Precision Camshafts Limited
Your Directors are pleased to present the TWENTY SEVENTH ANNUAL REPORTand the Audited Financial Statements for the year ended 31st March 2019.
1. FINANCIAL RESULTS
The Company's financial performance for the year under reviewalong with previous year's figures is given hereunder:
| || || || ||(र in Lakhs) |
|Financial Results ||Standalone ||Consolidated |
| ||For the Year ended 31st March 2019 ||For the Year ended 31st March 2018 ||For the Year ended 31st March 2019 ||For the Year ended 31st March 2018 |
|Total Revenue (I) ||43154.06 ||41918.88 ||70472.75 ||44004.37 |
|Total Expenses (II) ||32506.39 ||33123.32 ||56910.19 ||34888.63 |
|Earnings before interest tax depreciation and amortisation (EBITDA) ||10647.67 ||8795.56 ||13562.57 ||9115.74 |
|Profit before tax ||6571.47 ||5376.15 ||4064.29 ||6890.17 |
|Total Tax Expenses ||2280.17 ||1900.52 ||2458.88 ||2280.56 |
|Profit for the year ||4291.30 ||3475.63 ||1492.38 ||4609.59 |
|EPS (Basic) ||4.52 ||3.67 ||1.58 ||4.86 |
|EPS (Diluted) ||4.52 ||3.66 ||1.58 ||4.85 |
The above mentioned figures are extracted from financial statementsprepared in accordance with the Indian accounting standards (IND AS).
2. COMPANY'S FINANCIAL PERFORMANCE
During the Financial Year under review on standalone basis your Companyregistered a total revenue of र 43154.06 Lakhs as against र 41918.88 Lakhs in theprevious year. The profit after tax for the year stood at र 4291.30 Lakhs as against र3475.63 Lakhs in the previous year. Your Company reported increase in top-line by 3.88%over the previous year.
On consolidated basis total revenue was र 70472.75 Lakhs as against र44004.37 Lakhs in the previous year. The profit after tax for the year stood at र1492.38 Lakhs as against र 4609.59 Lakhs in the previous year. Your Company reportedincrease in top-line by 62% over the previous year.
Prior to balance sheet date the Directors of the Company confirmedtheir intention to sell the shares of investment in its Joint Ventures Ningbo ShenglongPCL Camshafts Company Limited and PCL Shenglong (Huzhou) Specialized Casting CompanyLimited collectively referred to as the "Disposal Group" as a result theCompany had classified the "Disposal Group" as held for sale in accordance withInd AS 105 Non Current Assets held for sale and discontinued operations. The netimpact of this transaction is र 2734.59 Lakhs booked as loss in P&L Account under theexceptional Items.
Based on Company's performance the Directors are pleased torecommend final dividend of र 1/- (10%) per Equity Share of Face Value of र 10/- for theFinancial year ended 31st March 2019. Payment of dividend is subject to theapproval of the members at the ensuing Annual General Meeting. In accordance withRegulation 43A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 the Company has formulated a Dividend Distribution Policy. The Dividend DistributionPolicy of the Company is also hosted on the website of the Company and can be viewed atwww.pclindia.in.
4. SHARE CAPITAL
During the year under review your Company allotted 109200 EquityShares of र 10/- each under the exercise of stock options under Precision CamshaftsLimited Employee Stock Option Scheme 2015 ("PCL ESOS 2015"). Consequently theissued subscribed and paid-up equity share capital of the Company increased from र9487.66 Lakhs divided into 94876635 Equity Shares of र 10/- each to र 9498.58 Lakhsdivided into 94985835 equity shares of र 10/- each.
5. SUBSIDIARIES AND ACQUISITIONS
The Company has 3 (Three) subsidiaries 3 (Three) step down subsidiaries and 2 (Two)associate companies.
(a) PCL (INTERNATIONAL) HOLDING B.V. ("PCL Netherlands") Wholly OwnedSubsidiary
PCL (International) Holding B.V. is a Wholly Owned Subsidiary of the Company inNetherlands. The existing customer base of the Company is predominantly located in Europehence to get future orders and to establish research and development facility PCLNetherlands would add value to the business of the Company.
(b) PCL (SHANGHAI) CO. Limited Wholly Owned Subsidiary
PCL (Shanghai) Co. Limited is a Wholly Owned Subsidiary of Precision Camshafts Limited.Its main business is to supply semi finished camshafts to the customers in China which areexported by Precision Camshafts Limited.
