To The Members
Your Directors are pleased to present the Annual Report of your Company along withAudited Financial Statements for the year ended 31st March 2018.
The year witnessed remarkable policy and structural reforms. The implementation ofGoods and Services Tax (GST) recapitalization of Public Sector Banks and other fiscalinitiatives will strengthen the Indian economy. In the backdrop of various reforms anddevelopments the international credit rating agency Moody's upgraded India's ratingafter a gap of about 13 years.
During this fiscal the Indian economy has grown by 6.75%. With the continued focus onrural economy healthcare education infrastructure and digitalization the GDP isexpected to surge ahead in the range of 7 - 7.5% in FY19 leading to a modern strong andconfident India.
The Tyre Industry grew by 7% in volume. JK Tyre outgrew the Industry ending the yearwith a growth of 11% and increased its market presence across categories especially inTruck PCR Light Truck Small Commercial Vehicles Farm and OTR tyres. Truckradialization further accelerated to 47% during the year and is expected to cross 50% inthe year ahead.
The year 2017-18 witnessed an unprecedented increase in the oil prices which togetherwith pre and transitory GST implementation effect had a major impact on production costsand margins of the Tyre Industry as a whole. JK Tyre was no exception.
The Company alongwith its subsidiaries on a consolidated basis recorded a Turnover of' 8543.41 Crores with Profit Before Tax (PBT) at ' 106.81 Crores.
On a standalone basis the Company achieved a turnover of ' 6610.95 Crores with PBT of' 63.85 Crores.
The year under review witnessed overall raw material cost increase by 13% while tyreprices increased marginally.
The first half of the year saw raw materials prices spiraling by as much as 23% overthe corresponding period. Oil prices did not abate and surged to a high of US$ 75/barrel.This impacted all the petro based raw materials particularly carbon black where pricesincreased by as much as 35%. Natural Rubber prices too remained high throughout the yearbesides constrained availability.
R&D AND TECHNOLOGY
Technology & innovation play significant role in performance and growth of anyorganization. To innovate your organization relies on R&D and technology teams whopassionately work on consistently improving process and products through their knowledgeand skill. They create innovative products by understanding application needs andattributes required through basic & applied research in laboratory and inmanufacturing. Innovation and creativity are driving forces behind the R&D andTechnology efforts of your organization.
JK Tyre in association with Hari Shankar Singhania Elastomer and Tyre ResearchInstitute (HASETRI) and "RPS Centre of Excellence for Tyre and VehicleMechanics" located at IIT Madras is continuously working on advanced materialalternate material nano technology process and product simulation predictivetechnology advanced tyre mechanics tyre characterization including working towardsreduction of raw material consumption. For reduction of greenhouse gas emissions (carbondioxide) HASETRI in association with JK Tyre's product development group is developingtyres with reduced rolling resistance & traction (wet & dry) without affectingmileage.
These efforts helped your Company offer various high performance tyres for newgeneration vehicles which were successfully commercialized across categories.
During the year under review your Company received several coveted awards forexcellence in the following areas:
1. Certified as Great Place to Work for the year 2018
2. Best Supplier Quality Excellence Award 2016 from General Motors
3. Quality Performance Award received from Volkswagen
4. Golden Peacock Award for Energy Efficiency 2017
5. National Award for Excellence in Energy Management 2017
6. National Award for Excellence in Water Management 2017
7. National Award for Manufacturing Competitiveness 2016-17 - GOLD MEDAL
8. UCCI PP Singhal Excellence Award in CSR - Large Enterprises Category 2018
9. 16th Annual Green Tech Safety Award 2017 - Gold category
Your Directors are pleased to recommend a dividend of ' 1.50 per equity share of ' 2each (i.e. 75%) on the equity share capital of ' 45.36 crores for the financial year ended31st March 2018. The dividend outgo will be ' 41.01 crores (inclusive of a dividend tax of' 6.99 crores). The dividend payout is in accordance with the Dividend Distribution Policyof the Company.
The amount available for appropriation including surplus from the previous year stoodat ' 446.55 crores and the same has been carried forward to Balance Sheet.
EXTRACT OF ANNUAL RETURN
An extract of the Annual Return as on 31st March 2018 in the prescribed form MGT 9is attached as Annexure A' with this Report and forms a part of it.
RELATED PARTY TRANSACTIONS
During the financial year ended 31st March 2018 all contracts or arrangements ortransactions entered into by the Company with related parties were in the ordinary courseof business and on an arm's length basis and were in compliance with the applicableprovisions of the Companies Act 2013 and the Securities and Exchange Board of India(Listing Obligations and Disclosure Requirements) Regulations 2015 as applicable.
Further the Company did not enter into any contract or arrangement or transaction withrelated parties that could be considered material in accordance with the policy of theCompany on materiality of related party transactions. In view of the above disclosure inFORM AOC-2 is not applicable.
