Force Motors Ltd.
|BSE: 500033||Sector: Auto|
|NSE: FORCEMOT||ISIN Code: INE451A01017|
|BSE 00:00 | 24 Apr 2020||Force Motors Ltd|
|NSE 05:30 | 01 Jan 1970||Force Motors Ltd|
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|Mkt Cap.(Rs cr)||1,096|
|Mkt Cap.(Rs cr)||1,096|
Force Motors Ltd. (FORCEMOT) - Director Report
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Company director report
The Directors are pleased to present the 60th Annual Report together with the auditedstandalone and consolidated financial statements for the Financial Year ended on 31stMarch 2019.
1. Financial Results
(? in Lakh) Standalone
* Post applicability of Goods and Services Tax (GST) wim effect tram 1st July 2017revenue from operations is required to be disclosed net ol GST the revenue fromoperations for Ilia year erdad 31 st March 2019 is not comparable with the previous year.
Considering the reserve position of the Company the Board of Directors of your Companydecided not to transfer further amount from the profits for the Financial Year underreport to General Reserve
The Audited Consolidated Financial Statements in accordance with the Companies Act2013 (the Act) and Indian Accounting Standard 110 on Consolidated FinancialStatements are provided in this Annual Report.
2. State of Companys Affairs and Future Outlook
The year under discussion mostly saw a stable business environment although towardsthe end of the financial year 201819 a slow-down in the business environment becameevident.
The Company continues to be burdened with asymmetric GST on its most popular vehicleson account of a classification imbroglio where vehicles between 10 and 13 seats capacitycontinue to receive step-motherly treatment.
The manufacturing operations of the Company have continued to improve and this isreflected in the quality of the products produced as also in improved cost efficiencies.
The product mix of the Company between Own Vehicles produced like the Traveller andTrax Families and the supply of crucial Driveline Aggregates to internationalmanufacturers like Mercedes Benz and BMW in India continues to retain even proportion.Both businesses have seen good stability and reasonable profitability through the lastfinancial year.
During the year under review the Company completed the development activity of the T3platform which is as far as is known the only light weight monocoque panel van in theworld catering to 33 to 41 seats capacity segment. This is a major achievement. Patentsare also applied for. The market segment of this passenger carrying capacity bus is largerthan the passenger segment for the smaller buses that the Company has been making.Therefore there is an optimistic view of the prospects for this novel high-tech highquality bus.
The BS-VI projects ofthe Company fortaking its Traveller Trax and Shakliman'Families of vehicles to conform to the B5-VI emission standards has progressed well.Results of the performance emission and fuel economy of these vehicles which are underextensive testing are very encouraging. It is expected that with effect from 1 st ofJanuary 2020 the Company shall be producing only BS-VI vehicles.
The Company has in the last year introduced the BS-IV version of the Shaktiman200' vehicle which is a 1.75 ton payload product to cater to the last mile deliverysegment. The Company hopes to offer a full range of new products in this segment and thedevelopment work is continuing.
The Company completed the development activity on two new tractor platforms viz. theSanman senes - comprising of Sanman 5000' and Sanman 6000tractors as also the Abhiman series - which has 4X4 configuration. During thecurrent year both these products are introduced in the market. Initial reports aresatisfactory.
An important event during the year under review was the "Acquisition by theCompany" ofthe land building plant tooling equipment machineries drawingsdesigns etc from MAN Truck & Bus India Pvt. Ltd. - as available in the plant atPithampur. Members will recall that your company had developed with awn efforts usingown design and engineering resources and tooling manufacture capability - a completerange of Heavy Trucks. For this select technology was purchased mainly from MAN and ZFGermany.
On realisation of the project- design development indiganization and productionisingof the product range - at the inauguration of the production facility a joint ventureagreement was entered into - at MANs suggestion - to enable achieve major export of trucksfrom India. During the development effort discussions had occurred with MAN where theysuggested to make European standard vehicles even if more expensive than required byIndian market for them to be able to export.
The expected export even after full development could not be achieved by thecollaboration partner. Thereby the high cost and specs of the products (meant for exportat their requirement and not for the low cost low spec domestic market requirements)the domestic market acceptance was low and the operations of the joint venture Man ForceTrucks Pvt. Ltd. - were severely affected.
