Asia Pacific Middle East and Africa) operations continued itsfocus on key themes for the Indian market - consolidating its leadership position andexpanding market share by introducing new products across segments. The Vision 2020 forthe Indian business aims at building leadership in multiple segments of the industry.Committed investments in R&D and brand building continued to fuel the growth journeyof the region to attain its vision. The region has seen continued OEMs approvals with highsatisfaction as well as increased customer acknowledgements. For other countries in theAPMEA region it continued seeding the markets with country specific products buildingbrand salience and expanding distribution networks.
In the CV segment the Company became the first tyre Company in India to introduce arange of fuel efficient tyres in the later part of the FY2019 which highlights the roleplayed by its R&D team in creating first to market products. With the emergence ofelectric vehicles the fiscal saw the Company becoming the exclusive supplier to the TataMotors' ultra-electric buses. On similar lines the Company saw its tyres fitted on the 9Mtr electric buses of Ashok Leyland both the wins validating the role played by theCompany's R&D team.
In the PV tyres segment the Company banking on its cutting edge R&D introduced SUVtyres - Apterra White Lettered - with white lettering on the sidewall. A key technologyadvancement the Apterra White Lettered tyre marks Apollo Tyres' entry into highvisibility SUV tyres market and had the distinction of the few manufacturers in India withthis technology capability. The fiscal saw the Company expand its co-branded tyre rangewith Manchester United Football Club and the tyre was available to Man Utd fans drivingfast selling cars like Brezza Nexon BRV-WRV XUV 500 Duster and Scorpio/ XUV 500.Further the Company was extremely successful in growing its premium range ApolloAlnac 4G meant for premium hatchbacks and sedans. To make deeper inroads in the luxurytyre segment the Company expanded its range of Aspire 4G branded tyre. With multiplebranding initiatives and a focus on increasing distribution for the brand the Companygrew this business by 6x over the corresponding previous fiscal. The Company achieved animportant milestone as it was ranked #1 in the JD Power 2018 India Original Equipment TyreCustomer Satisfaction Index in small cars segment and #2 in the midsize cars or sedansegment category. For the segment the fiscal ended with a bang as it concluded itsinaugural edition of #BadRoadBuddies an initiative to build and be connected with theSUV/4x4 community.
In the two-wheelers tyre segment the year saw the launch of Apollo Alpha India'sfirst zero-degree steel motorcycle radial tyre' in the country. Designed anddeveloped at Apollo Tyres' Global R&D Centre Asia in Chennai the tyres cater to thebiking enthusiasts. The launch was accompanied by a high-voltage campaign#ThrillUpYourBeast.
The Company adopted a 360 degree approach to strengthen its brand awareness. To targetthe biking community the Company used OOH media across major biking routes includingManali to Leh Mumbai to Lonavala etc. The Company participated in the Kumbh Mela withwall paintings parking lots service / safety activations. The Company continued to useits association with Man U and related football associations for social media andon-ground activations. All these brand awareness efforts have yielded results as theCompany moved to the #1 position in brand awareness in India and #2 position in overallBrand Equity as per the commissioned Brand Track Study.
In Europe the Company's strategy to move from a replacement only player and getassociated with OEM players in Europe saw good traction as Vredestein Quatrac 5 was chosenas a standard fitment for Ford Fiesta and the Vredestein Quatrac 5 (All Season) andVredestein Ultrac Satin (summer tyre) became part of the new Volkswagen Touareg in Europe.With a sharp focus on performance and design the Company's Vredestein Wintrac Pro wasdeclared winner in 2018 Auto Bild test with the prestigious exemplary (Vorbildlich)rating a testimony to the R&D prowess of Apollo Tyres.
Against this background of global and Indian outlook Apollo Tyres will continue itsthree-pronged strategy:
To consolidate market position in existing markets and seek newmarkets/segments.
To continue investment in both brands Apollo and Vredestein andcapacity expansion via organic expansions.
