Mar 31, 2023
The Directors have pleasure in presenting the 41st Annual Report along with the Audited Financial Statements of your Company for the financial year ended March 31, 2023.
Your Company has earned a total revenue from operations of Rs. 14,066.64 crores during the financial year 2022-23. The profit before depreciation and interest amounted to Rs. 3,393.50 crores, which is 24.1% of the total revenue. After accounting for other income of Rs. 639.84 crores, interest expense of Rs. 12.97 crores and depreciation of Rs. 512.05 crores, profit before tax amounted to Rs. 3,508.32 crores.
Profit after tax amounted to Rs. 2,622.59 crores after an income tax provision of Rs. 885.73 crores. Total Comprehensive income for the year, net of tax amounted to Rs. 2,632.54 crores.
The financial statements are summarised below:
Rs. in Crores |
||
Particulars |
For the financial year ended |
For the financial year ended |
March 31, 2023 |
March 31, 2022 |
|
Net Revenue from operations |
14,066.64 |
10,122.86 |
Profit before depreciation and interest |
3,393.50 |
2,113.56 |
Interest |
12.97 |
10.25 |
Depreciation |
512.05 |
445.52 |
Profit before other income and tax |
2,868.48 |
1,657.79 |
Other income |
639.84 |
454.28 |
Profit before tax |
3,508.32 |
2,112.07 |
Provision for tax (including Deferred tax) |
885.73 |
525.85 |
Net profit after tax |
2,622.59 |
1,586.22 |
Other comprehensive income |
9.95 |
(9.13) |
Total Comprehensive income for the year/period, net of tax |
2,632.54 |
1,577.09 |
Balance in statement of profit and loss brought forward from previous year |
10,112.61 |
8,993.44 |
Amount available for appropriation: (Excluding exchange difference in translation of foreign operations) |
12,729.13 |
10,577.28 |
Dividend for FY 2020-21, paid in FY 2021-22 |
- |
464.67 |
Dividend for FY 2021-22, paid in FY 2022-23 |
574.19 |
- |
Dividend proposed for FY 2022-23, to be paid in FY 2023-24 |
1,011.88 |
- |
Earnings per share |
||
- Basic (Rs.) |
95.91 |
58.02 |
- Diluted (Rs.) |
95.74 |
57.96 |
CHANGE IN THE NATURE OF BUSINESS, IF ANY
There is no change in the nature of business of the Company during the financial year under review.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY THAT HAVE OCCURRED AFTER MARCH 31, 2023 TILL THE DATE OF THIS REPORT
There have been no material changes or commitments affecting the financial position of the Company which have occurred after March 31, 2023 till the date of this report.
The Board of Directors at its meeting held on May 11, 2023, has recommended for approval of the shareholders, payment of dividend of Rs. 37/- per equity share of face value of Re. 1/- each (@ 3700%) out of the profits for the financial year 2022-23 in accordance with the Dividend Distribution Policy of the Company.
The dividend, if approved by the shareholders in the ensuing Annual General Meeting, shall be paid in the following manner:
a) To all Beneficial Owners in respect of shares held in dematerialised form as per the data made available by the National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL) as of the close of business hours on August 16, 2023 (record date);
b) To all Members in respect of shares held in physical form as of the close of business hours on August 16, 2023 (record date)
AMOUNTS TRANSFERRED TO RESERVES
During the financial year 2022-23, no amount was transferred to the General Reserve of the Company.
BRIEF DESCRIPTION OF THE STATE OF COMPANY''S AFFAIRS/BUSINESS PERFORMANCE
Your Company has sold 8,34,895 motorcycles in the financial year 2022-23, 38.6% higher when compared to 2021-22 sales of 6,02,268 motorcycles. Out of 8,34,895 motorcycles sold in 2022-23, 1,00,055 motorcycles were exported, an increase of 23.5% over previous year export volume of 81,032 motorcycles.
Net Revenue from operations for 2022-23 year was Rs. 14,066.64 crores, 39.0% higher when compared with previous year Rs. 10,122.86 crores. Net Sales of spare parts, gears and services increased to Rs. 1,855.07 crores in 2022-23 from Rs. 1,395.07 crores in the previous year, with a growth of 33.0%.
Your Company''s profit before depreciation, interest and tax was Rs. 3,393.50 crores in financial year 2022-23, higher by 60.6% over Rs. 2,113.56 crores recorded in financial year 2021-22.
Please refer to the Management Discussion & Analysis Report which forms part of the Annual Report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be given pursuant to the provisions of Section 134 of the Companies Act, 2013 ("the Act"), read with the Companies (Accounts) Rules, 2014 is provided under Annexure-1.
DISCLOSURE REGARDING ISSUE OF SWEAT EQUITY SHARES AND EQUITY SHARES WITH DIFFERENTIAL RIGHTS
The Company has not issued any sweat equity shares or equity shares with differential rights during the financial year 2022-23.
CHANGES IN SHARE CAPITAL & THE COMPANY''S EMPLOYEE STOCK OPTION PLAN, 2006AND RESTRICTED STOCK UNITS PLAN, 2019
The paid-up Equity Share Capital of the Company as on March 31, 2023, was Rs. 27,34,81,570/-. During the year under review, the Company has issued 58,468 Equity Shares (Face value Re. 1/- each) pursuant to its Employees Stock Option Plan, 2006 ("ESOP, 2006"). No shares have been issued under the Company''s Restricted Stock Units Plan, 2019 ("RSU Plan, 2019") during the year.
A Statement giving complete details as at March 31, 2023, pursuant to Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations, 2021 is available on the website of the Company and the web link for the same is https://www.eicher.in/content/dam/eicher-motors/ Eicher-Motors-ESOP-Statement-2022-23.pdf
ESOP, 2006 and RSU Plan, 2019, for grant of stock options have been implemented in accordance with the aforesaid SEBI Regulations. A certificate from M/s. AGSB & Associates, Secretarial Auditors, in this regard will be available for inspection on the website of the Company under "Investors" Section on the date of Annual General Meeting. The Company has not changed its ESOP, 2006 and RSU Plan, 2019 during the year under review.
Further, details of options granted and exercised are included in Note no. 49 in the notes to accounts forming part of standalone financial statements.
The Company has not accepted any deposits including from the public/members under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 during the financial year under review. The Company has not renewed/ accepted fixed deposits after May 29, 2009. There are no deposits that remain unclaimed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with Section 149(7) of the Act and Regulation 25(8) of SEBI (LODR) Regulations, 2015, Independent Directors of the Company have given written declarations to the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16 of SEBI (LODR) Regulations, 2015. As on March 31, 2023, all Independent Directors of the Company have valid registrations with the Independent Directors'' databank maintained by Indian Institute of Corporate Affairs in terms of Section 150 of the Companies Act, 2013 read with Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014.
Director liable to retire by rotation
In accordance with the provisions of Section 152 and other applicable provisions of the Act, Mr. Siddhartha Lal, Managing
Director, retires by rotation at the ensuing 41st Annual General Meeting and being eligible offers himself for re-appointment. The Board of Directors recommends his reappointment.
Reappointment of Directors
The Board of Directors of the Company at its meeting held on May 11, 2023, after taking into consideration recommendations of the Nomination & Remuneration Committee of the Company and subject to requisite approvals of the shareholders at the ensuing 41st Annual General Meeting, have re-appointed:
a) Mr. Inder Mohan Singh as Independent Director of the Company for second term of 5 (five) years with effect from November 12, 2023;
b) Mr. Vinod Kumar Aggarwal as Non-Executive Non-Independent Director of the Company, liable to retire by rotation, for a period of 5 (five) years with effect from April 1, 2024.
In the opinion of the Board, Mr. Inder Mohan Singh and Mr. Vinod Kumar Aggarwal possesses requisite skills & expertise required for the business and operations of the Company.
For details on skills, expertise, competencies of Mr. Singh and Mr. Aggarwal, please refer to the Corporate Governance Report forming part of this Annual Report.
In addition, the shareholders of the Company at the 40th Annual General Meeting held on August 24, 2022 approved the appointment of Mr. B. Govindarajan as the Whole-time Director of the Company for a period of 5 (five) years w.e.f. August 18, 2021.
Change in the Board and Key Managerial Personnel
Mr. Kaleeswaran Arunachalam resigned from the position of Chief Financial Officer of the Company with effect from closing of working hours of September 2, 2022. The Board of Directors pursuant to the recommendation of the Audit Committee and the Nomination & Remuneration Committee appointed Ms. Vidhya Srinivasan as Chief Financial Officer and Key Managerial Personnel of the Company w.e.f. November 18, 2022.
The Board at its meeting held on August 10, 2022, pursuant to the recommendation of Nomination and Remuneration Committee appointed Mr. Atul Sharma as Company Secretary (Key Managerial Personnel) and Compliance Officer of the Company w.e.f. August 10, 2022.
There has been no other change in the Directors and Key Managerial Personnel of the Company during the financial year under review.