(c) MEMCO ENGINEERING PRIVATE LIMITED ("MEMCO") Wholly OwnedSubsidiary
Precision Camshafts Limited acquired 95% of Equity Share Capital ofMEMCO Engineering Private Limited Nashik Maharashtra during the previous year. Theacquisition was done on 10th October 2017 for an enterprise value of र3804.35 Lakhs. Pursuant to the Share Purchase Agreement the Company has acquired balance5% equity shares for 261 Lakhs in the month of March 2019. Thus MEMCO Engineering PrivateLimited is a Wholly Owned Subsidiary of the Company as on date. MEMCO is engaged in thebusiness of manufacturing fuel injection components for conventional CRDi diesel enginesbrake components high pressure diesel injector connectors for naval ships and highprecision instrumentation components. MEMCO enjoys long term relationships with marqueeglobal customers like Bosch Delphi Endress Hauser and Giro.
(d) MFT MOTOREN UND FAHRZEUGTECHNIK GMBH ("MFT") StepDown Subsidiary
Your Company through its Wholly Owned Subsidiary PCL (International)Holding B.V. acquired 76% Shares in M/s MFT Motoren und Fahrzeugtechnik GmbH Germany("MFT") on 22nd March 2018 for EUR 3126018 (Circa र 2503.35 Lakhs).
MFT is engaged in the business of manufacturing Balancer Shafts (i.e.Fully Machined hardened and balanced vertical and horizontal Balancer shafts) CamshaftsBearing Caps Engine Brackets and Prismatic Components (i.e. brake and chassis componentsmachining of all casting materials). MFT enjoys long term relationship with marquee globalcustomers like Volkswagen Audi Opel Westphalia Hatz Suzuki etc.
(e) PCL BRASIL AUTOMOTIVE LTDA ("PCL BRAZIL") StepDown Subsidiary
Your Company through its Wholly Owned Subsidiary PCL (International)Holding B.V. Netherlands incorporated a Subsidiary Company in Brazil under the name"PCL BRASIL AUTOMOTIVE LTDA" in the state of Sao Paulo Brazil ("PCLBrazil") on 10th May 2018.
PCL Brazil will be engaged in manufacturing of machined camshafts tocater the needs of customers in Brazil and South America. It has not commenced itscommercial activity as on date.
(f) EMOSS MOBILE SYSTEMS B.V. ("EMOSS") Step DownSubsidiary
Your Company through its Wholly Owned Subsidiary PCL (International)Holding B.V. acquired 51% Shares of EMOSS Mobile Systems B.V. Netherlands("EMOSS") on 18th May 2018 for "EUR 7358000 (Circa र 5878.37Lakhs").
EMOSS is a one-of-a-kind business that designs develops produces andsupplies complete electric powertrains for trucks buses military vehicles and heavyequipments. EMOSS business model includes conversion of diesel trucks into ready to useelectric trucks. The company also manufactures "ready to assemble modular kits"which are assembled onto the chassis. EMOSS provides an end to end solution to itscustomers which includes research and development engineering production testingcertification delivery and post-sale service. EMOSS also provides real time powermanagement and tracking via an integrated cockpit setup. The trucks powered with ElectricDrivelines can carry a maximum payload of 50 tons with a mobility of up to 350 km whichmay be extended beyond 500 km with long range extenders developed by EMOSS. Acquisitionhas paved access to electrical mobility markets such as Europe North America AustraliaNew Zealand. Emoss enjoys customer base of Heineken Meyer & Meyer TEDI etc.
The Company has formulated a policy for determining "material" subsidiariesand such policy is hosted on the website of the Company and can be viewed atwww.pclindia.in.
Further a statement containing salient features of the financial statements ofsubsidiaries in the prescribed format AOC-1 is appended as Annexure-K to this Report. Thestatement also provides details of performance financial position of each of itssubsidiaries.
6. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Financial Statements are prepared in accordance withthe Companies Act 2013 and applicable Indian Accounting Standards. The performance of theCompany on consolidated basis is discussed at length in the Management Discussion andAnalysis.
7. CREDIT RATING
Credit ratings on standalone basis is:-
|Facilities ||Amount (र Crores) ||Previous Rating ||Rating action |
|Long term Bank Facilities (Term Loan) ||- ||- ||Withdrawn |
|Long-term Bank Facilities ||2.05 ||CARE A; STABLE ||Reaffirmed |
|Short-term Bank Facilities ||79.50 (enhanced from 44.00) ||CARE A1 ||Reaffirmed |
|Long-term/ Short term Bank Facilities ||10.00 (reduced from 66.50) ||CARE A; Stable/ CARE A1 ||Reaffirmed |
8. UTILISATION OF IPO PROCEEDS
The IPO Proceeds of र 240 Crores have been used for setting up ofmachine shop for machining of camshafts and offer related expenses and general corporatepurposes of There is no deviation in use of proceeds from objects stated in the offerdocuments. The summary of utilisation of IPO proceeds as on 31st March 2019 isstated in Note No. 41 of Notes to Accounts.