At MAN'S desire the full control in the equal joint venture company was sold to MAN inMarch 2012.
Having operated the business as MTBIPL for approximately 6 years the owners decided toquit the operations of this manufacturing plant in India.
We purchased this in October 2018 as stated above.
The plant was built on a large portion of land mainly within our Pithampur estate. There-acquisition of this asset is both logical and satisfactory.
In engineering and manufacturing terms your Company has thus re-acquired theinfrastructure and technology to be able to manufacture a complete range of heavyvehicles. The company as of now has not decided to enter into the production and sales ofheavy commercial vehicles though theoretically the capability tolly exists. There-acquired lane and building is being utilized for the company's normal activities andgrowth plans.
3. Change in Nature of Business if any
During the year under review there is no change in the nature of business of theCompany.
The Board recommended a dividend of ? 10/- per share for the year under review in itsmeeting held on 27th May 2019.
The details of the dividend and shares transferred to the Investor Education andProtection Fund during the year under review are covered in the Report of CorporateGovernance.
5. Share Capital
The paid up equity share capital as on 31st March 2019 was ? 13.18 Cmre. There was nopublic issue rights issue bonus issue or preferential issue etc. during the year underreview. The Company has not issued any shares with differential voting rights or grantedstock options or sweat equity during the year under review.
G. Annual Return
The Annual Return as on 31st March 2019 pursuant to the provisions of Section 92 ofthe Act and Rules framed there under is available on the website of the Company athttps:// www.foroemotors.eom/investors#shareholders-infomiation.The nxtract of Annual Return as on 31st March 2019 in the prescribed Form MGT-9 isannexed to this report.
7. Number of Meetings of the Beard of Directors
During the Financial Year 2018-19 there were six meetings of the Board of Directors ofthe Company held on 29th May 2018 26th July 2018 23rd August 2018 25th October 201813th February 2019 and 12th March 2019 detailed information is provided in the CorporateGovernance Report.
8. Particulars of Loans Guarantees or Investments
The Company has not given any loans guarantees under Section 166 of the Act during theyear under review. During the year the Company has made an investment of ? 133620000/-in tranches in Force MTU Power Systems Private Limited a subsidiary of the Company.Particulars of investments made by the Company upto the previous financial year areprovided in the Financial Statement attached to this Report.
9. Particulars of Contracts or Arrangements with Related Party During the FinancialYear 2018-19 pursuant to Section 177 of the Act and Regulation 23 of the Securities andExchange Board of India (Listing Obligations and Disclosure Requirements) Regulations2015 (The SEBI (LODR) Regulations 2015) all related party transactions (RPTs) wereplaced before the Audit Committee for its requisite approval.
All related party transactions entered during the year were on arm's length basis.There were no material related party contracts) or arrangements) or transaction(s) duringthe year under review as defined under Regulation 23 of the SEBI (LODR) Regulations 2015.
10. Explanation / Comments on any Qualification of Auditors
There are no qualifications reservations or adverse remarks made either by theStatutory Auditors or by the Company Secretary in Practice (Secretarial Auditor) in theirrespective audit reports.
11. Material Changes and Comntiimenfs
There are no material changes and commitments affecting the financial position of theCompany which has occurred between the end of the Financial Year i.e. 31st March 2019 andthe date of Report.
12. Conservation of Energy Technology Absorption and Foreign Exchange Earnings andOutgo
The Company has continued its efforts to organise incremental improvements in energyconservation across plant locations plant equipment and technologies To bring down powerconsumption a number of steps have been initiated at all plants comprising of -
- Solar power is being used for various functions across the plants of the Companyresulting in the increased use of clean energy vis-i-vis othersouroes of energy
- At Chennai plant new cooling techniques are adopted in cold test machines whichsaves 13950 units of power annually
- Compressors are replaced with new energy efficient compressors
- Translucent sheets in the roof improves natural lighting and reduces electriclighting load.
- Automated arrangement for switching off lights and machines when not in use
- Large scale switch-over to LED lamps throughout various plants and estates of theCompany
- Rain water is being conserved and used for gardening in the company's factoriessaving lots of water and
- Aerators have been fitted in the washing areas which substantially curtailed waterwastage.