THE COMPANY''S POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION
The Company''s Hiring & Employment Policy:
A number of factors are considered towards selecting candidates at the Board level which include:
⦠Ability to contribute to strategic thinking
⦠Proficiency in Governance norms, policies and mechanisms at the Board level
⦠Relevant cross industry/functional experience, educational background, skills and experience
⦠Wherever relevant, independence of Directors in terms of applicable regulations
With respect to core competencies and personal reputation, Company''s practices ensure through the selection process that all Directors:
⦠Exhibit integrity and accountability
⦠Exercise informed judgement
⦠Are financially literate
⦠Are mature and confident individuals
⦠Operate with high performance standards
Removal of Directors:
Under extreme circumstances and in highly unusual situations it may become necessary to remove a Director from the Board of the Company. Reasons for doing so, may relate to any of the following (indicative; other than as provided under the Companies Act, 2013):
i. Breach of confidentiality in anyway
ii. Failure to meet obligatory procedures in the disclosure of conflict of interest
iii. Failure to fulfil the fiduciary duties of a Director for the Company
iv. Acting in any other manner which is against the interests of the Company
Due process of law will be followed in this regard.
The Company''s Remuneration Policy:
The Company''s Compensation Strategy defines the principles underlying compensation philosophy for its employees. Compensation is a critical piece of overall human-resources strategy and broadly refers to all forms of financial returns and tangible benefits that employees receive as a part of their employment relationship.
The Remuneration/Compensation Policy of the Company is designed to attract, motivate and retain manpower.
This Policy applies to Directors and Senior Management including Key Managerial Personnel (KMP) and other employees of the Company.
The remuneration of the Managing Director, Whole-time/ Executive Director, Key Managerial Personnel (KMPs) and CXOs of the Company is recommended by the Nomination and Remuneration Committee based on criteria such as industry benchmarks, the Company''s performance vis-a-vis the industry, responsibilities and performance assessment.
The Company pays remuneration by way of salary, perquisites and allowances (fixed component), incentive remuneration and/or commission (variable components).
Loans/advances may be extended to employees for various personal purposes or to aid business functions, from time to time, on a case to case basis, in accordance with the relevant Human Resource guidelines/policies in force or as may be approved by the Chief Financial Officer, the Chief Human Resource Officer of the Company, or any person authorised by them, including for relocation viz. school deposits/expenses, travel/logistics expenses, housing advance, housing deposits/ brokerage, any other expenses towards relocation; advance submission of tax deducted at source by the Company on behalf of employee; advance towards medical insurance premiums; loans granted to enable grantees exercise ESOPs and towards deposit of perquisite tax thereon; loans/advances covered under Employees Union recognised by the Company as per Union Agreement; medical emergency advances etc.
Additionally, in the event of exigencies arising due to calamities, the Company may provide financial assistance to any affected employee by way of extending interest-free loan in an amount not exceeding his/her two months'' gross salary.
Remuneration by way of commission to the Non-Executive Directors shall be decided by the Board of Directors within the ceiling of a sum, not exceeding 1% of the annual net profits of the Company in each of the financial year, calculated in accordance with the provisions of the Act.
Remuneration of KMPs and employees largely consists of basic remuneration, perquisites, allowances, performance incentives and employee stock options granted pursuant to the Employees Stock Option Plan, 2006 and Restricted Stock Units Plan, 2019 of the Company. The components of remuneration vary for different employee levels and are governed by industry patterns, qualifications and experience of the employee and his/her responsibility areas, employee performance assessment etc.
The said Policy is also available on the website of the Company at https://www.eicher.in/content/dam/eicher-motors/ Remuneration-Compensation-Policy.pdf
ANNUAL EVALUATION OF BOARD,COMMITTEES AND INDIVIDUAL DIRECTORS
During the financial year under review, formal annual evaluation of the Board, its Committees and Individual Directors was carried out pursuant to the Board Performance Evaluation Policy of the Company and provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 by the Board at its meeting held on February 14, 2023.
The Nomination and Remuneration Committee has specified the criteria for effective performance evaluation of the Board, its Committees and Individual Directors of the Company. The performance of the Board and Committees was evaluated after seeking inputs from all the Directors on the basis of the criteria such as Board/Committee constitution, frequency of meetings, effectiveness of processes etc. The performance of individual Directors (including Independent Directors) was evaluated by the Board (excluding the Director being
evaluated) after seeking inputs from all Directors on the basis of the criteria such as thought contribution, business insights and applied knowledge. Once the evaluation process is complete, the Nomination & Remuneration Committee reviews the implementation of the manner specified by it for performance evaluation and effectiveness of the process.
Separate meeting of Independent Directors was also held on February 13, 2023, to review the performance of the Non-Independent Directors, performance of the Board as a whole and performance of the Chairperson of the Company. Review of the performance of the Chairperson was done after taking into account the views of the Executive Directors and Non-Executive Directors (excluding the Chairperson being evaluated).
MEETINGS OF BOARD OF DIRECTORS
Six (6) meetings of the Board of Directors of the Company were conducted during the financial year under review. The details of Board/Committees/Shareholder meetings are provided under the Corporate Governance Report which forms part of the Annual Report.
DETAILS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE ACT
The details of loans, guarantees and investments made by the Company during the financial year under review which are covered under Section 186 of the Companies Act, 2013 forms part of the notes to the financial statements provided in this Annual Report.
PARTICULARS OF RELATED PARTY TRANSACTIONS
All contracts/arrangements/transactions entered into by the Company during the financial year with related parties are in compliance with the applicable provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. The Board of Directors has approved the criteria pursuant to which omnibus approval can be granted for related party transactions by the Audit Committee. Requisite approvals of the Audit Committee, the Board and the shareholders, as required, were obtained by the Company for related party transactions.
There were no materially significant Related Party Transactions made by the Company with Promoters, Directors or Key Managerial Personnel, subsidiaries, joint ventures and associate Companies which may have a potential conflict with the interest of the Company. Transactions that are required to be reported in Form AOC-2, are attached as Annexure-2 and forms part of this report. The details of the transactions with Related Parties are also provided in the Company''s financial statements in accordance with Indian Accounting Standards.
The Company had obtained shareholders'' approval at the 40th Annual General Meeting (AGM) held on August 24,
2022 for certain material related party transactions between VE Commercial Vehicles Limited (VECV), Subsidiary of the Company, and Volvo Group India Private Limited (VGIPL),
a related party of VECV, for the financial year 2022-23 as per the amended provisions of SEBI (LODR) Regulations, 2015. Further, based on the recommendations of the Audit Committee and the Board, similar material related party transactions between VECV and VGIPL for the financial year 2023-24 are proposed at the ensuing 41st Annual General Meeting for the approval of the shareholders by way of Ordinary resolution. Please refer to the notice of 41st AGM for further details.
The Company has a Policy on materiality of and dealing with Related Party Transactions, as approved by the Board, which is available on its website www.eichermotors.com.
The Audit Committee of the Company is constituted pursuant to the requirements of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. At present, members of the Audit Committee are:
SI. No. |
Name of Members |
1 Mr. S. Sandilya (Chairman) |
|
2 |
Mr. Siddhartha Lal |
3 |
Ms. Manvi Sinha |
4 |
Mr. Inder Mohan Singh |
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM
The Company has formulated a Whistle Blower Policy to establish a vigil mechanism for Directors, employees, dealers and vendors of the Company to report concerns about unethical behaviour, actual or suspected fraud or violation of the Company''s Code of Conduct or Ethics Policy or to report genuine concerns or grievances including instances of leak or suspected leak of unpublished price sensitive information pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015. The Whistle Blower Policy of the Company is available at https://www.eicher.in/content/dam/eicher-motors/ Eicher-Whistle-Blower-Policy.pdf
SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES
Highlights of performance of subsidiaries, associate and joint venture Companies and their contribution to the overall performance of the Company during the year under review.
Royal Enfield North America Limited (RENA)
RENA was incorporated in March 2015 as a 100% subsidiary of Eicher Motors Limited to manage the distribution and sales of Royal Enfield products and services including, motorcycles, spares and gear in North America. It sold 13,827 motorcycles (including 925 motorcycles sold to Royal Enfield Canada Limited, 100% subsidiary of RENA) during the year 2022-23 and achieved revenue of Rs. 528.21 crores (including revenue of Rs. 33.46 crores from sales to Royal Enfield Canada
Limited). As of March 2023, RENA had contracted with 154 multi brand outlets in the USA. The company participated in 22 Dealer Demo Events and continued to support American Flat Track and Build Train Race (BTR) Programmes with participation in 31 collective events.
Royal Enfield Canada Limited (RECA)
RECA is a 100% subsidiary of RENA. RECA was incorporated in April 2016 in Canada to manage the distribution and sales of Royal Enfield products and services including, motorcycles, spares and gear in Canada. During the year 2022-23, the company sold 870 motorcycles and achieved revenue of Rs. 33.48 crores. As of March 2023, RECA had contracted with 16 multi brand outlets in Canada. The Company participated in 12 dealer demo events.