As part of its strategy the Company will continue to seed existing and new markets inAPMEA and will continue to seed other important markets across the globe including theAmericas. However the Company will stay focussed on its key markets India andEurope. For Europe region the focus will remain around premiumization in the sizes17" and above for the PV tyres segment and all its sub-categories - summer winterand All Season segments. Importantly the Company will focus on getting OEMs on board andmove away from its replacement only strategy in the past. With the initial positivefeedback of the TBR tyres from its Hungary plant the region will see an aggressive focuson this segment. However the region is gearing to pricing pressure for its All Seasontyres given increased competition in the segment. The Company has ended the year with ashowcase of its highly rated Quatrac Pro for the UHP and Ultra-UHP segments. For Indiathe Company plans to continue to maintain its leadership position in TBR segment. Withincreased brand building activities and on-ground activations around key initiative likeBad Road Buddies' the Company aims for the leadership position in PV tyres segment.The Company plans to replicate its radialization success story in the truck/ bus segmentin the two wheeler segment with its Alpha range of radial tyres.
MATERIAL CHANGES AND COMMITMENTS
No material changes and commitments affecting the financial position of your Companyhave occurred between the end of the financial year of the Company to which the financialstatements relate and on the date of this report.
SIGNIFICANT MATERIAL ORDERS PASSED BY REGULATORS
No significant material orders have been passed during the year under review by theregulators or courts or tribunals impacting the going concern status and Company'soperations in future.
CHANGE IN THE NATURE OF BUSINESS IF ANY
There is no change in the nature of business of your Company during the year underreview.
INTERNAL FINANCIAL CONTROLS
Internal Financial Control (IFC) means the policies and procedures adopted by theCompany for ensuring the orderly and efficient conduct of its business includingadherence to Company's policies the safeguarding of its assets timely prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information.
The Company has identified and documented key internal financial controls as part ofstandard operating procedures (SOPs). The SOPs are designed for critical processes acrossall plants warehouses and offices wherein financial transactions are undertaken. The SOPscover the standard processes risks key controls and each process is identified to aprocess owner. In addition the Company has a well defined Financial Delegation ofAuthority (FDOA) which ensures approval of financial transaction by appropriatepersonnel.
The Company uses SAP-ERP to process financial transactions and maintain its books ofaccounts. The SAP has been setup to ensure adequacy of financial transactions andintegrity & reliability of financial reporting. SAP was implemented in the Europeanoperations in year 2016. SAP was also implemented at Company's Greenfield plant inHungary.
The financial controls are evaluated for operating effectiveness through management'songoing monitoring and review process and independently by Internal Audit. The testing ofcontrols by Internal Audit are divided into three separate categories; a) automatedcontrols within SAP b) segregation of duties within SAP and restricted access to keytransactions c) manual process controls.
The SOPs FDOA SAP-ERP and independent reviews by the Internal Audit help inestablishing adequate internal financial controls with reference to its financialstatements and such internal financial controls are operating effectively.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
As required by Regulation 34(2) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a detailed Management Discussion and Analysis Report ispresented in a separate section forming part of the Annual Report.
SUBSIDIARY/ ASSOCIATE COMPANIES
As the Company follows its vision to become a global tyre brand of choice it hasmultiple Subsidiaries for facilitating these operations in various countries. As on March31 2019 your Company had 37 Overseas Subsidiary Companies (including step subsidiaries)2 Associate Companies and 1 Joint Venture.
Reifencom GmbH Hannover (RCH) a wholly owned Step Subsidiary was merged into itsparent Company Reifencom GmbH Bielefeld (RCB) w.e.f. August 16 2018. Pursuant to themerger the name of RCB was changed to Reifencom GmbH Hannover. Also ReifencomEinkaufsgesellschaft GmbH & Co. OHG Hannover (equally owned by RCH and RCB) wasmerged with RCB.
Retail Distribution Holding B.V. wholly owned Subsidiary of Apollo Tyres CooperatiefU.A. was wound up on November 27 2018.
Apollo Vredestein Italia Srl a Subsidiary of Apollo Vredestein B.V. was wound up onDecember 06 2018.
