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स्कूटर्स इंडिया निदेशकों की रिपोर्ट, स्कूटर्स इंडिया निर्देशकों द्वारा रिपोर्ट

स्कूटर्स इंडिया

बीएसई: 505141  |  NSE: N.A  |  ISIN: INE959E01011  |  Auto - 2 & 3 Wheelers

खोजें स्कूटर्स इंडिया कनेक्शन Mar 16
निदेशकों की रिपोर्ट वर्षांत : Mar '18

Dear Shareholders,

The Board of Directors of your Company is pleased to present the 46th Annual Report on the business and operations of the Company together with the audited Balance Sheet and statement of Profit and Loss Account and Auditors'' Report thereon for financial year ended 31st March, 2018.

1. PRODUCTION REVIEW:

(Nos.)

Description

2016-17

2017-18

Three Wheeler

6650

3664

As per recent order of Supreme Court BS-III Vehicles will not be allowed for manufacturing & Sale after 1st April 2017. The approval of BS-IV complied Vehicle were not available and few models got approved between May to September 2017 hence reduction in the number of units produced.

2. SALES REVIEW:

The Sales performance for the year is shown below:

Description 2016-17 2017-18

Physical

Financial

Physical

Financial

Three Wheeler

6349

10030.56

3107

4870.20

Spares

-

337.95

157.12

Petrol, Diesel, Lubricants etc

-

216.93

Nil

Other Operating Revenue

-

27.95

Total

-

10855.44

5055.27

3. FINANCIAL REVIEW:

The salient features of the Company''s financial results for the year under review are as follows:

(Rs. in lakhs)

Description

2016-17

2017-18

a) Profit before Depreciation, Interest, Taxes, Prior Year Items & Other Income

(1084.89)

(2283.63)

b) Profit before Depreciation, Interest, Taxes, & Other Income

(1084.89)

(2283.63)

c) PBDIT

(660.07)

(1627.89)

d) Profit /(Loss) for the Year

(1025.81)

(1870.11)

During the year under report:

(1) Loss before depreciation, interest, taxes, prior year items & other income increased by Rs. 1105.19 lakhs as compared to the previous year.

(2) Loss before depreciation, interest, taxes, & other income increased by Rs. 1104.33 Lakhs as compared to the previous year.

(3) Profit before depreciation, interest & taxes, decreased by Rs. 871.85 lakhs as compared to the previous year.

(4) Net profit for the year decreased by Rs. 842.44 lakhs as compared to the previous year.

4. OPERATIONAL REVIEW

During the year under report the operations of the company remained under stress due to constraints in marketing and disruption in supplies, leading to lower production, sales & profits. Further the Ministry of Road Transport and Highways vide notification no. GSR - 643(E) dated 19.08.2015 amended Rule 115 of Central Motor Vehicles Rules, 1989 to provide that the Mass Emission Standards for Bharat Stage IV shall come into force all over the country in respect of vehicles manufactured on or after the 1st April, 2017. Hon''ble Supreme Court of India in I.A.NO. 487/2017, I.A. NO. 491/2017, I.A. NO. 494/2017, I.A. NO. 489/2017, I.A. NO. 495/2017 in Writ Petition (Civil) No.13029/1985 in M C Mehta vs. Union of India & Others vide order dated

29.03.2017 held that:

a) On and from 1st April, 2017 such vehicles that are not BS-IV compliant shall not be sold in India by any manufacturer or dealer, that is to say that such vehicles whether two wheeler, three wheeler, four wheeler or commercial vehicles will not be sold in India by any manufacturer or dealer on and from 1st April, 2017.

b) All the vehicle registering authorities under the Motor Vehicles Act, 1988 are prohibited for registering such vehicles on and from 1st April, 2017 that do not meet BS-IV emission standards, except on proof that such a vehicle has already been sold on or before 31st March, 2017.

Due to the above change, the operations during the current year 2017-18 are also under stress. Though the Company has got vehicle type approval of few vehicle models namely VIKRAM 1500CG, 1000CG on May 2017, 750 D on July 2017 and 450 D on September 2017 of BS-IV; however liquidity crunch has further stressed the operations all through the year.