Royal Enfield Brasil Comercio De Motocicletas Ltda.
Royal Enfield started its operations in Brazil through a direct distribution company by the name of Royal Enfield Brasil Comercio de Motocicleta Ltda in 2016. During the year 2022-23, Eicher Motors Limited and RE Brazil entered into a tripartite agreement with Dafra da Amazonia Industria e Comercio de Motocicletas, a third-party CKD manufacturer, to assemble the components into motorcycles. The company sold 12,114 motorcycles in the financial year 2022-23 and achieved a revenue of Rs. 250.32 crores.
Royal Enfield (Thailand) Ltd
Royal Enfield (Thailand) Ltd. was incorporated on September 18, 2018 and commenced sales operations from September 2019. The Company''s footprints have been 12 exclusive stores, 5 studio stores and 12 authorised sales and service points.
The brand love has been demonstrated by the company''s passionate Customers & Communities from various provinces in Thailand and thereby impacting the company''s growing Mindshare & Market Share in the Kingdom of Thailand. Company is among the top #3 motorcycles in the Midsegment with a market share of 16% in FY 2022-23.
The company has commenced its manufacturing operations through CKD and started selling motorcycles assembled in Thailand in 2021-22. During the year 2022-23, the company received four awards from the coveted Grand Prix group, three awards for "Bike of the Year 2023" for Classic 350 being the "Best Modern Classic over 250 cc". Hunter 350 bagged the "Best Modern Classic Light Weight" and SCRAM 411 bagged the "Best Touring Lightweight" motorcycle award. Also the company''s newest Super Meteor 650 received "The Most Unique Bike Award" from Bangkok International Motor Show organisers 2023 as well. The company has sold 4,116 motorcycles and achieved revenue of Rs. 131.17 crores.
Royal Enfield UK Ltd
Royal Enfield UK Ltd, was incorporated in August, 2019 and commenced sales operations from June 2020. The company reflected steady growth in its footprints from 11 to 13 exclusive stores and 61 to 84 Authorised Sales & Service Points.
During the financial year 2022-23, the company sold 7,546 motorcycles against the plan of 9,000 motorcycles, reflecting
a rise in the mid-size market share in the UK from 18.6% in financial year 2021-22 to 20.4% in financial year 2022-23 and achieved a revenue of Rs. 186.71 crores in financial year 2022-23.
Eicher Polaris Private Limited (EPPL)
Eicher Polaris Private Limited, a joint venture company, was involved in manufacturing and sales of personal utility vehicles.
The Board of Directors and Shareholders of EPPL at their respective meetings held on February 18, 2020 approved voluntary liquidation (solvent liquidation) of EPPL and appointed an insolvency professional as the liquidator. The liquidation process is currently under progress.
VE Commercial Vehicles Limited and its step-down subsidiaries
Overview of performance covered separately in the Annual Report.
Report containing salient features of financial statements of subsidiaries and joint venture Companies
Pursuant to the provisions of Section 129(3) of the Act, a report containing salient features of the financial statements of the Company''s subsidiaries and joint venture Company in Form AOC-1 is attached as Annexure-3.
COMPANIES WHICH HAVE BECOME OR CEASED TO BE THE COMPANY''S SUBSIDIARIES,JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE FINANCIAL YEAR
VE Electro-Mobility Limited, incorporated on April 27, 2022, under the Companies Act, 2013, which is a 100% subsidiary of VE Commercial Vehicles Limited (Company''s material subsidiary) became the subsidiary of the Company during the financial year 2022-23.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY''S OPERATIONS IN FUTURE
There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations. However, members'' attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the financial statements.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Details of internal financial control and its adequacy are included in the Management Discussion and Analysis Report, which forms part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted a Corporate Social Responsibility (CSR) Committee and has framed a Corporate Social Responsibility Policy and identified Local Area Development, Social Mission (Responsible Travel and environmental sustainability) and road safety, as themes which will be given preference while formulating Annual Action Plans. The Company will continue to support social projects that are consistent with the Policy.
Corporate Social Responsibility Committee of the Company is constituted as follows:
1. Mr. S. Sandilya - Chairman
2. Mr. Siddhartha Lal
3. Mr. Inder Mohan Singh
4. Ms. Manvi Sinha
Annual Report on CSR activities is annexed as Annexure-4.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordance with the requirements of Indian Accounting Standard ("Ind AS")-110 "Consolidated Financial Statements" and Ind AS 28 "Investment in Associates and Joint ventures", prescribed under Section 133 of the Companies Act, 2013, read with the rules issued thereunder. The consolidated financial statements are provided in the Annual Report. A statement containing the salient features of the financial statements of each of the subsidiary and joint venture in the prescribed Form AOC-1 is attached.
Pursuant to Section 136 of the Act, the financial statements, consolidated financial statements and separate accounts of the subsidiaries are available on the website of the Company at www.eichermotors.com. These are also available for inspection by the shareholders at the Registered Office of the Company during business hours. The Company shall provide free of cost, the copies of the financial statements of the Company and its subsidiary Companies to the shareholders upon their request. The consolidated total Comprehensive income of the Company and its subsidiaries amounted to Rs. 2,922.49 crores for the financial year 2022-23 as compared to Rs. 1,657.44 crores for the previous financial year 2021-22.
(a) Statutory Auditors and their report
M/s S.R. Batliboi & Co., LLP, Chartered Accountants (Firm Registration Number: FRN 301003E/E300005) were re-appointed as Statutory Auditors in the 40th (Fortieth) Annual General Meeting (AGM) of the Company for second term of five consecutive years, from the conclusion of 40th AGM till the conclusion of 45th AGM to be held in the year 2027. The Statutory Auditors have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules made thereunder to continue to act as Statutory Auditors of the Company.
The Statutory Auditors had carried out audit of financial statements of the Company for the financial year ended March 31, 2023 pursuant to the provisions of the Act. The reports of Statutory Auditors form part of the Annual Report. The reports are self-explanatory and do not contain any qualifications, reservations or adverse remarks.
(b) Secretarial Auditors and their report
The Board of Directors has appointed M/s. AGSB & Associates, Company Secretaries, to conduct Secretarial Audit for the financial year ended March 31, 2023. As required under Section 204 of the Companies Act, 2013, the Secretarial Audit Report is annexed as Annexure-5 to this Report. The Secretarial Auditors'' Report is self-explanatory and there is no qualification or adverse remark in the report relating to the financial year 2022-23. The Secretarial Auditors provided two observations in its report as follows:
(a) The Company has filed an application with the Reserve Bank of India, Mumbai for the compounding of contravention of regulation 8(2) of erstwhile FEM (Transfer or Issue of Security by a Person Resident outside India) Regulations, 2000/FEMA 20 read with Master Circular No. 15/2015-16 dated July 01, 2015 as a result of omission to mention the name of a Non-Resident Indian/Overseas Citizen of India, in Form - ESOP filed physically on October 26, 2016 with the Reserve Bank of India, New Delhi through AD Bank, intimating grant of Employee Stock Option under the Company''s Employee Stock Option Plan, 2006;
(b) The Company has filed an appeal before the Hon''ble Securities Appellate Tribunal against the adjudicating order Ref. No. ORDER/SBM/KL/2022-2023/16885 dated June 01, 2022 passed by Securities and Exchange Board of India ("SEBI") imposing a monetary penalty of Rs. 10,00,000 (Rupees Ten Lakhs only) on the Company for violation of the provisions of clause 23 of General Norms for processing of documents under RRTI Circular no. 1 (2000-2001) dated May 09, 2001, Clause 3(e) of Listing Agreement read with Regulation 39(2) and 103(2) of the SEBI (LODR) Regulations, 2015 for
not following the due process as prescribed under the above regulations while approving requests for duplicate shares certificates in few cases during the period from 2007 to 2012. The Company has filed an appeal against the order of SEBI before the Hon''ble Securities Appellate Tribunal.
The Board of Directors took note of the above observations and the corrective action taken by the Company. The management is advised to exercise more caution to avoid any such instance in the future.
Further, pursuant to provisions of Regulation 24A of the SEBI (LODR) Regulations, 2015, VE Commercial Vehicles Limited (VECV) is a Material subsidiary of the Company in terms of Regulation 16(1)(c) of the SEBI (LODR) Regulations, 2015. The Secretarial Audit Report submitted by the Secretarial Auditors of VECV is also annexed as Annexure-6 to this Report.
(c) Cost Auditors
In terms of Section 148 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts)
Rules, 2014, it is hereby confirmed that the cost accounts and records are made and maintained by the Company as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013.
M/s. Jyothi Satish & Co, a qualified Cost Accountant Firm (Firm registration No. 101197), has been appointed as the Cost Auditors to carry out audit of the cost records of the Company for the financial year 2022-23 pursuant to the provisions of the Companies Act, 2013. The Cost auditor shall submit its report to the Board of Directors within the time prescribed under the Companies Act, 2013 and the rules made thereunder.