Apollo Tyres (Cyprus) Pvt Ltd wholly owned Subsidiary of the Company was wound up onJanuary 19 2019.
Vredestein Marketing B.V. & Co. KG a Subsidiary of Apollo Vredestein GmbH waswound up on January 31 2019.
During the year the Company had invested द 22.50 million in KT Telematic SolutionsPrivate Ltd. an Associate of the Company.
As per the provisions of Section 129 of the Companies Act 2013 the consolidatedfinancial statements of the Company its Subsidiaries and Associates are attached in theAnnual Report. A statement containing brief financial details of all the Subsidiaries andAssociates of the Company for the year ended March 31 2019 forms part of the AnnualReport. The annual accounts of Subsidiaries and Associates will be made available toshareholders on request and will also be kept for inspection by any shareholder at theRegistered Office and Corporate Office of your Company. A statement in Form AOC-1containing the salient features of the financial statements of the Company's SubsidiariesAssociates and Joint Venture is also attached with financial statements.
Your Company has following material unlisted Subsidiaries viz. Apollo Vredestein B. V.Apollo Tyres (Hungary) Kft. Apollo Tyres B. V. Apollo Tyres Cooperatief U. A. and ApolloTyres Holdings (Singapore) Pte Ltd. as on March 31 2019.
Pursuant to Regulation 24(1) of the SEBI (Listing Obligations and DisclosureRequirements) (Amendment) Regulations 2018 Mr. Akshay Chudasama an Independent Directorof the Company was nominated as Director on the Board of Apollo Vredestein B.V. ApolloTyres (Hungary) Kft. Apollo Tyres Holdings (Singapore) Pte Ltd. and Ms. Pallavi Shroffan Independent Director of the Company was nominated as Director on the Board of ApolloTyres B. V. & Apollo Tyres Cooperatief U. A with effect from April 1 2019.
a) Apollo Vredestein B.V.
Apollo Vredestein B. V. focuses on manufacturing marketing sales and distribution oftyres and supplies tyres for passenger cars commercial vehicles agricultural andindustrial vehicles and bicycles. The Company's distribution network extends throughEurope.
During the FY2019 Company's Passenger Car Tyre volume improved over the last year inline with overall market trend. The Company registered a strong improvement in SUV andLight Truck categories and continued on its strategy of premiumization. The manufacturingcapacity in Company's Enschede plant during the year was fully utilized for Agriculturetyres and Spacemaster tyres. The Company achieved overall 7% increased turnover for theyear.
The Company has launched two important new product lines in the Passenger Ultra HighPerformance segment viz. Wintrac Pro being Winter UHP and Quatrac Pro being All SeasonUHP. In agricultural sector it introduced the new compact tyres and Optimal productrange at prestigious SIMA show in Paris France. In addition the Company performed verywell on the product quality & performance and was honoured with podium positions byleading auto magazines.
b) Apollo Tyres (Hungary) Kft.
Apollo Tyres (Hungary) Kft. was established in June 4 2014 with an aim to set up astate of the art' automotive tyre manufacturing facility in Hungary which willproduce both passenger car tyres and commercial vehicle tyres.
During FY2019 the Company ramped up the production capacity for passenger car tyres.Full capacity ramp up for this product line is expected to complete by the followingfinancial year. The commercial vehicle tyre production started during the year andcapacity ramp up is expected to continue in the next year.
c) Apollo Tyres B.V.
Apollo Tyres B.V. incorporated in Netherlands is a Holding Company with twoSubsidiaries Apollo Vredestein B.V. and Apollo Tyres (Hungary) Kft.
d) Apollo Tyres Cooperatief U.A.
Apollo Tyres Cooperatief U.A. a direct Subsidiary of the Company is incorporated inNetherlands. The Company is primarily acting as a holding Company.
e) Apollo Tyres Holdings (Singapore) Pte. Ltd.
The Company is a private company limited by shares incorporated and domiciled inSingapore. The principal activities of the Company is that of sourcing raw materials forApollo manufacturing plants in India and Europe. 50% of the procurement is done forNatural Rubber. Major sourcing countries are Thailand Indonesia and China.