The Related Party Transaction Policy as approved by the Board is available on theCompany's website.
PARTICULARS OF LOANS GUARANTEES AND INVESTMENTS
The particulars of loans guarantees securities and investments covered under theprovisions of Section 186 of the Companies Act 2013 are furnished in the financialstatements.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The Board of Directors of the Company re-appointed Shri Arun K. Bajoria as Whole-timeDirector of the Company with the designation Director & President - InternationalOperations for a term of three years commencing 1st January 2019 subject to the approvalof the members of the Company at the ensuing Annual General Meeting (AGM).
Smt. Sunanda Singhania retires by rotation and being eligible offers herself forre-appointment at the ensuing AGM.
Declarations have been received from all Independent Directors of the Company that theymeet the criteria of independence as laid down under Section 149(6) of the Companies Act2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.
Further there were no other changes in the Directors/Key Managerial Personnel of theCompany during the year under review.
CONSERVATION OF ENERGY ETC.
The details as required under Section 134(3)(m) read with the Companies (Accounts)Rules 2014 are annexed to this Report as Annexure 'B' and forms a part of it.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordancewith the applicable accounting standards. The audited consolidated financial statementstogether with the Auditors' Report form a part of the Annual Report.
A report on each of the subsidiaries and associates together with highlights of theirperformances and financial position is presented in a separate section in this AnnualReport. Please refer to AOC-1 annexed to the financial statements in the Annual Report.Highlights of the contribution of major operating subsidiaries and associates to theoverall performance of the Company during the year under review are given hereunder:
|Name of Company ||Turnover ||PBT |
|- Cavendish Industries Ltd. ||1670.47 ||(21.18) |
|- JK Tornel (together with its subsidiaries) ||1073.29 ||56.81 |
Pursuant to the provisions of Section 136 of the Act the financial statements theconsolidated financial statements along with relevant documents and separate auditedaccounts in respect of subsidiaries are available on the website of the Company.
During the financial year under review Western Tire Holdings Inc. (USA) has become anassociate of the Company. Except this no Company has become or ceased to be yourCompany's subsidiary or associate during the said financial year. The Company does nothave any Joint Venture.
Pursuant to the approval of members by means of a special resolution dated 22ndSeptember 2015 the Company has continued to accept deposits from the public inaccordance with the provisions of the Companies Act 2013 and rules thereunder.
The particulars with respect to deposits covered under Chapter V of the said Act forthe financial year ended 31st March 2018 are:
(a) accepted during the year - ' 38.93 crores; (b) remained unclaimed as at the end ofthe year - ' 0.97 crores; (c) default in repayment of deposits or payment of interestthereon at the beginning of the year and at the end of the year - Nil and (d) details ofdeposits which are not in compliance with the requirements of Chapter V of the said Act -Nil.
(a) Statutory Auditors and their Report
In accordance with the provisions of the Companies Act 2013 and rules thereunder M/sS.S. Kothari Mehta & Co. Chartered Accountants were appointed Auditors of theCompany to hold office from the conclusion of the 64th Annual General Meeting (AGM) heldon 4th August 2017 until the conclusion of the 67th AGM to be held in the year 2020. Theobservations of the auditors in their report on accounts and the financial statementsread with the relevant notes are self-explanatory.
(b) Secretarial Auditor and Secretarial Audit Report
Pursuant to the provisions of Section 204 of the Companies Act 2013 the Board ofDirectors appointed Shri Namo Narain Agarwal Company Secretary in Practice asSecretarial Auditor to carry out the secretarial audit of the Company for the financialyear 2017-18. The Report given by him for the said financial year in the prescribedformat is annexed to this Report as Annexure 'C The secretarial audit report does notcontain any qualifications reservations or adverse remarks.
(c) Cost Auditor and Cost Audit Report
The Cost Audit for the financial year ended 31st March 2017 was conducted by M/s R.J.Goel & Co. Cost Accountants Delhi and as required the Cost Audit Report was dulyfiled with the Ministry of Corporate Affairs Government of India. The Audit of the costaccounts of the Company for the financial year ended 31st March 2018 is also beingconducted by the said firm.
PARTICULARS OF REMUNERATION
Details as required under the provisions of Section 197(12) of the Companies Act 2013read with Rule 5(1) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 are placed on the Company's website www.jktyre.com as an annexure to the Directors' Report. Aphysical copy of the same will be made available to any shareholder on request as perprovisions of Section 136(1) of the said Act.
Details as required under the provisions of Section 197(12) of the Companies Act 2013read with Rule 5(2) and 5(3) of the said Rules which form part ofthe Directors'Reportwill be made available to any shareholder on request as per provisions of Section 136(1)of the said Act.