DETAILS IN RESPECT OF FRAUD REPORTED BY AUDITORS
Pursuant to provisions of Section 143(12) of the Companies Act, 2013, the Statutory Auditors, the Secretarial Auditors and the Cost Auditors have not reported any incident of fraud to the Audit Committee or Board during the financial year under review.
CORPORATE GOVERNANCE, MANAGEMENT DISCUSSION & ANALYSIS AND BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORTS
As per SEBI (LODR) Regulations, 2015, Corporate Governance Report together with the Auditors'' certificate regarding compliance of conditions of Corporate Governance, Management Discussion & Analysis Report and Business Responsibility & Sustainability Report form part of the Annual Report.
The Company has voluntarily prepared an Integrated Report which will help stakeholders to understand the Company''s economic, environmental, social and governance performance more effectively and analysing the financial and non-financial performance of the Company. With this, stakeholders shall also have a better understanding of the Company''s long-term perspective. The report is also available on the website of the Company at www.eichermotors.com.
The Annual Return as required under Section 92 (3) read with Section 134(3)(a) of the Companies Act, 2013 is available on the website of the Company and the web link for the same is https://www.eicher.in/content/dam/eicher-motors/ Annual-Report-(Form-MGT-7)-2022-23.pdf.
DIRECTORS'' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:
a) that in the preparation of the Annual Financial Statements for the year ended March 31, 2023, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
b) that such accounting policies as mentioned in Note no. 3 of the Notes to the Financial Statements have been selected and applied consistently and judgement and
estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2023 and of the profits of the Company for the year ended on that date;
c) that proper and sufficient care has been taken 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) that the Annual Financial Statements have been prepared on a going concern basis;
e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively; and
f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
PARTICULARS OF DIRECTORS & EMPLOYEES
Disclosures 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:
1) Ratio of the remuneration of each director to the median remuneration of the employees of the Company and the percentage increase in remuneration of Directors & KMPs in the financial year:
Sl. No. |
Name of the Director/ KMP |
Designation |
Ratio of Remuneration of Directors to Median Remuneration of Employees** |
Percentage Increase in Remuneration for FY 2022-23 over FY 2021-22 |
1. |
Mr. S Sandilya |
Chairman & Non-Executive Independent Director |
6.7 |
14.1 |
2. |
Mr. Siddhartha Lal |
Managing Director |
355.4 |
14.6 |
3. |
Mr. Govindarajan Balakrishnan |
Whole-time Director and CEO-Royal Enfield |
70.5 |
N.A.* |
4. |
Mr. Inder Mohan Singh |
Non-Executive Independent Director |
4.0 |
20.9 |
5. |
Ms. Manvi Sinha |
Non-Executive Independent Director |
4.0 |
20.9 |
6. |
Mr. Kaleeswaran Arunachalam |
Chief Financial Officer (till September 2, 2022) |
19.2 |
N.A.* |
7. |
Mr. Atul Sharma |
Company Secretary (w.e.f. August 10, 2022) |
- |
N.A.* |
8. |
Ms. Vidhya Srinivasan |
Chief Financial Officer (w.e.f. November 18, 2022) |
- |
N.A.* |
*The % change in remuneration is not comparable as the said Directors/Key Managerial Personnel held their respective positions for a part of the year in either FY 2021-22 or in FY 2022-23
âRemuneration of Directors/Key Managerial Personnel who held their respective positions for a part of the year in either FY 2021-22 or in FY 2022-23 has not been annualised
Note:
1) Mr. Vinod Kumar Aggarwal, Non-Executive Director Non-Independent, is not drawing any remuneration by way of sitting fees or commission or otherwise, from the Company.
2) Percentage increase in the median remuneration of the employees in the financial year: 15%
3) Number of permanent employees on the rolls of Company as at March 31, 2023: 5,002 employees.
4) The average increase in median remuneration of the employees (other than managerial personnel) was 15% and the increase in the managerial remuneration was also 15%.
5) It is hereby affirmed that the remuneration is paid as per the Remuneration Policy of the Company.
Further, a statement containing particulars of top ten employees in terms of the remuneration drawn and employees drawing remuneration in excess of the limits set out in Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are provided as part of the Directors'' Report. However, in terms of provisions of Section 136 of the said Act, the Annual Report is being sent to all the members of the Company and others entitled thereto, excluding the said statement. Any member interested in obtaining such particulars may write at [email protected]. The said information is also available for inspection at the Registered Office of the Company during working hours till the date of Annual General Meeting.
Requisite information is provided under Management Discussion and Analysis Report which forms part of the Annual Report.
COMPLIANCE OF SECRETARIAL STANDARDS
During the financial year under review, the Company has complied with applicable Secretarial Standards specified by the Institute of Company Secretaries of India pursuant to Section 118 of the Companies Act, 2013.
SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Requisite information is provided under the Corporate Governance Report which forms part of the Annual Report.
PROCEEDINGS UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016
No Corporate Insolvency Resolution Process has commenced against the Company during the financial years under the Insolvency and Bankruptcy Code, 2016.
ONE-TIME SETTLEMENT AND VALUATION DONE WHILE TAKING LOAN FROM BANKS AND FINANCIAL INSTITUTIONS
During the year under review, there was no one-time settlement with any Bank or Financial Institution. Hence, no valuation was required to be undertaken.
We thank our customers, business associates and bankers for their continued support during the financial year.
We wish to convey our deep appreciation to the dealers of the Company for their achievements in the area of sales and service, and to suppliers/vendors for their valuable support.
We also place on record our sincere appreciation for the enthusiasm and commitment of the Company''s employees for the growth of the Company and look forward to their continued involvement and support.
For and on behalf of the Board of Directors
Siddhartha Lal S. Sandilya
Managing Director Chairman
DIN: 00037645 DIN:00037542
Place : London, UK Place: Chennai, Tamil Nadu
Date: May 11, 2023
Mar 31, 2022
The Directors have pleasure in presenting the 40th Annual Report along with the Audited Financial Statements of your Company for the financial year ended March 31, 2022.
Your Company has earned a total revenue of Rs. 10,122.86 crores during the financial year 2021-22. The profit before depreciation and interest amounted to Rs. 2,113.56 crores, which is 20.9% of the total revenue. After accounting for other income of Rs. 454.28 crores, interest expense of Rs. 10.25 crores and depreciation of Rs. 445.52 crores, profit before tax amounted to Rs. 2,112.07 crores.
Profit after tax amounted to Rs. 1,586.22 crores after an income tax provision of Rs. 525.85 crores. Total Comprehensive income for the year, net of tax amounted to Rs. 1,57709 crores.
The financial results are summarized below:
Rs. in Crores |
||
Particulars |
For the financial year ended March 31, 2022 |
For the financial year ended March 31, 2021 |
Net Revenue from operations |
10,122.86 |
8,619.04 |
Profit before depreciation and interest |
2,113.56 |
1,786.51 |
Interest |
10.25 |
9.20 |
Depreciation |
445.52 |
446.03 |
Profit before other income and tax |
1,657.79 |
1,331.28 |
Other income |
454.28 |
452.03 |
Profit before tax |
2,112.07 |
1,783.31 |
Provision for tax (including Deferred tax) |
525.85 |
453.61 |
Net profit after tax |
1,586.22 |
1,329.70 |
Other comprehensive income |
(9.13) |
24.05 |
Other comprehensive income, net of tax |
1,577.09 |
1,353.75 |
Balance in statement of profit and loss brought forward from previous year |
8,993.44 |
7,663.16 |
Amount available for appropriation: (Excluding exchange difference in translation of foreign operations) |
10,577.28 |
8,993.44 |
Dividend for FY 2020-21, paid in FY 2021-22 |
464.67 |
|
Dividend proposed for FY 2021-22, to be paid in FY 2022-23 |
574.19 |
|
Earnings per share |
||
- Basic (Rs.) |
58.02 |
48.68 |
- Diluted (Rs.) |
57.96 |
48.61 |
There is no change in the nature of business of the Company during the financial year under review.
There have been no material changes or commitments affecting the financial position of the Company which have occurred after March 31, 2022 till the date of this report.
DIVIDEND
The Board of Directors at its meeting held on May 13, 2022, has recommended for approval of the shareholders, payment of dividend of Rs. 21/- per equity share of face value of Re.
1/- each (@2100%) out of the profits for the financial year 2021-22 in accordance with the Dividend Distribution Policy of the Company.
The dividend, if approved by the shareholders in the ensuing Annual General Meeting, shall be paid in the following manner:
a) To all Beneficial Owners in respect of shares held in dematerialized form as per the data made available by the National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL) as of the close of business hours on August 17, 2022 (record date);
b) To all Members in respect of shares held in physical form after giving effect to valid transfer/transmission in respect of transfer/transmission requests properly lodged with the Company on or before the close of business hours on August 17, 2022 (record date).
AMOUNTS TRANSFERRED TO RESERVES
During the financial year 2021-22, no amount was transferred to the General Reserve of the Company.