In addition Global Supply Chain team based out of Singapore is managing Global OceanFreights Transport Optimization Offtake activities Supply Chain Cost Reviews MouldManagements and Certification Projects.
During the year under review your Company did not accept deposits covered underChapter V of the Companies Act 2013.
M/s. Walker Chandiok & Co LLP Chartered Accountants Firm Registration No.001076N/N500013 (the firm licenses audit software as well as audit methodology from GrantThornton International Ltd) had been appointed as Statutory Auditors of your Company fora period of 5 years from FY2018 to FY2022 at the Annual General Meeting held on July 52017.
The report given by M/s. Walker Chandiok & Co LLP Chartered Accountants StatutoryAuditors on financial statements of the Company for FY2019 is part of the Annual Report.The comments on statement of accounts referred to in the report of the Auditors are selfexplanatory. The Auditors' Report does not contain any qualification reservation oradverse remark.
During the year under review the Auditors had not reported any matter under Section143(12) of the Companies Act 2013 therefore no detail is required to be disclosed underSection 134(3)(ca) of the Companies Act 2013.
M/s. N.P. Gopalakrishnan & Co. Cost Accountants were appointed with the approvalof the Board to carry out the cost audit in respect of the Company's plants at Perambra(Kerala) Limda (Gujarat) and Chennai (Tamil Nadu) as well as Company's lease operatedplant at Kalamassery (Kerala) for FY2019.
Based on the recommendation of the Audit Committee M/s. N.P. Gopalakrishnan & Co.Cost Accountants being eligible have also been appointed by the Board as the CostAuditors for FY2020 subject to Members' approval. The Company has received a letter fromthem to the effect that their re-appointment would be within the limits prescribed underSection 141(3)(g) of the Companies Act 2013 and that they are not disqualified for suchre-appointment within the meaning of Section 141 of the Companies Act 2013. Theremuneration to be paid to Mr. N.P Gopalakrishnan & Co. for FY 2020 is subject toratification by the shareholders at the ensuing AGM.
Cost records as specified by the Central Government under Sub-Section (1) of Section148 of the Companies Act 2013 are made and maintained by the Company.
Pursuant to the provisions of Section 204 of the Companies Act 2013 and the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Company hasre-appointed M/s. PI & Associates Company Secretaries as Secretarial Auditor of theCompany for FY2019 to undertake secretarial audit of the Company.
The Secretarial Audit Report does not contain any qualification reservation or adverseremark. Secretarial Audit Report given by Secretarial Auditors is annexed with the reportas Annexure I.
MEETINGS OF THE BOARD OF DIRECTORS
A calendar of meetings is prepared and circulated in advance to the Directors. Duringthe year six Board meetings were convened and held. The intervening gap between themeetings was within the period prescribed under the Companies Act 2013 and SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. The details of all Board/Committee meetings held are given in the Corporate Governance Report.
The details of the Audit Committee including its composition and terms of referencementioned in the Corporate Governance Report forms part of Board's Report.
The Board during the year under review had accepted all recommendations made to it bythe Audit Committee.
The Company has formulated a vigil mechanism through Whistle Blower Policy to deal withinstances of unethical behaviour actual or suspected fraud or violation of Company'scode of conduct or ethics policy. The details of the policy are explained in the CorporateGovernance Report and also posted on the website of the Company.
COMMITTEES OF BOARD
Pursuant to requirement under Companies Act 2013 and SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 the Board of Directors has constituted variousCommittees of Board such as Audit Committee Nomination & Remuneration CommitteeStakeholders Relationship Committee Business Responsibility Committee Risk ManagementCommittee and Corporate Social Responsibility Committee. The details of composition andterms of reference of these Committees are mentioned in the Corporate Governance Report.