Since Company has utilised IPO Proceeds Last Statement of Deviation is submitted toStock Exchange on 7th June 2019 statement is posted on the website of theCompany.
9. DIRECTORS AND KEY MANAGERIAL PERSONNEL
Changes in the Composition of Board of Directors of the Company:
Mr. Karan Y. Shah (DIN: 07985441) was appointed as Additional Director andWhole-time Director w.e.f. 13th August 2018. The shareholders of the Company inthe Annual General Meeting (AGM) held on 26th September 2018 approved hisappointment as Whole-time Director - Business Development for a period of 5 years w.e.f.13th August 2018.
Dr. Suhasini Y. Shah (DIN:02168705) was Whole-time Director of the Company up to12th August 2018 she was appointed as Non-Executive Director w.e.f. 13thAugust 2018.
Mr. Jayant V. Aradhye (DIN: 00409341) resigned from the post of Non-ExecutiveDirector of the Company with effect from 28th May 2018 due to health and age.The Board acknowledges the valuable contribution made by Mr. Jayant V. Aradhye during histenure.
The term of appointment of Mr. Sarvesh N. Joshi (DIN: 03264981) IndependentDirector ended at the 26th AGM held on 26th September 2018. Theshareholders approved his appointment for the next 5 years up to the 31st AGMof the Company.
During the year Mr. Mahesh Kulkarni Company Secretary and Compliance Officerresigned with effect from 8th December 2018. Mrs. Mayuri I. Kulkarni wasappointed as Company Secretary and Compliance Officer with effect from 23rdMarch 2019.
Pursuant to the provisions of Section 203 of the Act the Key Managerial Personnel(KMP) of your Company for the financial year 2018-19 were:-
|Mr. Yatin S. Shah ||Chairman and Managing Director |
|Dr. Suhasini Y. Shah ||Non- Executive Director w.e.f 13th August 2018 (Whole-time Director (up to 12th August 2018) |
|Mr. Karan Y. Shah ||Whole-time Director Business Development w.e.f. 13th August 2018 |
|Mr. Ravindra R. Joshi ||Whole-time Director and Chief Financial Officer |
|Mr. Mahesh Kulkarni ||Company Secretary (up to 8th December 2018) |
|Mrs. Mayuri I. Kulkarni ||Company Secretary (w.e.f. 23rd March 2019) |
10. DECLARATION FROM INDEPENDENT DIRECTORS
The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet the criterion of Independence asprescribed under Section 149 (6) of the Companies Act 2013 and Regulation 16 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015.
During the year Independent Directors of the Company had no pecuniaryrelationship or transactions with the Company other than commission and reimbursement ofexpenses incurred by them for the purpose of attending meetings of the Board of Directorsand Committees. The details of remunerations and/or other benefits of the IndependentDirectors are mentioned in the Corporate Governance Report.
11. STATEMENT ON FORMAL ANNUAL EVALUATION OF THE PERFORMANCE OF THEBOARD ITS COMMITTEES AND DIRECTORS
Pursuant to the provisions of the Companies Act 2013 and Regulation 19read with Schedule II Part D of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 the Board has devised a policyon evaluation of performance of Board of Directors Committees and Independent Directors.
A structured questionnaire was prepared after taking into considerationthe various aspects of the Board's functioning composition of the Board and itsCommittees culture execution and performance of specific duties obligations andgovernance. The Board of Directors expressed their satisfaction with the evaluationprocess.
12. PCL ESOS 2015 INFORMATION REGARDING ALLOTMENTS DURING THEYEAR
During the year under review in terms of PCL ESOS-2015 the Companyhas allotted 109200 Equity Shares of र 10/- each on exercise of vested options. Duringthe year under review no fresh grant was made by the Company.