BRIEF DESCRIPTION OF THE STATE OF COMPANY''S AFFAIRS/BUSINESS PERFORMANCE
Your Company has sold 6,02,268 motorcycles in the financial year 2021-22, 1.6% lower when compared to 2020-21 sales of 6,12,350 motorcycles. Out of 6,02,268 motorcycles sold in 2021-22, 81,032 motorcycles were exported, an increase of 109.8% over previous year export volume of 38,622 motorcycles in 2020-21.
Net Revenue from operations for 2021-22 year was Rs. 10,122.86 crores, 174% higher when compared with previous year Rs. 8,619.04 crores. Net Sales of spare parts, gears and services increased to Rs. 1,395.07 crores in 2021-22 from Rs. 991.44 crores in the previous year, with a growth of 40.7%.
Your Company''s profit before depreciation, interest, exceptional item and tax was Rs. 2,113.56 crores in 2021-22, higher by 18.3% over Rs. 1,786.51 crores recorded in 2020-21.
MARKET AND FUTURE PROSPECTS
Please refer to Management Discussion & Analysis Report which forms part of the Annual Report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be given pursuant to the provisions of Section 134 of the Companies Act, 2013 ("the Act"), read with the Companies (Accounts) Rules, 2014 is provided under Annexure-1.
DISCLOSURE REGARDING ISSUE OF SWEAT EQUITY SHARES AND EQUITY SHARES WITH DIFFERENTIAL RIGHTS
The Company has not issued any sweat equity shares or equity shares with differential rights during the financial year 2021-22.
CHANGES IN SHARE CAPITAL & THE COMPANY''S EMPLOYEE STOCK OPTION PLAN, 2006AND RESTRICTED STOCK UNITS PLAN, 2019
The paid up Equity Share Capital of the Company as on March 31, 2022, was Rs. 27,34,23,102/-. During the year under review, the Company has issued 37,180 Equity Shares (Face value Re.
1/- each) pursuant to its Employees Stock Option Plan, 2006 ("ESOP, 2006") and 50,000 Equity Shares (Face value Re. 1/-each) pursuant to its Restricted Stock Units Plan, 2019 ("RSU Plan, 2019").
A Statement giving complete details as at March 31, 2022, pursuant to Regulation 14 of the SEBI (Share Based Employee Benefits and Sweat Equity) Regulations 2021 is available on the website of the Company and the weblink for the same is https:// www.eicher.in/uploads/1658479599_eicher-motors-esop-statement-2021-22_final.pdf.
ESOP, 2006 and RSU Plan, 2019, for grant of stock options have been implemented in accordance with the aforesaid SEBI Regulations. A certificate from M/s. AGSB & Associates (Formerly M/s. Shweta Banerjee & Associates), Secretarial Auditors, in this regard will be available for inspection on the website of the Company under "Investors" Section on the date of Annual General Meeting. The Company has not changed its ESOP, 2006 and RSU Plan, 2019 during the year under review.
Further, details of options granted and exercised are included in Note no. 49 in the notes to accounts forming part of standalone financial statements.
DEPOSITS
The Company has not accepted any deposits from the public/
members under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 during the financial year under review. The Company has not renewed/accepted fixed deposits after May 29, 2009. There are no deposits that remain unclaimed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with Section 149(7) of the Act and Regulation 25(8) of SEBI (LODR) Regulations, 2015 Independent Directors of the Company have given written declarations to the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16 of SEBI (LODR) Regulations, 2015. As on March 31, 2022, all Independent Directors of the Company have valid registrations with the Independent Directors'' databank maintained by Indian Institute of Corporate Affairs in terms of Section 150 of the Companies Act, 2013 read with Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014.
Director liable to retire by rotation
In accordance with the provisions of Section 152 and other applicable provisions of the Act, Mr. Vinod K. Aggarwal, NonExecutive Director, retires by rotation at the ensuing 40th Annual General Meeting and being eligible offers himself for re-appointment. The Board of Directors recommends his reappointment.
Change in the Board and Key Managerial Personnel
The Board of Directors of the Company at its meeting held on August 12, 2021 appointed Mr. Govindarajan Balakrishnan, as Additional Director (Whole-time) of the Company, liable to retire by rotation, for a period of 5 (five) years with effect from August 18, 2021, after taking into consideration recommendations of the Nomination & Remuneration Committee of the Company and subject to requisite approval of the shareholders at the ensuing 40th Annual General Meeting. In the opinion of the Board,
Mr. Govindarajan Balakrishnan possesses requisite skills & expertise in the context of business of the Company. For details of skills/expertise/competencies of Mr. Govindarajan Balakrishnan, please refer Corporate Governance Report forming part of this Annual Report. Further, the Board of Directors on the recommendation of Nomination and Remuneration Committee at its meeting held on May 13, 2022 appointed Mr. Govindarajan Balakrishnan as Chief Executive Officer of Royal Enfield. With said appointment, Mr. Govindarajan Balakrishnan becomes the CEO - Royal Enfield, and Whole-time Director on the Board of Eicher Motors Limited.
During the year under review, the shareholders of the Company
through Postal Ballot concluded on October 24, 2021 had approved the re-appointment of Mr. Siddhartha Lal as Managing Director of the Company for a term of 5 (five) years with effect from May 1, 2021. Mr. Siddhartha Lal, being a non-resident Indian, his reappointment required approval of Central Government and the same was obtained vide Central Government approval letter dated December 31, 2021.
Mr. Vinod K. Dasari, Whole-time Director and CEO-Royal Enfield, resigned w.e.f. August 13, 2021 and Mr. Manhar Kapoor, Chief Legal Counsel & Company Secretary, resigned w.e.f. March 11, 2022.
There has been no other change in the Directors and Key Managerial Personnel of the Company during the financial year under review.
A number of factors are considered towards selecting candidates at the Board level which include:
⢠Ability to contribute to strategic thinking
⢠Proficiency in Governance norms, policies and mechanisms at the Board level
⢠Relevant cross industry/functional experience, educational background, skills and experience
⢠Wherever relevant, independence of Directors in terms of applicable regulations
With respect to core competencies and personal reputation, our practices ensure through the selection process that all Directors:
⢠Exhibit integrity and accountability
⢠Exercise informed judgment
⢠Are financially literate
⢠Are mature and confident individuals
⢠Operate with high performance standards Removal of Directors:
Under extreme circumstances and in highly unusual situations it may become necessary to remove a member from the Board of Directors. Reasons for doing so, may relate to any of the following (indicative; other than as provided under the Companies Act, 2013):
i. Breach of confidentiality in anyway
ii. Failure to meet obligatory procedures in the disclosure of conflict of interest
iii. Failure to fulfill the fiduciary duties of a Director for the Company
iv. Acting in any other manner which is against the interests of the Company
The Company''s Compensation Strategy defines the principles underlying compensation philosophy for its employees. Compensation is a critical piece of overall human-resources strategy and broadly refers to all forms of financial returns and tangible benefits that employees receive as a part of their employment relationship.
The Remuneration/Compensation Policy of the Company is designed to attract, motivate and retain manpower. This Policy applies to Directors and Senior Management including Key Managerial Personnel (KMP) and other employees of the Company.
The remuneration of the Managing Director, Executive Director, Key Managerial Personnel (KMPs) and CXOs of the Company is recommended by the Nomination and Remuneration Committee based on criteria such as industry benchmarks, the Company''s performance vis-a-vis the industry, responsibilities and performance assessment. The Company pays remuneration by way of salary, perquisites and allowances (fixed component), incentive remuneration and/or commission (variable components).
Loans/advances may be extended to employees for various personal purposes or to aid business functions, from time to time, on a case to case basis, in accordance with the relevant Human Resource guidelines/policies in force or as may be approved by the Chief Financial Officer, the Chief Human Resource Officer of the Company, or any person authorized by them, including for relocation viz. school deposits/expenses, travel/logistics expenses, housing advance, housing deposits/ brokerage, any other expenses towards relocation; advance submission of tax deducted at source by the Company on behalf of employee; advance towards medical insurance premiums; loans granted to enable grantees exercise ESOPs and towards deposit of perquisite tax thereon; loans/advances covered under Employees Union recognized by the Company as per Union Agreement; medical emergency advances etc.
Additionally, in the event of exigencies arising due to calamities, the Company may provide financial assistance to any affected employee by way of extending interest free loan in an amount not exceeding his/her two months'' gross salary.
Remuneration by way of commission to the Non-Executive Directors shall be decided by the Board of Directors within the ceiling of a sum, not exceeding 1% of the annual net profits of the Company in each of the financial year, calculated in accordance with the provisions of the Act.
Remuneration of KMPs and employees largely consists of basic remuneration, perquisites, allowances, performance incentives and employee stock options granted pursuant to the Employees
Stock Option Plan, 2006 and Restricted Stock Units Plan,
2019 of the Company. The components of remuneration vary for different employee levels and are governed by industry patterns, qualifications and experience of the employee and his/ her responsibility areas, employee performance assessment etc.