During the year under review the Issued Subscribed and Paid-up Share Capital of theCompany was 572049980 equity shares of द 1/- each. There was no change in the capitalstructure of the Company.
a) Issue of equity shares with differential rights
Your Company has not issued any equity shares with differential rights during the yearunder review.
b) Issue of sweat equity shares
Your Company has not issued any sweat equity shares during the year under review.
c) Issue of employee stock options
Your Company has not issued any employee stock options during the year under review.
d) Provision of money by Company for purchase of its own shares by employees or bytrustees for the benefit of employees
Your Company has not made any provision of money for purchase of its own shares byemployees or by trustees for the benefit of employees during the year under review.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
During the year under review your Company has not given any loan or guarantee which iscovered under the provisions of Section 186 of the Companies Act 2013. However detailsof investment made during the year are given under notes to the financial statements.
RELATED PARTY TRANSACTIONS
All contracts/ arrangements/ transactions entered by the Company during the financialyear with related parties were in the ordinary course of business and on an arm's lengthbasis and do not attract the provisions of Section 188 of the Companies Act 2013. Duringthe year the Company had not entered into any contract/ arrangement/ transaction withrelated parties which could be considered material in accordance with the policy of theCompany on materiality of related party transactions.
Suitable disclosures as required by the Indian Accounting Standards have been made inthe notes to the financial statements. The policy on related party transactions asapproved by the Board is uploaded on the Company's website.
a) The details required pursuant to Rule 5(1) of the Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014 are provided in the CorporateGovernance Report.
b) During the year under review Mr. Neeraj Kanwar (DIN: 00058951) Vice Chairman &Managing Director also received remuneration from Apollo Tyres (UK) Pvt. Ltd. whollyowned Subsidiary of the Company.
PARTICULARS OF EMPLOYEES
Particulars of employees as required in terms of the provisions of Section 197 of theCompanies Act 2013 read with Rule 5(2) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 are set out in Annexure A to the Board's Report.
PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE
Your Company has in place a formal policy for prevention of sexual harassment of itsemployees at workplace and the Company has complied with provisions relating to theconstitution of Internal Committee under the Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013.
During the year under review there were no cases filed pursuant to the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
HEALTH SAFETY & ENVIRONMENT
As a firm commitment to Health Safety and Environment (HSE) the year saw multipleinitiatives to implement and review the HSE plans and achieve the defined KPIs. Fordetails on HSE please refer to Management Discussion and Analysis Report.
AWARDS AND RECOGNITIONS
In its constant quest for growth and excellence your Company was honoured andrecognised at various forums. The prominent Awards are listed below for your reference.
|Name of the Award ||Category ||Awarded by |
|Excellence in Customer Delight || ||Hyundai Motors India |
|FGI Award for Outstanding Work Place ||Limda Plant ||Federation of Gujarat Industries |
|Comprehensive Excellence Consistent High Quality & || ||Maruti Suzuki |
|Systems and Audits || || |
|Tyre Customer Satisfaction ||Small Car Segment; Midsize Cars ||JD Power |
|India's Best Companies to Work for ||Manufacturing and Production ||Great Place to Work |
|Mahindra Supplier Excellence Award ||Vehicle Proprietary Commodity- ||Mahindra & Mahindra |
| ||Automotive Division || |
|Golden Peacock Award for Excellence in Corporate ||Corporate Governance and ||India's Institute of Directors (IoD) |
|Governance ||Sustainability || |
|Best Corporate Social Responsibility (CSR) Film || ||Woodpecker International Film |
| || ||Festival (WIFF) |
|Kerala State Energy Conservation Award ||Large Scale Energy Consumers ||Energy Management Centre (EMC) |
| || ||Under Department of Power Govt. of |
| || ||Kerala |
|Best Overall Performance Award ||Tyre Manufacturer ||Maruti Suzuki |
The Board at its meeting held on February 5 2019 had constituted a Risk ManagementCommittee (RMC) of the Board comprising of Directors and Senior Executives of the Company.The terms of reference of the Committee including its composition are mentioned in theCorporate Governance Report which forms part of the Board's Report.