The disclosures in compliance with Section 62 of the Companies Act2013 read with Rule 12 of Companies (Share Capital and Debentures) Rules 2014 SEBI(Share Based Employee Benefits) Regulations 2014 are as follows:
|Total No. of Shares covered by ESOP Scheme approved by the Shareholders ||600000 (Six Lakhs) Equity ||600000 (Six Lakhs) Equity || |
| ||Shares ||Shares || |
|Grant ||I ||II ||Total |
|Options granted ||Nil ||Nil ||Nil |
|Options vested ||21750 Equity ||104240 Equity ||125990 Equity |
| ||Shares ||Shares ||Shares |
|Options exercised ||18625 Equity ||90575 Equity ||109200 Equity |
| ||Shares ||Shares ||Shares |
|The total number of shares arising as a result of exercise of option ||18625 Equity ||90575 Equity ||109200 Equity |
| ||Shares ||Shares ||Shares |
|Options forfeited ||Nil ||Nil ||Nil |
|Options lapsed ||Nil ||Nil ||Nil |
|Extinguishment or modification of options ||Nil ||Nil ||Nil |
|The exercise price ||र 10/- ||र 10/- ||र 10/- |
|Pricing formula ||As per the ESOS Scheme approved by the members of the Company. |
|Variation of terms of options ||NA ||NA ||NA |
|Money realised by exercise of options ||186250 ||905750 ||1092000 |
|Total number of options in force (PCL ESOS 2015) || ||68090 Equity Shares || |
|Employee wise details of options granted to: || || || |
|-Key Managerial Personnel & Senior Managerial Personnel ||NA ||NA ||NA |
|-Any other employee who receives a grant of options in any one year of option amounting to 5% or more of options granted during that year ||NA ||NA ||NA |
|-Identified employees who were granted option during any one year equal to or exceeding 1% of the issued capital (excluding outstanding warrants and conversions) of the Company at the time of grant. ||NA ||NA ||NA |
|Total No. of Shares covered by ESOP Scheme approved by the Shareholders ||600000 (Six Lakhs) Equity ||600000 (Six Lakhs) Equity || |
| ||Shares ||Shares || |
|-Issued Capital (excluding outstanding warrants and conversions of the Company at the time of grant. (Only in case of Listed Companies) ||NA ||NA ||NA |
|-Diluted EPS calculated in accordance with International Accounting Standard (IAS) 33 ||NA ||NA ||NA |
13. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS
a) The Company has given loan to PCL (International) Holding B.V.Netherlands of र 3092.33 Lakhs during the year.
b) The Company has given Corporate Guarantee of र 14900 Lakhs to Bank of BarodaLondon in respect of Term Loan given by Bank of Baroda to PCL (International) HoldingB.V. Netherlands for strategic acquisitions in FY 2017-18 same is continued in FY2018-19 . Please refer Note No. 34 of notes forming part of the financial statements tothe Standalone Financial Statements.
c) The Company has given Corporate Guarantee of र 20 Crores to Citi Bank NA for CreditFacilities availed by Memco Engineering Private Limited during the year.
d) Please refer Note No 5 notes forming part of the financial statements to theStandalone Financial Statements for investments under Section 186 of the Companies Act2013.
14. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All contracts/ arrangements/ transactions entered by the Company duringthe financial year with related parties were on an arm's length basis and were in theordinary course of business. Such transactions form part of the notes to the financialstatements provided in this Annual Report. (Please refer Note No. 34 to the StandaloneFinancial Statements.) The details of material transactions entered with related partiesduring the financial year 2018-19 provided in Form AOC-2 is enclosed herewith as Annexure-A
15. STATEMENT ON RISK MANAGEMENT POLICY
The Company has in place a mechanism to identify assess monitor andmitigate various risks to the Company. The Company's future growth is linked withgeneral economic conditions prevailing in the market. Management has taken appropriatemeasures for identification of risk elements related to the Industry in which the Companyis engaged and is always trying to reduce the impact of such risks. The Company has alsoformulated Risk Management Policy and Risk Management Systems are evaluated by the AuditCommittee.
The Company has adopted a Risk Management Policy in accordance with the provisions ofthe Act and Regulation 21 of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015.
Risk Management Policy is hosted on website of the Company and can be viewed at forwww.pclindia.in.
16. CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company's guiding principle for CSR is to build its relationship withstakeholders and the community at large and to contribute to their long term social goodand welfare. Your company as a matter of duty has been carrying out the CSR activitiessince long even when there were no statutory requirements in this regard.
In compliance of Section 135 of the Companies Act 2013 your Company has constituted aCorporate Social Responsibility (CSR) Committee comprising of:
|Mr. Yatin S. Shah ||Chairman |
|Dr. Suhasini Y. Shah ||Member |
|Mr. Vedant V. Pujari ||Member |
|Mr. Vaibhav S. Mahajani ||Member |
Detailed Annual Report on CSR Activities during the year is given as AnnexureB and is also disclosed on the website of the Company www.pclindia.in.
17. VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has adopted a Whistle Blower Policy (Vigil mechanism) toprovide a formal mechanism to the Directors and employees to report their concerns aboutunethical behaviour actual or suspected fraud irregularities or violation of theCompany's Code of Conduct. The Policy provides for adequate safeguards againstvictimisation of employees who avail of the mechanism and also provides for direct accessto the Chairman of the Audit Committee.