1MW Roof Top Solar Power Plant has been installed and commissioned on 10th August, 2017 . This will lead to substantial savings in energy cost.

5. CONTRIBUTION TO EXCHEQUER

The company has contributed a sum of Rs. 709.06 lakhs (towards duties & taxes) to the exchequer during the period under review vis-a-vis Rs. 2167.26 lakhs during previous financial year.

6. EXPORTS

The company has not made any exports during the period under review. Further the royalty income during the year by way of foreign exchange remittances also remained nil, in view of ongoing legal cases.

7. EXPENDITURE ON ADVERTISEMENT AND PUBLICITY:

An expenditure of Rs. 12.98 Lakhs was incurred on account of advertisement and publicity in the year.

8. STATUS OF REPAYMENT OF LOAN FROM GOI

In terms of Cabinet approval the existing term plan & non-plan loan as of 31st March, 2012 of Rs 85.21 Crores (Plan loan - Rs 1.93 Crores & Non-plan - Rs. 83.28 crores) has been converted into equity share capital of Rs. 85.21 crores by issue of 8.52 crores equity shares of Rs. 10/- each at par and further the Equity share Capital of the Company has been reduced by 85.21 crores by cancellation of aforesaid Rs. 85.21 crores equity share capital held by Government of India in terms of BIFR Order dated 24.06.2013. The existing interest Accrued as on 31st March, 2012 amounting to Rs. 2,367 Lacs on GOI loan (Plan loan of Rs. 193 lakhs & Non-plan loan of Rs. 8328 lacs) has been written off against accumulated losses and no further interest has been provided on the aforesaid loan from 31st March, 2012 onwards. The matter of repayment of principal & interest on non-plan loan sanctioned during financial year 2012-13 of Rs. 189 Lakhs, which has been followed up with Department of Heavy Industry since the year 2013-14, has been approved and Ministry of Heavy Industry and Public Enterprises vide its letter No. F3-33/2009 PE-VI(Vol-IV) dated 5th June 2018 communicated the freezing of the interest on the Non Plan Loan of Rs.1.89 crore and conversion into Equity of the Outstanding Principal amount of Rs.1.89 Crore. The Company has accordingly made allotment of 18.90 lacs equity shares of Rs. 10/- each. The GOI has also approved the reduction of equity of Rs. 85.21 crores in the share capital of SIL held by GOI against the accumulated losses with effect from 31.03.2013. The Company has been preparing its annual reports for 2012-13 and onwards recognizing the aforesaid reduction, so no revision in annual accounts is required to be made. The Government of India, Ministry of Industries & Public Enterprises, Department of Heavy Industry released funds by way of interest free plan loan amounting to Rs. 2000.00 lakhs during the financial year 2013-14 for working capital under an approved revival package of Scooters India Limited by Cabinet/ Misc. Application approved by BIFR. As per sanction 23.7.2013 the Moratorium period for the loan is 3 years and Installment commence from 31.3.2015. The company sought by way of Reliefs & Concessions in the Draft Rehabilitation Scheme (DRS) submitted to Operative Agency (SBI) for submission of BIFR for recovery of 5 installments commencing from 23.7.2016 onwards i.e. 3 years from date of sanctioning i.e. beginning w.e.f. 23.7.2016.

9. AUDITORS'' REPORT

M/s Dhawan & Madan, Chartered Accountants have been appointed by the Comptroller and Auditor General of India, as Statutory Auditors of the Company for the year 2017-18. The Statutory Auditors'' Report on the accounts of the Company for the financial year ended 31 st March, 2018 are enclosed at ANNEXURE-2.

The Accounts of the Company were submitted to the Comptroller and Auditor General of India for their report under section 143(5) of the Companies Act, 2013 and their report is appended as ANNEXURE-3.

The Comptroller and Auditor General of India, has appointed M/s Dhawan & Madan, Chartered Accountants, as Statutory Auditors of the Company for the year 2018-19.

10. MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY WHICH HAVE OCCURRED FROM 01.04.2017 TO DATE

No material change and commitment have been made by the company from 01.04.2018 to date that has adverse effect on the financial position.

11. MANAGEMENT DISCUSSION AND ANALYSIS

(A) MISSION, VISION & OBJECTIVE

VISION Scooters India''s vision is to grow as a recognized automotive company, with market presence in public transport category in Goods, Passenger & Special Purpose Carriers in India & abroad.

MISSION Our mission is to build on the reliability we possess in niche markets and evolve into an economic enabler with stronger after-market support for our customers who trust us when plying our vehicles in service.

OBJECTIVE

- To prosper into defined areas delineated by the revival plan in 2013

- To achieve 2 % decrease in cost, and rationalize input materials expense.

- Growing resources & JV partners to fill strategic gaps in skills and operations.

- To reduce energy input per unit of production with renewable.

- To make a mark in Electric Three Wheeler market and thus support the cause of environment protection for further generations

(B) MARKET SCENARIO

(i). The total number of 3-Wheelers produced and sold in the domestic market by manufactures in India during the year 2017-18 as against 2016-17 is given below :

Category

Production

(In Nos.)

Segment/ Sub- segment

April''16- March''17

April''17- March''18

Passenger Carrier

671361

899023

Goods Carrier

112360

122888

Total

783721

1021911

Domestic Sales

(In Nos.)

Passenger Carrier

402189

517423

Goods Carrier

109690

118275

Total

511879

635698

Note: Sales excluding Export of 281894 nos. in 2016-17 and 381002 nos. in 2017-18

Source: SIAM

Scooters India Limited has been a pioneer in bringing out various models of 3-Wheelers running on Diesel, Electric, LPG and CNG for applications as both passengers and load carrier versions. Company has played an important role in popularization of 3- Wheelers of larger capacity in the country. SIL has achieved sales of 6348 nos. in 2017-18. This has also resulted in decrease the SIL market share from 1.28 % in 2016-17 to 0.44 % in 2017-18.

The company continues to be the leader in larger capacity of vehicles i.e. passenger carrier (6 1) segment and goods carrier exceeding 1 ton of vehicles. The market share of company is 100% in 2017-18 (SIL sales 1210 nos. out of 1210 nos.).

(ii). 3- Wheelers growth drivers in future are as under:

- Rapid development of infrastructure and focus of both Central as well as State Govt. on infrastructure mainly on roads, the demand of 3- wheeler may see an upward trend in coming years. The demand driver for 3-Wheelers are its affordability as an economical viable transport solution. However the demand for 3-Wheeler passenger carrier depends on the availability of permits issued by Local RTO''s.

- Increased demand from semi urban & rural areas for 3- Wheelers because of its high product maneuverability and drivability

- Suitability of 3- Wheelers for congested Indian roads and tropical conditions.

- Self employment opportunity for a large no of youths especially with the Govt. focus on various schemes for the unemployed youths.

- 3- Wheelers of smaller capacity are in great demand in load carrier segment because of increase in organizing retail marketing across the country which requires faster and economical transportation.

- 3-Wheeler is a low cost transport solution to daily commuting passenger. Hence the market for 3 - wheeler shall continue to be there because of higher cost of transportation in other modes of transport like taxi, contract carriages, buses etc.

- 3-Wheeler are also better earning opportunity for unemployed youths. With a minimum expenditure i.e Rs. 45,000 - 50,000 (margin money) , one can start earning Rs.300-400 per day right from the day one of purchasing a new 3- Wheeler.

(C) Opportunities & Threats:

C1. Strengths:

- Integrated plant with capability to produce majority of components.

- Induction of new Machinery through CAPEX has improved quality as well as Productivity.

- Skilled manpower at reduced cost by re-engage retired personals.

- Scope of doubling/tripling the production with minimum investment,.

C2. Weakness :

- Depleting manpower.

- Sourcing of material at ecpnomical costs is difficult due to low volumes. This is also resulting in weak supply chain.

- Location of plant with respect to automotive hub:

- Not able to introduce new models/variants due to low volumes of production.