The Company continues to emphasise on development of new product platforms to replaceits current platforms in orderto cater to future technology and market segments. Workingclosely with various international and Indian technology consultants and companies eachproduct platform of the Company has been upgraded and either is already fully developedor under final stages of development so as to meet:
- the new emission standards as will be applicable to vehicles and tractors
- emerging market trends in terms of performance fuel economy fit finish comfortconvenience and the evolving expectations of the customer
- to move seamlessly towards adaption of alternate fuels and electric energy forpropulsion.
Besides the new NVH lab built last year whichissinceputtouse.a new well equipped labfor electric vehicles development - encompassing all aspects of battery batterymanagement electric motors drive arrangements electronic controls such as VCUperipherals etc. is fast evolving. Besides technical collaborations with renownedTechnology Houses the Company has also stepped up Its investment in manpower by puttingtogether a comprehensive and a competent and qualified team of young engineers.
The expenditure on the Ft & D for new products Including the expenditure onProjects and Tool Engineering was 5.60 % of the operational turnover of the Company forthe year under report. The Company continues to maintain its emphasis on researchdevelopment and tool engineering activities.
(T in Lakh
Foreign Exchange Earnings and outgo
The foreign exchange earned by the Company during the year under review was ? 21.51Crore as against T 36.80 Croro during the previous year.
Total foreign exchange outflow during the year under review was T 1288.50 Crore ascompared to ? 1171.18 Crore during the previous year.
Tempo Finance (West) Private Limited is a subsidiary of the Company. The Board ofDirectors of the Company have reviewed the affairs of the Subsidiary Company.
Force MTU Power Systems Private Limited (the FMTU) was incorporated on 7thAugust 2018 as a joint venture between the Company and Rolls Royce Power Systems AG(RR) through its subsidiary company namely MTU Friedrichshafen GmbH for engaging in thebusiness of development manufacture and marketing of engines engines for powergeneration complete power generators and engines for various applications like Rail. Byvirtue of Companys majority shareholding the FMTU is now a subsidiaryof the Company.
As per Section 129 of the Act the Company has prepared the Consolidated FinancialStatements of the Company and its subsidiaries which forms part of the Annual Report. Astatement containing the salient features of the Financial Statement of subsidiaries inthe prescribed format AOC-1 forms part of the Audited Financial Statement of the Company.
A copy of the Audited Financial Statements of the subsidiary companies will be madeavailable to the members of the Company seeking such information. The Audited FinancialStatements of subsidiary companies will be kept for inspection by any member at theRegistered Office of the Company on all working days (10.00 a.m. to 3.30 p.m.) upto thedate of the ensuing Annual General Meeting.
These financial statements and the policyfor Determining Material Subsidiaries& its Governance Framework is placed on the Companys website
14. Risk Management
The Company has in place a comprehensive Risk Management framework - to identifymonitor review and take all necessary steps towards mitigation of any risk elements whichcan impact the business health of the Company on a periodic basis.
All the identified risks are managed through continuous review of business parametersby the Management and the Board of Directors are also Informed of the risks and concerns
15. Changes In the Directors and Key Managerial Personnel
Mr. Vinay Kothari (DIN : 00337134) Director of the Company resigned from the Board ofthe Company w.e.f. 10th December 2018. Mr. Yeshwant M. Deosthalee an Independent Director(DIN:00001698) resigned w.e.f. 26th July 2019 due to his health issues. The Board placeson record its sincere appreciation for the services rendered by them during theirassociation with the Company.
The Board in its meeting held on 13th February 2019 appointed Mr. Anant Talaulicar(DIN : 00031051) and Lt. Gen. (Dr.) D. B. Shekatkar (DIN : 02676828) as additionaldirectors of the Company. The members of the Company through postal ballot also approvedtheir appointment as independent directors for a period of three years.
Members of the Company accorded their approval by passing special resolution throughpostal ballot on 29th March 2019 for continuing the directorships of Mr. Nitin Desai Mr.Pratap Pawar Dr. Indira Parikh and Mr. S.Padmanabhan post-attainment of the age ot 75years pursuant to the provisions of Listing Regulations read with the SEBI (LODR)(Amendment) Regulations 2018.