The detailed policy on Vigil mechanism is hosted on the website of theCompany www.pclindia.in. The Vigil mechanism is overseen by the Audit Committee andprovides a mechanism for Directors and employees of the Company to report to the Chairmanof the Audit Committee or Chairman of the Company. During the year there have been nocomplaints alleging child labour forced labour involuntary labour and discriminatoryemployment.
18. EXTRACT OF ANNUAL RETURN
Pursuant to Section 92(3) of the Act and Rule 12(1) of the Companies(Management and Administration) Rules 2014 the Extract of Annual Return in theprescribed form i.e. Form MGT-9 is annexed herewith as Annexure C whichforms part of this Report and also hosted on website of the Company www.pclindia.in
19. ENERGY CONSERVATION TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGEEARNINGS AND OUTGO
The information pertaining to conservation of Energy TechnologyAbsorption Foreign Exchange Earnings and Outgo as required under Section 134(3)(m) of theCompanies Act 2013 read with Rule 8(3) of the Companies (Accounts) Rules 2014 is annexedherewith in Annexure - D.
The Chincholi plant of Precision Camshafts Limited Solapur wasbestowed upon The Machinist Super Shopfloor Awards 2019 in SME Indian category. PCLalso bagged the Excellence in Quality' award and the Excellence inCSR' award at a glittering ceremony in Bangalore in May 2019.
21. PARTICULARS OF EMPLOYEES
Disclosures with respect to the remuneration of Directors KMPs andemployees as required under Section 197(12) of the Companies Act 2013 read with Rule 5(1)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 aregiven in Annexure E to Annual Report.
There were no employee(s) in receipt of remuneration of र 1.02 Croresor more per annum or in receipt of remuneration of र 8.50 Lakhs per month under Rule 5(2)of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 exceptemployees mentioned in Annexure E of the Annual Report.
Industrial relations continued to be cordial during the year.
22. INTERNAL COMPLAINTS COMMITTEE (ANTI- SEXUAL HARASSMENT POLICY)
The Company has in place a policy for prevention of sexual harassmentat workplace. This inter alia provides a mechanism for the resolution settlement orprosecution of acts or instances of Sexual Harassment at work and ensures that allemployees are treated with respect and dignity. The Company has also complied with theprovisions relating to the constitution of Internal Complaints Committee under the SexualHarassment of Women at Workplace (Prevention Prohibition and Redressal) Act 2013.
No complaint was reported to the Committee during the year ended on 31stMarch 2019 in connection with the Sexual Harassment of Women at Workplace (PreventionProhibition and Redressal) Act 2013.
The Company has not accepted any deposits during the year under review.
24. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS OR COURTS ORTRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATION IN FUTURE
During the year there were no significant and material orders passed by regulators orcourts or tribunals impacting the going concern status and Company's operation infuture.
25. COMMISSION OR REMUNERATION FROM SUBSIDIARY
Neither the Managing Director nor the Whole-time Directors of the Company received anyremuneration or commission from Subsidiary (ies).
(a) STATUTORY AUDITORS
The members at the 25th Annual General Meeting held on 27thSeptember 2017 appointed M/s P. G. Bhagwat Chartered Accountants Pune (ICAI FirmRegistration Number 101118W) as the Statutory Auditors of the Company for a period of fiveyears with effect from the conclusion of 25th Annual General Meeting till theconclusion of the 30th Annual General Meeting of the Company to be held in theFinancial Year 2022-2023.
The Board of Directors of the Company at its Board Meeting held onAugust 132019 recommend to appoint M/s MSKA & Associates Chartered Accountants (FirmReg No: 105047W) as Statutory Auditors of the Company after taking note of the consentletter of M/s MSKA & Associates to act as Statutory Auditors.
Considering the Compliance requirements and expansion of Business inEurope Board is of the view that it would be convenient to appoint Auditors with GlobalPresence. It is recommended to appoint M/s MSKA & Associates Chartered Accountants(Firm Reg No: 105047W) one of the Renowned Audit Firms as Statutory Auditors.
(b) SECRETARIAL AUDITORS
Pursuant to the provisions of Section 204 of the Companies Act 2013and the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany had appointed M/s J. B. Bhave & Co. Company Secretaries Pune to undertakeSecretarial Audit of the Company for Financial Year 2018-2019. The Report of theSecretarial Audit for Financial Year 2018-2019 in MR-3 is annexed herewith as Annexure- F to the Annual Report.