- Not having strong vehicles finance tie ups.

C3. Opportunities:

Growing automobile sector

Untapped markets - South, West, East & Exports

Developing hub and spoke transportation model

Increasing allocation of funds for poverty alleviation under various Govt. Schemes like PMRY, SC/ST, NREGS etc.

Rapidly growing awareness about vehicular pollution leading to policy formulation for increase use of alternate fuel vehicles such as Electric Vehicle.

Options for technology infusion

Rapidly growing network for CNG supply

Replacement market of 4W SCV, like Tata Ace with 3 wheelers.

C4. Threats:

Growing e- rickshaws markets.

Increase in product substitution effect by rapidly growing Electric Market Vehicle

Increased competition both from organized and unorganized players

Frequent changes in Market Norms.Volatility in Raw Materials prices/input and difficulty in passing on cost increase.

(D) Future Outlook:

Challenges faced by the Company:

The need for consistency in quality demands for enhanced investment in R&D and upgradation of plant & machinery. Existing over-lived plant & machinery is a cause of concern.

Manpower cost in the company is still high because of low volumes of production and so is the average age profile of the employees. While the company needs to reduce its manpower cost even while putting efforts to infuse fresh blood simultaneouly.

Though 3-wheelers as an industry continue to grow but increase in competition and availability of 4-wheelers in 1.0 ton and sub 1.0 ton category is expected to aggravate the extremely competitive scenario and impact the volumes and margins.

Strict regulatory laws concerning pollution and their strict implementation by banning sale of diesel vehicles in certain states shall act as deterrent for company growth.

SIL has lesser presence in small 1 3- Passenger Category segment which has strong market preference. This segment contribution has high volumes though the margins are low. The established player''s viz. Piaggio, Mahindra etc. dominate the market. SIL is putting extra efforts to enhance its market share in this segment by expanding its market network to southern states.

Employees'' aspiration for effecting revision in salary and wages.

(E) Strategic Road Map:

Although there has been negative growth in three wheeler segment of Auto sector in India, the performance of your company has improved considerably in comparison to the previous year. Your company is evaluating various new product development options to cater to various market segments with a view to higher production and sales.

The various efforts are as under

- Introduction of Electric Passenger Vehicle with Li-ion Battery with DC Motor as short term strategy.

- In long term it is planned to introduce electric Passenger /Load Carrier vehicles with Li-Ion Battery and AC Motor.

(iii) Status before BIFR:

On 18th February, 2010, BIFR has declared the Company as sick industrial company in terms of the provisions of section 3(1)(o) of the Sick Industrial Companies (Special Provisions) Act,1985 (SICA) on reference being made after full erosion of the Net-worth of the Company, as per annual accounts for the year ended at 31st March, 2009. BIFR approved the miscellaneous application filed by the Company for seeking necessary permission/appropriate directions for reliefs & concessions enabling issue of shares, restructuring of balance sheet and for release of funds for capital expenditure and working capital in line with the cabinet decision for revival of SIL. The Draft Rehabilitation Scheme (DRS) was submitted by Co Operating Agency (SBI) for submission with BIFR. BIFR in its hearing dated 15.09.2015 directed that SIL ceases to be a sick industrial company, within the meaning of Section 3(1)(o) of the SICA as its net worth has turned positive and It is, therefore, discharged from the purview of SICA/BIFR.

12. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE EARNINGS AND OUTGO:

Your company is an ISO 9001: 2000 certified which focuses on quality management system. A statement giving details of conservation of energy, technology absorption, foreign exchange earnings and outgo in accordance with the Section 134 (3) (m) of the Companies Act, 2013 read with Rule 8 of The Companies (Accounts) Rules, 2014 is provided at ANNEXURE-1, 1-A and 1-B to this report.

13. PARTICULARS OF EMPLOYEES:

Information under Sec. 197(12) of the Companies Act, 2013 read with rule 5(2) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 be treated as NIL as none of the employee of the company is getting salary more than the prescribed limit.