The said Policy is also available on the website of the Company at https://www.eicher.in/uploads/1S61782697 remuneration-policy.pdf
ANNUAL EVALUATION OF BOARD, COMMITTEES AND INDIVIDUAL DIRECTORS
During the financial year under review, formal annual evaluation of the Board, its Committees and Individual Directors was carried out pursuant to the Board Performance Evaluation Policy of the Company and provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015 by the Board at its meeting held on March 30, 2022.
The Nomination and Remuneration Committee specified the criteria for effective performance evaluation of the Board, its Committees and Individual Directors of the Company. The performance of the Board and Committees was evaluated after seeking inputs from all the Directors on the basis of the criteria such as Board/ Committee constitution, frequency of meetings, effectiveness of processes etc. The performance of individual Directors (including Independent Directors) was evaluated by the Board (excluding the Director being evaluated) after seeking inputs from all Directors on the basis of the criteria such as thought contribution, business insights and applied knowledge. Once the evaluation process is complete, the Nomination & Remuneration Committee reviews the implementation of the manner specified by it for performance evaluation & effectiveness of the process.
Separate meetings of Independent Directors were also held on February 14, 2022 and March 30, 2022, to review the performance of the Non-Independent Directors, performance of the Board as a whole and performance of the Chairperson of the Company. Review of the performance of the Chairperson was done after taking into account the views of the Executive Directors and Non-Executive Directors (excluding the Chairperson being evaluated).
MEETINGS OF BOARD OF DIRECTORS
Six (6) meetings of the Board of Directors of the Company were conducted during the financial year under review. The details of Board/Committees/Shareholder meetings are provided under the Corporate Governance Report which forms part of the Annual Report.
The details of loans, guarantees and investments made by the Company during the financial year under review which are covered under Section 186 of the Companies Act, 2013 forms part of the notes to the financial statements provided in this Annual Report.
All contracts/ arrangements/ transactions entered into by the Company during the financial year with related parties are in compliance with the applicable provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. Requisite approval of the Audit Committee and the Board (wherever required) was obtained by the Company for all Related Party Transactions.
There were no materially significant Related Party Transactions made by the Company with Promoters, Directors or Key Managerial Personnel, subsidiaries, joint ventures and associate Companies which may have a potential conflict with the interest of the Company. There are no transactions that are required to be reported in Form AOC-2, hence the said form does not form part of this report. However, the details of the transactions with Related Parties are provided in the Company''s financial statements in accordance with Indian Accounting Standards.
The Company has a Policy on materiality of and dealing with Related Party Transactions, as approved by the Board, which is available on its website www.eichermotors.com.
The Audit Committee of the Company is constituted pursuant to the requirements of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. At present, members of the Audit Committee are:
Sl. No. |
Name of Members |
1 |
Mr. S. Sandilya (Chairman) |
2 |
Mr. Siddhartha Lal |
3 |
Ms. Manvi Sinha |
4 |
Mr. Inder Mohan Singh |
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM
The Company has formulated a Whistle Blower Policy to establish a vigil mechanism for Directors, employees, dealers and vendors of the Company to report concerns about unethical
behavior, actual or suspected fraud or violation of the Company''s Code of Conduct or Ethics Policy or to report genuine concerns or grievances including instances of leak or suspected leak of unpublished price sensitive information pursuant to SEBI
(Prohibition of Insider Trading) Regulations, 2015. The Whistle Blower Policy of the Company is available at https://www.eicher. in/uploads/1652950270_eicher-whistle-blower-policy.pdf
SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES
RENA was incorporated in March 2015 as a 100% subsidiary of Eicher Motors Limited to manage the distribution and sales of Royal Enfield products and services including, motorcycles, spares and gear in North America. It sold 7,305 motorcycles (including 576 motorcycles sold to Royal Enfield Canada Limited, 100% subsidiary of RENA) during the year 2021-22 and achieved revenue of Rs. 25748 crores (including revenue of Rs. 20.22 crores from sales to Royal Enfield Canada Limited). As of March 2022, RENA had contracted with 125 multi brand outlets in USA. The company participated in multiple race events and won the American Flat Track (AFT) Lima Half Mile for the first time in June 2021 along with six top 5 finishes in other AFT events with custom Twin FT.
RECA is a 100% subsidiary of RENA. RECA was incorporated in April 2016 in Canada to manage the distribution and sales of Royal Enfield products and services including, motorcycles, spares and gear in Canada. During the year 2021-22, the company sold 576 motorcycles and achieved revenue of Rs. 21.57 crores. As of March 2022, RECA had contracted with 13 multi brand outlets in Canada.
Royal Enfield started its operations in Brazil through a direct distribution company by the name of Royal Enfield Brasil Comercio de Motocicleta Ltda in 2016. During the year 2021-22, there was a capital infusion of Rs. 111.19 crores in Royal Enfield Brasil Comercio De Motocicletas Ltda and the company sold 7,874 motorcycles and achieved a revenue of Rs. 132.24 crores.
Royal Enfield (Thailand) Ltd. was incorporated on September 18, 2018 and commenced sales operations from September 2019. The Company''s footprints have been 12 exclusive stores, 3 studio
stores and 14 authorized sales and service points. The company has commenced its manufacturing operations through CKD and started selling motorcycles assembled in Thailand in 2021-22. During the year 2021-22, the company received three awards from the coveted Grand Prix group for Classic 350 being the "Best Modern Classic Light weight", Meteor being the "Best Modern Classic over 250cc" and Himalayan being "Best Lightweight Tourer" motorcycle. The company has sold 2,021 motorcycles and achieved revenue of Rs. 75.04 crores and there was a capital infusion of Rs. 726 crores.
Royal Enfield UK Ltd, was incorporated in August, 2019 and commenced sales operations from June 2020. The company reflected steady growth in its footprints from 8 to 11 exclusive stores and 52 to 61 Authorized Sales & Service Points. During the year 2021-22, the company sold 7,083 motorcycles against the plan of 5,760 motorcycles, reflecting a rise in the mid-size market share in the UK from 14.3% in 2020-21 to 18.6% in 2021-22, and achieved a revenue of Rs. 182.63 crores.
Eicher Polaris Private Limited, a joint venture company, was involved in manufacturing and sales of personal utility vehicles.
The Board of Directors and Shareholders of EPPL at their respective meetings held on February 18, 2020 approved voluntary liquidation (solvent liquidation) of EPPL and appointed an insolvency professional as the liquidator. The liquidation process is currently under progress.
Overview of performance covered separately in the Annual Report.
Pursuant to the provisions of Section 129(3) of the Act, a report containing salient features of the financial statements of the Company''s subsidiaries and joint venture Company in Form AOC-1 is attached as Annexure-2.
COMPANIES WHICH HAVE BECOME OR CEASED TO BE THE COMPANYâS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE FINANCIAL YEAR
No Company has become or ceased to be the Company''s subsidiary, joint venture or associate company during the financial year 2021-22.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANYâS OPERATIONS IN FUTURE
There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations. However, members'' attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the financial statements.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Details of internal financial control and its adequacy are included in the Management Discussion and Analysis Report, which forms part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted a Corporate Social Responsibility (CSR) Committee and has framed a Corporate Social Responsibility Policy and identified Local Area Development,
Social Mission (Responsible Travel) and Road safety, as themes which will be given preference while formulating Annual Actions Plans. The Company will continue to support social projects that are consistent with the Policy.
Corporate Social Responsibility Committee of the Company is constituted as follows:
1. Mr. S. Sandilya - Chairman
2. Mr. Siddhartha Lal
3. Mr. Inder Mohan Singh
4. Ms. Manvi Sinha
Annual Report on CSR activities is annexed as Annexure-3.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordance with the requirements of Indian Accounting Standard ("Ind AS")-110 "Consolidated Financial Statements" and Ind AS 28 "Investment in Associates and Joint ventures", prescribed under Section 133 of the Companies Act, 2013, read with the rules issued thereunder. The consolidated financial statements are provided in the Annual Report. A
Company Secretaries, to conduct Secretarial Audit for the financial year ended March 31, 2022. As required under Section 204 of the Companies Act, 2013, the Secretarial Audit Report is annexed as Annexure-4 to this Report. The Secretarial Auditors'' Report is self-explanatory and does not contain any qualifications or adverse remarks which require any clarification or explanation.
Further, pursuant to provisions of Regulation 24A of the SEBI (LODR) Regulations, 2015, VE Commercial Vehicles Limited (VECV) is a Material subsidiary of the Company in terms of Regulation 16(1)(c) of the SEBI (LODR) Regulations, 2015.
The Secretarial Audit Report submitted by the Secretarial Auditors of VECV is also annexed as Annexure-5 to this Report.
(c) Cost Auditors
In terms of Section 148 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, it is hereby confirmed that the cost accounts and records are made and maintained by the Company as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013.