(c) COST AUDITORS
The Board of Directors on the recommendation of Audit Committee hadappointed M/s. S. V. Vhatte and Associates Cost Accountants Solapur [Firm RegistrationNo.:100280] as Cost Auditors to audit the cost accounts of the Company for the FinancialYear 2018-2019. As required under the Companies Act 2013 a resolution seekingMembers' ratification for the remuneration payable to the Cost Auditors forms part ofthe notice convening the 27th Annual General Meeting. The Cost Audit report forthe Financial Year 2018-2019 will be filed with the Ministry of Corporate Affairs on orbefore the due date. The Company pursuant to the provisions of Section 148 of theCompanies Act 2013 and applicable rules made thereunder makes and maintains costrecords.
(d) INTERNAL AUDITORS
The Company had appointed M/s D K V & Associates as InternalAuditor of the Company for Financial Year 2018-2019. The scope and authority of theInternal Auditor is as per the terms of reference approved by Audit Committee. TheInternal Auditors monitors and evaluates the efficiency and adequacy of internal controlsystem in the Company its compliance with operating systems accounting procedures andpolicies of the Company. Significant audit observations and recommendations along withcorrective actions thereon are presented to the Audit Committee of the Board.
27. REPORT ON MANAGEMENT DISCUSSION AND ANALYSIS
The Management Discussion and Analysis Report as required under SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 forms part of thisAnnual Report.
28. CORPORATE GOVERNANCE REPORT
Corporate Governance is about maximising shareholder value legallyethically and sustainably. Corporate Governance Report is set out in this Annual Report asAnnexure- G
A certificate from M/s J. B. Bhave & Co. Practicing CompanySecretaries Pune regarding compliance with conditions of corporate governance as requiredunder SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 also formspart of this Annual Report as Annexure H
A certificate from M/s J. B. Bhave & Co. Practicing CompanySecretaries Pune regarding compliance with sub regulation 10(i) of Regulation 34(3) ofSchedule V of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015also forms part of this Annual Report as Annexure-I
29. ANNUAL SECRETARIAL COMPLIANCE REPORT
Pursuant to SEBI Circular CIR/CFD1/27/2019 dated 8thFebruary 2019 all listed entities shall additionally on annual basis submit a report tothe stock exchange(s) on compliance of all applicable SEBI Regulations and circulars/guidelines issued thereunder within 60 days of end of financial year. Such report shall besubmitted by Company Secretary in practice to the Company in the prescribed format.
The Company has received such report from M/s J.B. Bhave & Co.Practicing Company Secretaries Pune for the financial year ended 31st March2019 and it has been submitted to the stock exchange(s) within the stipulated time. A copyof the report also forms part of this Annual Report as Annexure J.
30. DIRECTORS' RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act 2013 theBoard of Directors hereby submits its responsibility Statement:
1. in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
2. 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 of the Company for that period;
3. 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;
4. the Directors had prepared the annual accounts on a going concern basis; and
5. the Directors had laid down internal financial controls to be followed by theCompany and such internal controls are adequate and were operating effectively.
6. the Directors had devised proper systems to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
31. MATERIAL CHANGES AFTER CLOSE OF FINANCIAL YEAR
(a) LIQUIDATION OF PCL (SHANGHAI) CO. Limited CHINA
The Company at its Board Meeting held on 23rd March 2019 had passedresolution to initiate liquidation of PCL (Shanghai) Co. Limited a Wholly OwnedSubsidiary.
PCL (Shanghai) Co. Limited a Wholly Owned Subsidiary was incorporatedin February 2011 with the purpose of expanding business to the growing OEM base in China.For the first few years PCL (Shanghai) was able to onboard new clients and Ford MotorCompany was one of its major customers. The Company was supplying camshaft castings toFord in China.
Over the last few years the particular camshafts got phased out inChina which impacted the operations of PCL (Shanghai) along with its profitability.Coupled with the phase out of these Camshafts the overall auto industry faced challengingtimes in China making it unsustainable for the Company to continue with its operations.
(b) DISINVESTMENT FROM NINGBO SHENGLONG PCL CAMSHAFTS CO. LIMITED(SLPCL)
Precision Camshafts Limited ("PCL India") as a part of itsglobal expansion and assured business of CFMA China had entered into joint ventureagreement dated 11th February 2012 with Ningbo Shenglong Powertrain Co. Limited("Shenglong") to set up machining facility. During the same time ZMM TechnologyLtd ("ZMM") was introduced into the JV and the capital contribution wasrestructured as Shenglong (75%) PCL India (22.5%) and ZMM (2.5%). The Company servedcustomers like Geely and CFMA China.
SLPCL supplied Fox Sigma and GTDI type camshafts to CFMA China. Thesespecific types of camshafts have been phased out from the China market and gradually ithas impacted our business.
The Management of Precision Camshafts Limited has decided to sell itsstakes in SLPCL in near future considering aforesaid business circumstances in China.