Mr. Sudhir Mehta (DIN : 00056867) Director of the Company retires by rotation andbeing eligible offers himself for reappointment. All the necessary information pertainingto Mr. Sudhir Mehta Director retiring by rotation is a part of the Statement attached tothe notice dated 26th July 2019.
The existing terms of Mr Abhaykumar Firodia Chairman Mr. i'rasan Firodia ManagingDirector Mr Prashant V. Inamdar Executive Director and Mr. Arvind Mahajan IndependentDirector shalf expire on 19th September 2019 5th November 2019 15th January 2020 and27th September 2019 respectively. In view of the same resolutions as set out in itemnos. 789 and 10 respectively in the Notice of the Annual General Meeting are proposedfor approval of members.
There was no change in the Key Managerial Personnel during the year under review.
16. Declaration of Independent Directors
The Independent Directors have submitted their declarations to the Board that they f uHill all the criteria of independence as stipulated in Section 149(6) of the Act and inRegulation 16(1)(b) of the SEBi (LODR) Regulations 2015. The Board after assessingveracity of the same has taken the same on record.
17. Details of Significant and Material Orders Passed by the Regulators or Court orTribunal
There were no significant and material orders passed by the regulators or courts ortribunals impacting the going concern status of the Company's operations in future duringthe year under report.
As reported earlier petition challenging the decision of the Honbie High Courtof Judicature at Bombay in respect of change in the name of the Company is still underconsideration of the Honbie Supreme Court of India.
18. Adequacy of Infernal Financial Controls
M/s. Capri Assurance & Advisory Services Chennai and Ws. Jugal S. Rathi CharteredAccountants Pune are the Internal Auditors of the Company. The internal financialcontrols are adequate with reference to the financial status size and operations of theCompany.
19. Fixed Deposits
The Company currently has no Fixed Deposit Scheme in place.
The details of earlier deposits are furnished hereunder:
* Includes 5 nos. frad deposits amounting to 7 60000 which are matured claimed buthave been withheld on the Instructions of Statutory Authorities (CBI) and wil I be repaidupon their approval.
20. Corporate Social Responsibility (CSR)
The Annual Report on the CSR activities of the Company pursuant to Rule 8 of theCompanies (Corporate Social Responsibility Policy) Rules 2014 is annexed to this Report.
21. Audit Committee
The Audit Committee of the Company consists of Mr. Pratap Pawar Mr. Arun Sheth Dr.Indira Parikh and Mr. Sudhir Mehta. Of the above Mr. Pratap Pawar Mr Arun Sheth and Dr.Indira Parikh are the independent directors. For more details of the Committee pleaserefer heading Audit Committee of the Report on Corporate Governance.
The Company has established a vigil mechanism formulated a Whistleblower Policy andthe Committee would oversee the genuine concerns expressed by the employees and otherDirectors. The Company has also provided adequate safeguards against victimization ofemployees and Directors who express their concerns. The mechanism provides direct accessto the Chairman of the Audit Committee in exceptional cases. The details of the mechanism/ policy are disclosed on the website of the Company www.forcemotors.com.
22. Policy on Directors Appointment and Criteria
The Board in its meeting held on 13th February 2019 has revised the Policy relating toappointment of Directors payment of managerial remuneration Directors' qualificationspositive attributes independence of Directors pursuant to the SEBI (LODR) (Amendment)Regulations 2018. The Policy and other related matters as provided under Section 178(3)of the Act is available on the website of the Company
23. Formal Annual Evaluation of the Performance of Board / Committees and Directors
Information on the manner in which formal annual evaluation is made by the Board ofits own performance that of its committees and the individual directors is given in theReport on Corporate Governance.
24. Corporate Governance
The Company has taken all necessary steps to implement the provisions of theRegulations and a detailed report on the various matters including the Auditors'Certificate on Corporate Governance is annexed to this Report.
25. Business Responsibility Report
As per the criteria mentioned under Regulation 34(2) of the SEBI (LODR) Regulations2015 the Company is not required to present Business Responsibility Report for theFinancial Year 2013-19 as a part of this annual report.
25. Details ot Directors and Employees Remuneration
Details as required under the provisions of Section 197 (12) of the Companies Act2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended; are annexed to this report.
Details as required under the provisions of Section 197(12) of the Companies Act 2013read with Rule 5(2) and 5(3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 as amended; which form part of this report will be made availableto any shareholder on request as per provisions of Rule 5(3).