14. INDUSTRIAL RELATION:

During the period under review i.e. 01.04.2017 to 31.03.2018, the industrial relation in the Company remained normal. No agitation and strike took place during the aforesaid period.

15. TRAINING AND DEVELOPMENT:

Employees of the Company are the most important constituent and Company understands that without their motivation and development the Company cannot progress. The Company has been analyzing developmental needs in technical and managerial areas and provide requisite training and exposure to all employees at all levels in the area on Professional Excellence through motivation etc. employees were trained during 01.04.2017 to 31.03.2018 on course of Fire Fighting, Vigilance, Industrial Safety & Health etc.

Programme Details

Officers

Staffs

Workmen

Trainees

Total

External

15

09

02

70

96

Internal

07

01

-

-

-

Total

22

10

02

70

104

16. VIGILANCE:

Vigilance Department continues to function with particular emphasis on the aspects of preventive and corrective vigilance. Strict vigil was exercised over various activities as part of Preventive Vigilance measures and suggestions were made to the Management for system improvement. Company also observed Vigilance Awareness Week from 31.10.2017 to 04.11.2017.

17. HUMAN RESOURCE DEVELOPMENT:

Employees of the Company are the most important constituent and Company understands that without their motivation and development Company cannot progress. The Company has been analyzing developmental needs in technical and managerial areas and provides requisite training and exposure to the employees at all levels in the area on Professional Excellence through Motivation, Advance Engine Combustion & Diagnostics, Competence Building for Effective Management, Healthcare Services, Part Programming for CNC Machines, Leadership Strategies for Building Excellence, Quest for Excellence Imperatives for India PSUs, Health, Safety, Environment Protection through Legal Reforms & technological Innovations, Building & Leading Effective Teams, Safety Engineering & Management, Value Based Management, Legal framework for Cost Audit Compliances, Finance for Non-finance Executives, International Commercial Practices, Energy Conservation, House Keeping etc.

18. HINDI IMPLEMENTATION:

Official Language Implementation Committee monitors and reviews the progress of implementation of the Annual Programme issued by Department of Official Language, Ministry of Home Affairs, Government of India. Hindi Divas is commemorated every year by observing official language week in the month of September. Various competitions are organized for employees and winners are felicitated on Republic Day.

19. REPRESENTATIVE FOR SCHEDULED CASTES & SCHEDULE:

As on 31.03.2018 the total strength of the company is 177. Out of these, 52 employees belong to Scheduled Castes and 01 employee to Scheduled Tribe.

20. DIRECTORS, KEY MANAGERIAL PERSONNEL, APPOINTED AND RESIGNED:

Government of India, Ministry of Heavy Industries & Public Enterprises, Department of Heavy Industry has vide its Order No. F. No.:1(1)/2016-PE-VI dated 26th September, 2016, appointed Shri Renati Sreenivasulu as Chairman & Managing Director of SIL for the period of five years or till the date of his superannuation or until further orders, whichever is earliest. Shri Renati Sreenivasulu has joined as Chairman & Managing Director of SIL w.e.f. 06.10.2016. Mr. Shaktimani was appointed as a Diector (F) on additional charge basis with effect from 30 May, 2018 for the period of three months.

Ms. Shrabanti Mandol has joined as Company Secretary of SIL w.e.f 06.11.2017.

Mr. R.S Tiwari, HOD Finance also re designated as Chief Financial Officer of the Company w.e.f 08.02.2018

The Board of Directors of the Company are appointed by the Government of India as per guidelines issued by the Department of Public Enterprises (DPE), Government of India from time to time. The remuneration of Managing Director/Whole time Director is fixed as per grade and other terms and conditions issued by the DPE. The Government Directors on the Board of the Company draw their remuneration from Government of India and not from the Company. The independent directors, if any, are paid the sitting fee only (within the limits prescribed under the Companies Act), as per Articles of Association, besides reimbursement of the expenses to attend the meeting. No other remuneration is paid to the independent directors.

As regards, the appointment and remuneration of Key Managerial Personnel and other employees, the appointment of all employees below board level is made as per Recruitment & Promotion Rules of the Company and remuneration is paid to them as per DPE guidelines.