CORPORATE SOCIAL RESPONSIBILITY
As a responsible corporate citizen the Company has been undertaking and participatingin the socially important projects in the fields of health education rural developmentadult literacy renewable energy among others - ever since it commenced operations i.e.even before Corporate Social Responsibility (CSR) was mandated by law.
The Company has also framed a CSR policy in accordance with the provisions of theCompanies Act 2013 and rules made thereunder. The contents of the CSR policy aredisclosed on the website of the Company.
The annual report on the CSR activities undertaken by the Company during the financialyear under review in the prescribed format is annexed to this Report as Annexure 'D'.
INTERNAL FINANCIAL CONTROLS
With a view to have a robust Internal Financial Control system the Company has put inplace budgetary controls internal reporting policies and procedures. These systemspolicies and procedures are reviewed from time to time and are updated. This ensuresaccuracy and completeness of the accounting records safeguarding of the assets andresources of the Company and also helps in prevention and detection of frauds and errors.The policies and procedures are also adequate for orderly and efficient conduct ofbusiness of the Company. The Company also has a robust management information systemcommensurate with the size and nature of its operations which not only facilitates speedybusiness decisions but also helps in sharing reliable information across various levels inthe Company. No reportable material weaknesses were observed in the system during theprevious fiscal.
SIGNIFICANT AND MATERIAL ORDERS
Passed bY the regulators or courts oR
During the financial year under review there were no significant and material orderspassed by the regulators or courts or tribunals that could impact the going concern statusof the Company and its future operations.
MATERIAL CHANGES AND COMMITMENTS
There have been no material changes and commitments affecting the financial position ofthe Company which have occurred between the end of the financial year of the Company andthe date of this report.
CHANGE IN THE NATURE OF BUSINESS
During the year under review there was no change in the nature of business.
SUSTAINABILITY & BUSINESS RESPONSIBILITY REPORT
Pursuant to Regulation 34(2)(f) of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 the Sustainability & Business Responsibility Reportof the Company for the financial year ended 31st March 2018 in the prescribed formatgiving an overview of the initiatives taken by the Company from an environmental socialand governance perspective is given in a separate section of the Annual Report and formspart of it.
CORPORATE GOVERNANCE Including pertaining to Board Meetings Nomination andRemuneration Policy Performance Evaluation Risk Management Audit Committee and VigilMechanism
Your Company reaffirms its commitment to the highest standards of corporate governancepractices. Pursuant to the Securities and Exchange Board of India (Listing Obligations andDisclosure Requirements) Regulations 2015 a Management Discussion and Analysis CorporateGovernance Report and Auditor's Certificate regarding compliance of conditions ofCorporate Governance are made a part of this Report as Annexures - 'E' & 'F.
The Corporate Governance Report which forms part of this Report also covers thefollowing:
(a) Particulars of the four Board Meetings held during the financial year under review.
(b) Policy on Nomination and Remuneration of Directors Key Managerial Personnel andSenior Management including inter alia the criteria for performance evaluation ofdirectors.
(c) The manner in which formal annual evaluation has been made by the Board of its ownperformance and that of its Committees and individual Directors.
(d) The details with respect to composition of Audit Committee and establishment ofVigil Mechanism.
(e) Details regarding Risk Management.
(f) Dividend Distribution Policy.
DIRECTORS' RESPONSIBILITY STATEMENT
As required under Section 134(3)(c) of the Companies Act 2013 your Directors statethat:
(a) in the preparation of the annual accounts the applicable accounting standards havebeen followed along with proper explanation relating to material departures if any;
(b) the accounting policies have been selected and applied consistently and judgmentsand estimates made are reasonable and prudent so as to give a true and fair view of thestate of affairs of the Company at the end of the financial year and of the profit andloss of the Company for that period;
(c) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the said Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) the annual accounts have been prepared on a going concern basis;
(e) the internal financial controls to be followed by the Company have been laid downand that such internal financial controls are adequate and were operating effectively; and
(f) the proper systems to ensure compliance with the provisions of all applicable lawshave been devised and that such systems were adequate and operating effectively.
Your Directors further state that applicable Secretarial Standards issued under Section118 of the Companies Act 2013 have been complied with.
Your Directors wish to place on record their appreciation for the continued support andcooperation received from various State Governments including those of Rajasthan MadhyaPradesh Karnataka Tamil Nadu Uttarakhand as well as the Governments of India andMexico. The Directors also thank the banks shareholders suppliers dealers and inparticular the valued customers for their trust and patronage.
Your Directors record their appreciation for the dedication and hard work put in by'Team-JK Tyre' which has enabled the Company to continue to grow stronger in thesechallenging times.
On behalf of the Board of Directors
|17th May 2018 ||Dr. Raghupati Singhania |
|New Delhi ||Chairman & Managing Director |