M/s. Jyothi Satish & Co, a qualified Cost Accountant Firm (Firm registration No. 101197), has been appointed as the Cost Auditors to carry out audit of the cost records of the Company for the financial year 2021-22 pursuant to the provisions of the Companies Act, 2013. The Cost Auditor shall submit its report to the Board of Directors within the time prescribed under the Companies Act, 2013 and the rules made thereunder.
DETAILS IN RESPECT OF FRAUD REPORTED BY AUDITORS
Pursuant to provisions of Section 143(12) of the Companies Act, 2013, the Statutory Auditors, the Secretarial Auditors and the Cost Auditors have not reported any incident of fraud to the Audit Committee or Board during the financial year under review.
CORPORATE GOVERNANCE, MANAGEMENT DISCUSSION & ANALYSIS AND BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORTS
As per SEBI (LODR) Regulations, 2015, Corporate Governance Report together with the Auditors'' certificate regarding compliance of conditions of Corporate Governance, Management Discussion & Analysis Report and Business Responsibility & Sustainability Report form part of the Annual Report.
statement containing the salient features of the financial statements of each of the subsidiary and joint venture in the prescribed Form AOC-1 is attached.
Pursuant to Section 136 of the Act, the financial statements, consolidated financial statements and separate accounts of the subsidiaries are available on the website of the Company at www.eicher.in. These are also available for inspection by the shareholders at the Registered Office of the Company during business hours. The Company shall provide free of cost, the copies of the financial statements of the Company and its subsidiary Companies to the shareholders upon their request. The consolidated total Comprehensive income of the Company and its subsidiaries amounted to Rs. 1,657.44 crores for the financial year 2021-22 as compared to Rs. 1,381.24 crores for the previous year 2020-21.
M/s S.R. Batliboi & Co., LLP, Chartered Accountants (Firm Registration Number: FRN 301003E/E300005) were appointed as Statutory Auditors in the 35th (Thirty Fifth) Annual General Meeting (AGM) of the Company for a period of five years, from the conclusion of 35th AGM till the conclusion of the ensuing 40th AGM and are eligible for reappointment.
The Statutory Auditors had carried out audit of financial statements of the Company for the financial year ended March 31, 2022 pursuant to the provisions of the Act. The reports of Statutory Auditors form part of the Annual Report. The reports are self-explanatory and do not contain any qualifications, reservations or adverse remarks.
The Company has received a confirmation from the Auditors to the effect that if they are reappointed, it will be in accordance with the limits specified under the Companies Act, 2013 and that they satisfies the criteria specified in Section 141 of the Companies Act, 2013 read with Rule 4 of Companies (Audit & Auditors) Rules 2014.
The Board is of the opinion that continuation of M/s S.R. Batliboi & Co., LLP, as Statutory Auditors will be in the best interests of the Company and therefore, the members are requested to consider their re-appointment as Statutory Auditors of the Company, for a term of five years, from the conclusion of the ensuing 40th Annual General Meeting, till the conclusion of 45th Annual General Meeting to be held in the year 2027
The Board of Directors has appointed M/s. AGSB &
Associates (Formerly M/s. Shweta Banerjee & Associates),
INTEGRATED REPORT
The Company has voluntarily prepared an Integrated Report which will help stakeholders to understand the Company''s economic, environmental, social and governance performance more effectively and analyzing the financial and non-financial performance of the Company. With this, stakeholders shall also have a better understanding of the Company''s long term perspective. The report is available on the website of the Company at www.eichermotors.com.
ANNUAL RETURN
The Annual Return as required under Section 92 (3) and Section 134 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is available on the website of the Company and the weblink for the same is https://www.eicher.in/uploads/1658479740_ annual-return-mgt-7-fy-2021-22.pdf.
DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:
(a) that in the preparation of the Annual Financial Statements for the year ended March 31, 2022, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
(b) that such accounting policies as mentioned in Note no. 3 of the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2022 and of the profits of the Company for the year ended on that date;
(c) that proper and sufficient care has been taken 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) that the Annual Financial Statements have been prepared on a going concern basis;
(e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively; and
(f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Disclosures 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:
1) Ratio of the remuneration of each director to the median remuneration of the employees of the Company and the percentage increase in remuneration of Directors & KMPs in the financial year:
Sl. No. |
Name of the Director/KMP |
Designation |
Ratio of Remuneration of Directors to Median Remuneration of Employees |
Percentage Increase in Remuneration for FY 202122 over FY 2020-21 |
1 |
Mr. S Sandilya |
Chairman & Non-Executive Independent Director |
6.8 |
(33.9)# |
2 |
Mr. Siddhartha Lal |
Managing Director |
357.7 |
8.9 |
3 |
Mr. Govindarajan Balakrishnan |
Additional Director (Whole-time) (w.e.f August 18, 2021) |
49.8 |
N.A.1 |
4 |
Mr. Vinod K Dasari |
Whole-time Director (till August 13, 2021) |
366.4 |
N.A.1 |
5 |
Mr. Inder Mohan Singh |
Non-Executive Independent Director |
3.8 |
43.1 |
6 |
Ms. Manvi Sinha |
Non-Executive Independent Director |
3.8 |
45.6 |
7 |
Mr. Kaleeswaran Arunachalam |
Chief Financial Officer (w.e.f. May 6, 2020) |
N.A.1 |
|
8 |
Mr. Manhar Kapoor |
Chief Legal Counsel & Company Secretary (till March 11, 2022) |
N.A.1 |
Note: 1) Mr. Vinod K. Aggarwal, Non-Executive Director, is not drawing any remuneration by way of sitting fees or commission or otherwise, from the Company.
2) Percentage increase in the median remuneration of the employees in the financial year: 8%
3) Number of permanent employees on the rolls of Company as at March 31, 2022: 4,739 employees.
4) The average increase in median remuneration of the employees (other than managerial personnel) was 8% as compared to the increase in the managerial remuneration by 8%.
5) It is hereby affirmed that the remuneration is paid as per the Remuneration Policy of the Company.
Further, a statement containing particulars of top ten employees in terms of the remuneration drawn and employees drawing remuneration in excess of the limits set out in Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are provided as part of the Directors'' Report. However, in terms of provisions of Section 136 of the said Act, the Annual Report is being sent to all the members of the Company and others entitled thereto, excluding the said statement. Any member interested in obtaining such particulars may write at [email protected]. The said information is also available for inspection at the Registered Office of the Company during working hours till the date of Annual General Meeting.
RISK MANAGEMENT
Requisite information is provided under Management Discussion and Analysis Report which forms part of the Annual Report.
COMPLIANCE OF SECRETARIAL STANDARDS
During the financial year under review, the Company has complied with applicable Secretarial Standards specified by the Institute of Company Secretaries of India pursuant to Section 118 of the Companies Act, 2013.
SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT,
2013
Requisite information is provided under the Corporate Governance Report which forms part of the Annual Report.
PROCEEDINGS UNDER THE INSOLVENCY AND BANKRUPTCY CODE, 2016
There are no proceedings initiated/ pending against your Company under the Insolvency and Bankruptcy Code, 2016.
ONE-TIME SETTLEMENT AND VALUATION DONE WHILE TAKING LOAN FROM BANKS AND FINANCIAL INSTITUTIONS
During the year under review, there was no one-time settlement with any Bank or Financial Institution. Hence, no valuation was required to be undertaken.
ACKNOWLEDGEMENT
We thank our customers, business associates and bankers for their continued support during the financial year.
We wish to convey our deep appreciation to the dealers of the Company for their achievements in the area of sales and service, and to suppliers/ vendors for their valuable support.
We also place on record our sincere appreciation for the enthusiasm and commitment of the Company''s employees for the growth of the Company and look forward to their continued involvement and support.
Managing Director Chairman
DIN: 00037645 DIN: 00037542
Place: London, UK Place: Chennai, Tamil Nadu
Date: May 13, 2022
The % change in remuneration is not comparable as the said Directors/Key Managerial Personnel held their respective positions for a part of the year in either FY 2020-21 or in FY 2021-2
# Figures in bracket represent percentage decrease in remuneration
Mar 31, 2021
To the Members of Eicher Motors Limited
The Directors have pleasure in presenting the Thirty Ninth Annual Report along with the Audited Financial Statements of your Company for the financial year ended March 31, 2021.
Your Company has earned a net revenue from operations of Rs. 8,619.04 crores during the financial year 2020-21. The profit before depreciation and interest expense amounted to Rs. 1,786.51 crores, which is 20.7% of the total revenue. After accounting for other income of Rs. 452.03 crores, interest expense of Rs. 9.20 crores and depreciation of Rs. 446.03 crores, profit before tax amounted to Rs. 1,783.31 crores.
Profit after tax amounted to Rs. 1,329.70 crores after an income tax provision of Rs. 453.61 crores. Total Comprehensive Income for the year, net of tax amounted to Rs. 1,353.75 crores.