CORPORATE SOCIAL RESPONSIBILITY
Your Company has been taking initiatives under Corporate Social Responsibility (CSR)for society at large well before it has been prescribed through the Companies Act 2013.The Company has a well defined Policy on CSR as per the requirement of Section 135 of theCompanies Act 2013 which covers the activities as prescribed under Schedule VII of theCompanies Act 2013. The Company has an in-house department which is exclusively workingtowards that objective. The Company is carrying out its CSR Activities through RegisteredTrusts created by the Company for this purpose and the Trust is monitored by CSRCommittee.
During the year under review the Company has carried out activities primarily relatedto promoting preventive healthcare ensuring environmental sustainability livelihoodenhancement projects rural development projects promoting education and eradication ofhunger and poverty.
Corporate Social Responsibility Report pursuant to clause (o) of Sub-Section (3) ofSection 134 of the Act and Rule 9 of the Companies (Corporate Social Responsibility)Rules 2014 forms part of this Report as Annexure II.
The CSR Policy of the Company is available on the website of the Company and theweblink is: - https://corporate.apollotyres.com/investors/corporate-governance/?filter=CodesPolicies
BUSINESS RESPONSIBILITY REPORT
SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 mandates thetop 500 Listed Companies by market capitalisation to include Business ResponsibilityReport ("BR Report") in their Annual Report.
Your Company falls under the top 500 Listed Companies by market capitalisation.Accordingly a BR Report describing the initiatives taken by the Company from anenvironmental social and governance perspective forms part of this Report as AnnexureIII.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
Particulars required under Section 134(3)(m) of the Companies Act 2013 read with Rule8 of the Companies (Accounts) Rules 2014 regarding conservation of energy technologyabsorption and foreign exchange earnings and outgo are given in Annexure IV forming partof this report.
The extract of the Annual Return in Form MGT-9 is enclosed herewith as Annexure Vforming part of this report.
As per Section 134(3)(a) of the Companies Act 2013 the Annual Return referred to inSection 92(3) has been placed on the website of the Company www.apollotyres.com under theInvestors Section.
CORPORATE GOVERNANCE REPORT
Your Company always places major thrust on managing its affairs with diligencetransparency responsibility and accountability thereby upholding the important dictumthat an organisation's corporate governance philosophy is directly linked to highperformance.
The Company is committed to adopting and adhering to established world-class corporategovernance practices. The Company understands and respects its fiduciary role andresponsibility towards its stakeholders and society at large and strives to serve theirinterests resulting in creation of value and wealth for all stakeholders.
The compliance report on corporate governance and a certificate from M/s. WalkerChandiok & Co LLP Chartered Accountants Statutory Auditors of the Company regardingcompliance of the conditions of corporate governance as stipulated under Chapter IV ofSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 is attachedherewith as Annexure VI to this report.
DIRECTORS' RESPONSIBILITY STATEMENT
As required by Section 134(3)(c) of the Companies Act 2013 your Directors state that:
(a) in the preparation of the annual accounts for the financial year ended March 312019 the applicable accounting standards had been followed along with proper explanationrelating to material departures;
(b) the Directors had selected such accounting policies and applied them consistentlyand made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company at the end of the financial year and ofthe profit and loss of the Company for that period;
(c) the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of this Act for safeguarding theassets 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 theCompany and that such internal financial controls are adequate and were operatingeffectively; and
(f) the Directors had devised proper systems to ensure compliance with the provisionsof all applicable laws and that such systems were adequate and operating effectively.
During the year under review your Company had complied with all the applicableSecretarial Standards.
Your Company's organisational culture upholds professionalism integrity and continuousimprovement across all functions as well as efficient utilisation of the Company'sresources for sustainable and profitable growth.
Your Directors wish to place on record their appreciation to the respective StateGovernments of Kerala Gujarat Haryana Tamil Nadu and Andhra Pradesh and the NationalGovernments of India Netherlands and Hungary. We also thank our customers businesspartners members bankers and other stakeholders for their continued support during theyear. We place on record our appreciation for the contribution made by all employeestowards the growth of your Company.
| ||For and on behalf of the Board of Directors |
|Place: Gurgaon ||ONKAR S. KANWAR |
|Date: May ||Chairman & Managing Director |