In absence of Independent Directors on the Board, the Nomination & Remuneration Committee (NRC) has also not been constituted. The other matters relating to remuneration, if any, are placed directly to the Board of Directors.

21. INDEPENDENT DIRECTOR''S DECLARATION

Directors on the Board of the Company are appointed by the Administrative Ministry. SIL has been requesting the Ministry to appoint the independent directors. The appointment of Independent directors is yet to be made by the Ministry. During the year there was no independent director on the board of the Company. Thus, the declaration pertaining to independent director does not apply.

22. DISCLOSURE ON REAPPOINTMENT OF INDEPENDENT DIRECTORS:

During the year there was no independent director on the Board of the Company. Hence, disclosure pertaining to reappointment of independent directors does not apply.

23. NUMBER OF MEETINGS OF THE BOARD

The Board met seven times during the financial year, the details of which are given in the Corporate Governance Report that forms part of this Annual Report. The intervening gap between any two meetings was within the period prescribed by the Companies Act, 2013 and the Listing Agreement.

24. COMPANY''S POLICY ON DIRECTORS'' APPOINTMENT & REMUNERATION INCLUDING CRITERIA FOR DETERMINING QUALIFICATIONS, ATTRIBUTES, INDEPENDENCE ETC.:

The Board of Directors of the Company are appointed by the Government of India as per guidelines issued by the Department of Public Enterprises (DPE), Government of India from time to time. The remuneration of Managing Director/Whole time Director is fixed as per grade and other terms and conditions issued by the DPE. The Government Directors on the Board of the Company draw their remuneration from Government of India and not from the Company. The independent directors, if any, are paid the sitting fee only (within the limits prescribed under the Companies Act), as per Articles of Association, besides reimbursement of the expenses to attend the meeting. No other remuneration is paid to the independent directors.

As regards, the appointment and remuneration of Key Managerial Personnel and other employees, the appointment of all employees below board level is made as per Recruitment & Promotion Rules of the Company and remuneration is paid to them as per DPE guidelines.

In absence of Independent Directors on the Board, the Nomination & Remuneration Committee (NRC) has also not been constituted. The other matters relating to remuneration, if any, are placed directly to the Board of Directors.

25. ANNUAL EVALUATION OF PERFORMANCE OF BOARD, ITS COMMITTEE AND DIRECTORS

The Company enters into MoU with the Administrative Ministry in the month of March every year for the next financial year. Before signing the MoU the targets are negotiated with the Company in detail by the MoU Task Force constituted by the DPE. The evaluation of performance of the Company against MoU parameter is done by DPE every year and MoU score is communicated by it to the Company through the Administrative Ministry.

26. MANAGING DIRECTOR RECEIVING COMMISSION OR REMUNERATION FROM HOLDING OR SUBSIDIARY COMPANY:

The Company has no holding or subsidiary company, hence not applicable.

27. RATIO OF DIRECTORS’ REMUNERATION TO MEDIAN EMPLOYEES’ REMUNERATION AND OTHER DISCLOSURES:

During the year, the remuneration of Chairman & Managing Director was Rs. 24.94 lac and median employee’s remuneration was Rs. 4.28 lac. The Chairman & Managing Director remuneration comes to 582.71% of median employees’ remuneration. (ANNEXURE - 7)

28. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS

As per the requirement of section 186(4) of Companies Act, 2013, particulars of loans given, investments made, guarantees given or securities provided along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient are provided in the financial statements on page number 71. The Company is in compliance with the limits as prescribed under Section 186 of Companies Act, 2013 read with rule 11 of the Companies (Meeting of Board and its Powers) Rules, 2014.

29. PARTICULARS OF CONTRACTS OR ARRANGEMENTS MADE WITH RELATED PARTIES:

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm''s length basis. Particulars of contracts or arrangements with related parties referred to in section 188(1) of the Companies Act, 2013, are presented in Annexure 8 to the Directors'' Report in Form AOC 2.