(c) DISINVESTMENT FROM PCL SHENGLONG (HUZHOU) SPECIALISED CASTING CO.(PCLSL)
In 2013 PCL India entered into joint venture agreement with NingboShenglong Powertrain Co. Limited ("Shenglong") and ZMM Technology Ltd("ZMM") to set up foundry for manufacturing camshafts. The Company suppliedcamshaft castings to Ningbo Shenglong PCL Camshafts Co. Limited
PCLSL is solely dependent on orders of SLPCL and therefore thecascading effect of slowdown of business of SLPCL has adversely impacted PCLSL. Theoperating expenses of the plant are on a higher side and adversely affecting the cashflows.
The Management of Precision Camshafts Limited has decided to sell its stakes in PCLSLin near future considering aforesaid business circumstances in China.
(d) LIQUIDATION OF PCL BRASIL AUTOMOTIVE LTDA
In 2018 PCL Brasil Automotive LTDA was incorporated as a wholly owned subsidiary ofPCL (International) Holding B.V. Netherlands. PCL Brasil Automotive LTDA is step downsubsidiary of PCL India.
PCL Brasil Automotive LTDA has not commenced any business since its incorporation dueto the Economic Conditions Labor Factor Complex Tax Structure considering thesecircumstances it is not viable to have business in Brasil. It has been decided toliquidate the Company in near future.
Other than details specified above there are no other significant change betweenclosure of the financial year ended on 31st March 2019 and the date of thisreport in respect of Company's financial position profitability turnoversuspension of any business activity foreign collaborations joint ventures etc.
32. STATEMENT CONTAINING THE SALIENT FEATURES OF THE FINANCIALSTATEMENTS OF SUBSIDARIES / ASSOCIATE COMPANIES / JOINT VENTURES
The details of Subsidiary Joint Ventures and Associate Companies isgiven in Form AOC - 1 as Annexure K
There has not been any material change in the nature of the business ofthe Subsidiary and Joint Ventures. As required under SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 and Companies Act 2013 the consolidatedfinancials of your Company and Subsidiary and Joint Ventures are provided in this annualreport.
33. CODE OF CONDUCT FOR BOARD AND SENIOR MANAGEMENT
The Company has adopted the Code of Conduct for the Directors andSenior Management and the same is available on the Company's website www.pclindia.in.All Directors and Senior Management personnel have affirmed their compliance with the saidCode. A declaration signed by Managing Director to this effect is annexed as a part ofDirectors' Report.
34. COMMITTEES OF THE BOARD
Details of all the Committees along with their charters compositionsand meetings held during the year are provided in the Report on Corporate Governance whichforms part of this Annual Report and is also available on the website of the Companywww.pclindia.in.
35. COMPANY'S POLICY ON DIRECTORS' KEY MANAGERIAL PERSONNELAND SENIOR MANAGEMENT PERSONNEL APPOINTMENT AND REMUNERATION
The Board has on the recommendation of the Nomination and RemunerationCommittee framed a policy for selection and appointment of Directors Key ManagerialPersonnel Senior Management and their remuneration. The Company pays remuneration by wayof salary perquisites allowances variables and retirement benefits to its ExecutiveDirectors. The remuneration to the Executive Director(s) is in accordance with theprovisions of the Companies Act 2013 and Rules made thereunder and is within the ceilinglimits as provided thereunder and approved by the shareholders.
The Company's policy of remuneration of the senior management is structured toattract and retain the talent and is in turn dependent on following key parameters:
1. Complexities and criticality of the jobs
2. Profile of the employee in terms of his / her qualification and experience
3. General trends in the industry and market for a similar talent
4. Incorporation of an element of motivation by way of remuneration linked to specificperformances wherever applicable.
As a policy of the Company the Non-Executive Directors are paid commission as apercentage of profit based on the performance evaluation for that financial year underreview.
36. INTERNAL FINANCIAL CONTROLS
The Company has in place adequate internal financial controls withreference to the financial statements. The Audit Committee periodically reviews theinternal control systems with the management Internal Auditors and Statutory Auditorstest the adequacy of internal audit functions. During the year under review thesecontrols were tested and the observations of the Auditors were addressed by the Companyafter taking necessary steps to strengthen the financial controls and improve the systems.Statutory Auditors have also certified adequacy of internal financial controls systemsover financial reporting based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India.
37. BOARD MEETINGS
The Board meets at regular intervals to discuss and decide on Company /business policy and strategy apart from other Board business. The notice of Board meetingis given well in advance to all the Directors. The Agenda of the Board / Committeemeetings is set by the Company Secretary in consultation with the Chairman and ManagingDirector and Chief Financial Officer of the Company. The Agenda for the Board andCommittee meetings cover items set out as per the guidelines in SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 and Companies Act 2013 to the extent it isrelevant and applicable. The Agenda for the Board and Committee meetings include detailednotes on the items to be discussed at the meeting to enable the Directors to take aninformed decision.