27. Disclosure on Sexual Harassment of Women at Workplace (Prevention Prohibition& Redressal) Act 2013
The Company has adopted Anti Sexual Harassment Policy in line with the requirements ofthe Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal) Act2013. Internal Complaints Committee has been set up to redress complaints if anyreceived regarding sexual harassment. All employees as defined under the said Act arecovered under this policy. Awareness programs were carried out against sexual harassment.There were no complaints received during the year under review.
28. Details of Frauds Reported by Auditors
There are no frauds against the Company reported by the Auditors forthe period underreport.
29. Directors Responsibility Statement
The Directors of your Company to the best of their knowledge and belief and accordingto the information and explanations obtained by them make the following statements interms of Section 134 (3) (c) of the Act:
a) in the preparation of the Annual Financial Statements for the year ended 31st March2019 the applicable accounting standards have been followed along with proper explanationrelating to material departures;
b) for the Financial Year ended 31st March 2019 such accounting policies as mentionedin the Notes to the Financial Statements have been applied consistently and judgments andestimates that are reasonable and prudent have been made so as tD give a true and fairview of the state of affairs of fee Company and of the profit of the Company for fee yearended 31 st March 2019;
c) feat proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of fee Company and for preventing and detecting fraud and other irregularities;
d) the Annual Financial Statements have been prepared on a going concern basis;
e) that proper internal financial controls were followed by the Company and that suchinternal financial controls are adequate and were operating effectively;
f) that proper systems to ensure compliance with the provisions of all applicable lawswere in place and that such systems were adequate and operating effectively.
30. Secretarial Standards of the ICSI
The Company is in compliance with the Secretarial Standards on the Meetings of Board ofDirectors (SS-1) and General Meetings (SS-2) as issued and amended by the Institute ofCompany Secretaries of India (The ICSI).
31. Statutory Auditor
The Shareholders at the 58th Annua! General Meeting appointed M/s. Kirtane &Pandit LLR Chartered Accountants (Firm Registration No. 105215W/W100057) Pune as theStatutory Auditors of the Company for a period of five years i.e. upto the conclusion of63rd Annual General Meeting.
The Board of Directors of the Company has appointed M/s. Joshi Apts &Associates. Cost Accountants Pune for verification and review of the Cost Records of theCompany for the Financial Year 2019-20.
33. Secretarial Audit Report
Mr I. U. Thakur Company Secretary in Practice having Membership No. FCS 2298 wasappointed to conduct the Secretarial Audit of the Company for the Financial Year 2018-19as required under Section 204 of the Act and Rules made there
under. The Secretarial Audit Report in Form MR-3 for the Financial Year 2018-19 isannexed to this re port.
34. Industrial Relations
The industrial relations at all the Plants of the Company have been cordial during theyear.
The Directors express their gratitude to the Dealers Suppliers and Banks for theirsupport and express their warm appreciation for the sincere co-operation and dedicatedwork by the employees of the Company.
For and on behalf of the Board of Directors Force Motors Limited
Pune 26th July 2019
Mumbai-PuneRoad Akurdi. Pune-411035.
Phone: (Board) +9120 2747 6381
Annexure to the Boards Report
Details pertaining to remuneration as required under Section 197(12) of the CompaniesAct 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014:
1. The ratio of the remuneration of each director to the median remuneration of theEmployees of the company for the financial year 2018-19 & increase in the remunerationin the financial year 2018-19:
* Appoirrted as a director often Company w.e.f. 13thFebruary2019.
** Ceased to be a direct or of the Compary w.e.f. 10th Desembar2018.
Mr. Abhaykumar Firodia Chairman of the Company is not drawing any remuneration fromthe Company.
2. The percentage increase in the median remuneration is -2% tortile Financial Year2018-19.
3. There were 4761 permanent employees (excluding trainees and contractual employees)on the rolls of the Company as on 31st March 2019.
4. The average percentage increase in the salaries of employees other than themanagerial personnel in the last financial year 2018-19 was 10% whereas percentageincrease in the managerial remuneration was 6% forthe same financial year.
5. It is affirmed that the remuneration paid is as perthe Remuneration policy of theCompany.
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