30. DIRECTORS'' RESPONSIBILITY STATEMENT:

In accordance with the provisions of section 134(3)(c) of the Companies Act, 2013 your Directors confirm that:

a) in preparation of the annual accounts for the year ended March 31, 2018, the applicable accounting standards read with the requirements set out under Schedule III of the Act have been followed and that there are no material departures from the same;

b) they have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year ended on March 31, 2018and of the profit of the Company for year ended on that date;

c) they have taken proper and sufficient care, to the best of their knowledge and ability, for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities;

d) they have prepared the annual accounts on a going concern basis;

e) they have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively to the best of their knowledge and ability; and

f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and are operating effectively.

31. ADEQUACY OF INTERNAL CONTROL:

The Company has proper and adequate system of internal controls to ensure that all activities are monitored and controlled against any unauthorized use of disposal of assets, and that the transactions are authorized, recorded and reported correctly.

The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines. The Company has in place adequate internal financial controls with reference to financial statements. The Statutory Auditors of the Company tested such controls and no reportable material weakness in the design or operation was observed.

32. FIXED DEPOSITS:

The Company has not accepted any deposits under the provisions of the Companies Act, 2013 during the year.

33. SECRETARIAL AUDITOR:

M/s Amit Gupta & Associates, Practicing Company Secretaries were appointed as secretarial auditors of the Company for the year 2017-18 as required under Section 204 of the Companies Act, 2013 and Rules made there under. The secretarial audit report in Form MR-3 for FY 2017-18 forms part of the Directors Report and is placed at Annexure - 5. Regarding comments/qualifications in the said report, it is submitted that the Company has taken up matter regarding appointment of Independent Directors/women Director with DHI and with the said appointments the Board shall become duly constituted in accordance with the provisions of the Companies Act, 2013 & Listing agreement and necessary compliances regarding constitution of various Committees viz. Audit Committee, Nomination & Remuneration Committee etc. shall also be made. Further the Company is in process of filing of necessary returns with the Registrar of Companies, Kanpur.

34. CORPORATE GOVERNANCE:

A Certificate from M/s Dhawan & Madan, Auditors of the Company regarding compliance of conditions of Corporate Governance as stipulated under regulation 34(3) of the SEBI Listing regulations, 2015 along with the report on Corporate Governance is attached as Annexure - 4 to this report.

SECRETARIAL STANDARDS

The Directors state that applicable Secretarial Standards, i.e. SS-1 and SS-2, relating to ‘Meetings of the Board of Directors’ and ‘General Meetings’, respectively, have been duly followed.

35. SIGNIFICANT AND MATERIAL ORDERS:

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and the Company''s operations in future.

36. AUDIT COMMITTEE AND VIGIL MECHANISM:

In view of non appointment of Independent Directors by GOI, the Company is not having Audit Committee pursuant to requirement of section 177(1) of Companies Act, 2013 read with Rule 6 of the Companies (Meeting of Board and its Powers) Rules, 2014 and Regulation 18 of the SEBI Listing Regulations, 2015 & erstwhile clause 49 of Listing Agreement.

The Vigil Mechanism of the Company, which also incorporates a Whistle Blower Policy in terms of the Listing Agreement, may be accessed on the Company''s website at the link: http://www.scootersindia.com. The policy includes appointment of a Whistle Officer who will look into the matter, conduct detailed investigation and take appropriate disciplinary action. Protected disclosures can be made by a whistle blower through an e-mail, or dedicated telephone line or a letter to the Whistle Blower Officer. During the year under review, no employee was denied access to Whistle Blower Officer.

37. EXTRACT OF ANNUAL RETURN:

Extract of Annual Return of the Company is annexed herewith as ANNEXURE - 6 to this Report.

38. ISSUE OF SHARES WITH DIFFERENTIAL RIGHT, SWEAT EQUITY, EMPLOYEE STOCK OPTION:

The Company has not issued any share with differential right, sweat equity, employee stock option during the year, hence, not applicable.