During the year 6 (Six ) Board Meetings were convened and held on 14thMay 2018 28th May 2018 13th August 2018 14th November2018 7th February 2019 and 23rd March 2019.
The interval between any two meetings was well within the maximumallowed gap of 120 days.
38. MEETING OF INDEPENDENT DIRECTORS
In compliance with the provisions of Schedule IV of the Companies Act2013 and Regulation 25(3) of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a meeting of Independent Directors was held on 23rd March2019 to review the performance of Non-Independent Directors performance of the Board as awhole and performance of the Chairman of the Company taking into account the views ofChairman and Managing Director Executive Directors and Non-Executive Directors.
The Independent Directors of the Company at their meeting held on 23rdMarch 2019 expressed satisfaction on the quality quantity and timeliness of flow ofinformation between the Company Management and the Board. All the Independent Directorswere present at the meeting.
39. EXPLANATION OR COMMENTS ON QUALIFICATIONS RESERVATIONS OR ADVERSEREMARKS OR DISCLAIMERS MADE BY THE STATUTORY AUDITORS SECRETARIAL AUDITORS AND COSTAUDITORS IN THEIR REPORTS
There were no qualifications reservations or adverse remarks made bythe Statutory Auditors in the Audit Report on the Standalone Financial Statements for theyear ended 31st March 2019.
The Statutory Auditors have expressed modified opinion in the AuditReport on Consolidated Financial Statements for the year ended 31st March2019. Details of Audit Qualification
"The consolidated financial statements of PCL BV are managementdrawn as on 31st March 2019 and have not been audited or reviewed by us.Consequently we were unable to determine whether any adjustments to these amounts werenecessary including with respect to Ind AS specified under section 133 of the Act (ifany). Our opinion on the Consolidated Ind AS Financial Statements of the Company in so faras it relates to the amounts and disclosures included in respect of the consolidatedfinancial statements of PCL BV is based on such management certified financialinformation."
Explanation of the Board of Directors on the Audit Qualification
PCL (International) Holding B.V Netherlands is a Wholly OwnedSubsidiary of Precision Camshafts Limited. It has acquired MFT Moteren und FahrzeuntechnikGmbH on 22nd March 2018 and EMOSS Mobile Systems B.V. (Netherlands) on 17thMay 2018. The management of Precision Camshafts Limited have already started implementingaccounting practices and procedures which are necessary to comply with Indian Laws andAccounting Principles. According to the prevailing applicable Accounting Standards andAudit Requirement criteria in Netherlands PCL (International) Holding B.V. is not subjectto audit and therefore the Consolidated Ind AS Financial Statements of the Company in sofar as it relates to the amounts and disclosures included in respect of the consolidatedfinancial statements of PCL (International) Holding B.V. is based on such managementcertified financial information.
From the financial year 2019-20 pursuant to Regulation 33(3)(b) ofSEBI (LODR) Regulations 2015 Listed entities has to submit quarterly/year to dateconsolidated financial results with effect from 1st April 2019. Accordinglythe management of Precisions Camshafts Limited has taken necessary steps to ensure thatthe books of accounts of PCL (International) Holding B.V. will be audited as per thestatutory requirements of LODR.
There were no qualifications reservations or adverse remarks made bythe Secretarial Auditors or by the Cost Auditors in their respective reports for the yearended 31st March 2019.
40. DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS UNDER SECTION143(12) OF THE COMPANIES ACT 2013 OTHER THAN THOSE WHICH ARE REPORTABLE TO THE CENTRALGOVERNMENT
During the year under review no instances of frauds were reported bythe Statutory Auditors of the Company.
41. CAUTIONARY STATEMENTS
Statements in this report particularly those which relate toManagement Discussion and Analysis describing the Company's objectives estimatesand expectations may constitute forward looking statements' within the meaningof applicable laws and regulations. Actual results may differ materially from those eitherexpressed or implied.
The Directors would like to place on record their deep appreciation toemployees at all levels for their hard work dedication and commitment. The Board placeson record its appreciation for the support and co-operation your Company has beenreceiving from its Shareholders Customers Business Associates Bankers Suppliers andall other stakeholders for their continued support and their confidence in its management.
For and on behalf of the Board of Directors of Precision CamshaftsLimited
|Yatin S. Shah ||Ravindra R. Joshi |
|Chairman and Managing Director ||Whole-time Director and CFO |
|DIN: 0031840 ||DIN: 03338134 |
|Date: 13th August 2019 ||Date: 13th August 2019 |
|Place: Pune ||Place: Pune |