39. RISK MANAGEMENT:

SIL aims to have a formalized and systematic approach for managing risks across the Company. It encourages knowledge and experience sharing in order to increase transparency on the key risks to the Company to the extent possible. This approach increases risk awareness, and ensures proper management of risks as part of the daily management activities.

The policy on Risk Management may be accessed on the Company''s website at the link: http//www.scootersindia.com. The objective of the Company''s risk management process is to support a structured and consistent approach to identify, prioritize, manage, monitor and report on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. The Company has introduced several initiatives for risk management including the introduction of audit functions and processes to identify and create awareness of risks, optimal risk mitigation and efficient management of internal control and assurance activities.

40. LISTING:

The Company is listed at BSE Limited and has connectivity from both National Securities Depository Limited (NSDL) & Central Depository Services Limited (CDSL). Delhi Stock Exchange Limited, Delhi has been de-recognized by SEBI vide its order dated November 19, 2014.The Company has paid due listing fees with the stock exchange.

41. CORPORATE SOCIAL RESPONSIBILITY:

SIL strongly believes in concept of sustainable development and is committed to operate and grow its operations in a socially and environmentally responsible way.

As per the Companies Act, 2013, all companies with a net worth of Rs. 500 crore or more, or turnover of Rs. 1,000 crore or more or a net profit of Rs. 5 crore or more during any financial year are required to constitute a Corporate Social Responsibility (CSR) committee of the Board of Directors comprising of three or more directors, at least one of whom should be an independent director and such company shall spend at least 2% of the average net profits of the company''s immediately preceding three financial years on CSR activities. The Company has duly constituted a Corporate Social Responsibility (CSR) Committee pursuant to the requirement of Section 135(1) of Companies Act, 2013 and the Rules made there under. However in absence of an Independent Director Committee constitution is not proper. Accordingly to conserve the resources for business operations the Company has decided not to spend any amount towards Corporate Social Responsibility during the year under report.

42. VIGILANCE CASES:

In pursuance of Order No. F. No. 26(1)/2016 PE-VI dated January 24, 2018 issued by Ministry of Ministry of Heavy Industries & Public Enterprises; Department of Heavy Industries Committee recommends including vigilance cases during the year. The Report is as follows:

During 2017-18, 4 complaints related to procurement and Corruptions and Harassment of employees were investigated by Vigilance department, out of which 2 complaints related to procurement were carried to a logical conclusion and appropriate disciplinary action has been initiated wherever necessary. The remaining 2 related to Corruptions and Harassment of employees complaints were under various stages of investigation as on 31.03.2018.

43. RIGHT TO INFORMATION CASES:

In pursuance of Order No. F. No. 26(1)/2016 PE-VI dated January 24, 2018 issued by Ministry of Ministry of Heavy Industries & Public Enterprises; Department of Heavy Industries Committee recommends including RTI matters during the year. The Report is as follows:

RTI CASES STATUS FOR FY 2017-18

Application Received in FY 2017-18

No. of cases transferred to other Public Authorities

Decisions

where

request/

appeals

rejected*

Decisions

where

request/

appeals

accepted

Cases Disposed off in FY 2017-18

Cases

Pending

Requests

23

1

1

21

23

0

First Appeal

1

0

0

1

1

0

Second Appeal

1

0

1

1

1

0

44. ACKNOWLEDGEMENT:

The Board of Directors would like to express their grateful appreciation for the sincere support and co-operation extended by its Bankers, Financial Institutions, Dealers and Suppliers. The Directors would also like to express their sincere thanks for the co-operation and advice received from Govt. of India, particularly, Deptt. Of Heavy Industry and Public Enterprises, BIFR, BRPSE, the State Govt. and the local authorities for their continued support, co-operation and guidance.

Your Directors wish to place on record their deep sense of appreciation for the devoted services of employees and are deeply grateful to the shareholders for reposing the confidence and faith in us.

By the order of Board of Directors

Sd/

Renati Sreenivasulu

DIN: 07634253

Place : New Delhi Chairman & Managing Director

Dated : August 03, 2018 Scooters India Limited, Lucknow -226008

स्रोत: रेलीगरे टेचनोवा

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