The financial results are summarized below:
Rs. in Crores |
||
Particulars |
For the financial year ended March 31, 2021 |
For the financial year ended March 31, 2020 |
Net Revenue from operations |
8,619.04 |
9,077.47 |
Profit before depreciation and interest |
1,786.51 |
2,203.78 |
Interest |
9.20 |
10.86 |
Depreciation |
446.03 |
377.92 |
Profit before other income and tax |
1,331.28 |
1,815.00 |
Other income |
452.03 |
615.34 |
Profit before tax |
1,783.31 |
2,430.34 |
Provision for tax (including Deferred tax) |
453.61 |
526.52 |
Net profit after tax |
1,329.70 |
1,903.82 |
Other comprehensive income |
24.05 |
7.02 |
Total Comprehensive income for the year net of tax |
1,353.75 |
1,910.84 |
Balance in statement of profit and loss brought forward from previous year |
7,663.16 |
6,576.63 |
Amount available for appropriation (Excluding exchange difference in translation of foreign operations) |
8,993.44 |
8,471.89 |
Dividend for FY 2018-19, paid in FY 2019-20 |
- |
341.11 |
Interim dividend proposed and paid in FY 2019-20 |
- |
341.32 |
Dividend proposed for FY 2020-21, to bp paid in FY 2021-22 |
464.67 |
- |
Tax on dividend |
- |
126.30 |
Earnings per share |
||
- Basic (Rs.)# |
48.68 |
69.75 |
- Diluted (Rs.)# |
48.61 |
69.72 |
# Previous year earning per share are adjusted due to sub division of each equity share of face value of Rs.10/- each into 10 equity shares of face value of Re. 1/- each, pursuant to thp approval of thp shareholders at thp Annual Gpnpral Mppting of thp Company held on August 10 2020
CHANGE IN THE NATURE OF BUSINESS, IF ANY
There is no change in the nature of business of the Company during the financial year under review.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY THAT HAVE OCCURRED AFTER MARCH 31, 2021 TILL THE DATE OF THIS REpORT
The second wave of the global health pandemic COVID-19 in the month of April and May 2021 in India and the lockdown
imposed by the State Governments resulted into closure of most of the retail outlets of dealers. Company''s manufacturing facilities although continue to operate as per the business requirements and in compliance with the instructions and guidelines issued by the Government and local bodies.
The Company has considered the possible effects that may result from the COVID-19 on its operations. Management believes that it has taken into account external and internal information for assessing the possible impact of COVID-19
on various elements of its financial statement, including its liquidity position and the recoverability of assets. However, the impact assessment of COVID-19 is a continuing process, given the uncertainties associated with its nature and duration. The Company will continue to monitor any material changes to future economic conditions and the consequent impact on its business, if any.
The Board of Directors at its meeting held on May 27, 2021, has recommended for approval of the shareholders, payment of dividend of Rs. 17/- per equity share (@1700%) of face value of Re. 1/- each out of the profits for the financial year 2020-21 in accordance with the Dividend Distribution Policy of the Company.
The dividend, if approved by the shareholders in the ensuing Annual General Meeting, shall be paid in the following manner:
a) To all Beneficial Owners in respect of shares held in dematerialized form as per the data made available by the National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL) as of the close of business hours on August 10, 2021 (record date);
b) To all Members in respect of shares held in physical form after giving effect to valid transfer/transmission in respect of transfer/transmission requests properly lodged with the Company on or before the close of business hours on August 10, 2021 (record date).
AMOUNTS TRANSFERRED TO RESERVES
During the financial year 2020-21, no amount was transferred to General Reserve of the Company.
BRIEF DESCRIPTION OF THE STATE OF COMPANY''S AFFAIRS/ BUSINESS pERFORMANCE
Your Company has sold 6,12,350 motorcycles in the financial year 2020-21, 12.3% lower when compared to financial year 2019-20 sales of 6,98,216 motorcycles. Out of 6,12,350 motorcycles sold in financial year 2020-21, 38,622 motorcycles were exported, a decline of 1.7% over previous year export volume of 39,296 motorcycles in financial year 2019-20.
Net Revenue from operations for financial year 2020-21 was Rs. 8,619.04 crores, 5.1% lower when compared with previous financial year of Rs. 9,077.47 crores. Net Sales of spare parts, gears and services decreased to Rs. 991.44 crores in financial year 2020-21 from Rs. 1,075.18 crores in the previous financial year, registering a decline of 7.8%.
Your Company''s profit before depreciation, interest and tax was Rs. 1,786.51 crores in financial year 2020-21, lower by 18.9% over Rs. 2,203.78 crores recorded in financial year 2019-20.
Please refer to Management Discussion & Analysis Report which forms part of the Annual Report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be given pursuant to the provisions of Section 134 of the Companies Act, 2013 ("the Act"), read with the Companies (Accounts) Rules, 2014 is provided under Annexure-1.
DISCLOSURE REGARDING ISSUE OF SWEAT EQUITY SHARES AND EQUITY SHARES WITH DIFFERENTIAL RIGHTS
The Company has not issued any sweat equity shares or equity shares with differential rights during the financial year 2020-21.
CHANGES IN SHARE CApITAL & THE COMpANY''S EMpLOYEE STOCK OpTION pLAN, 2006 AND RESTRICTED STOCK UNITS pLAN, 2019
The Board of Directors of the Company at its meeting held on June 12, 2020 approved sub-division of equity shares of the Company and the same was also approved by the members at their 38th Annual General Meeting held on August 10, 2020 pursuant to which each equity share of face value of Rs. 10 each of the Company has been sub-divided into 10 equity shares of face value of Re. 1/- each with effect from August 25, 2020 (record date for sub-division). Capital clause of the Memorandum of Association has been amended suitably.
Pursuant to the above sub-division and with effect from August 25, 2020 (record date for sub-division), appropriate adjustments were made in the number of stock options that have been granted & yet to be exercised such that each such stock options shall stand converted into Ten (10) stock options of the same category and the respective exercise price for each such option shall be one tenth (1/10) of the exercise price fixed at the time of grant of such options.
The paid up Equity Share Capital of the Company as on March 31, 2021, was Rs. 27,33,35,922/-. During the year under review, the Company has issued 2,40,222 Equity Shares (Face value Re. 1/- each) pursuant to its Employees Stock Option Plan, 2006 ("ESOP, 2006") and 50,000 Equity Shares (Face value Re. 1/- each) pursuant to its Restricted Stock Units Plan, 2019 ("RSU Plan, 2019").
A Statement giving complete details as at March 31, 2021, pursuant to Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 is available on the website of the Company and the weblink for the same is https://www.eicher.in/uploads/1626351902_eicher-motors-esop-statement-2020-21.pdf
ESOP, 2006 and RSU Plan, 2019, for grant of stock options have been implemented in accordance with the aforesaid SEBI Regulations. A certificate from M/s S.R. Batliboi & Co.,
LLP, Statutory Auditors, in this regard will be available for inspection on the website of the Company under "Investors" Section on the date of Annual General Meeting. The Company has not changed its ESOP, 2006 and RSU Plan, 2019 during the year under review.
Further, details of options granted and exercised are included in Note no. 48 in the notes to accounts forming part of standalone financial statements.
The Company has not accepted any deposits from the public/ members under Section 73 of the Act read with the Companies (Acceptance of Deposits) Rules, 2014 during the financial year under review. The Company has not renewed/accepted fixed deposits after May 29, 2009. There are no deposits that remain unclaimed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with Section 149(7) of the Act and Regulation 25(8) of SEBI (LODR) Regulations, 2015 Independent Directors of the Company have given written declarations to the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16 of SEBI (LODR) Regulations, 2015. As on March 31, 2021, all Independent Directors of the Company have valid registrations with the Independent Director''s databank maintained by Indian Institute of Corporate Affairs in terms of Section 150 of the Companies Act, 2013 read with Rule 6 of the Companies (Appointment and Qualifications of Directors) Rules, 2014.
In accordance with the provisions of Section 152 and other applicable provisions of the Act, Mr. Siddhartha Lal, Managing Director, retires by rotation at the ensuing 39th Annual General Meeting and being eligible offers himself for re-appointment. The Board of Directors recommends his reappointment.
The Board of Directors of the Company at its meeting held on February 10, 2021, re-appointed Mr. Siddhartha Lal, as Managing Director of the Company for a period of 5 (five) years with effect from May 1, 2021, after taking into consideration recommendations of the Nomination & Remuneration Committee of the Company and subject to requisite approval of the shareholders at the ensuing AGM and the approval of the Central Government. In the opinion of the Board, Mr. Siddhartha Lal possess requisite skills & expertise in the context of business of the Company. For details on skills/expertise/competencies of Mr. Siddhartha Lal, please refer Corporate Governance Report forming part of this Annual Report.
During the year under review, Mr. S. Sandilya and Ms. Manvi Sinha were re-appointed as Independent Directors on the Board of the Company w.e.f. February 13, 2020, with requisite approvals of the shareholders obtained at the 38th Annual General Meeting held on August 10, 2020. Mr. Vinod Agarwal retired at the 38th Annual General Meeting held on August 10,
2020 and was reappointed by the shareholders
Further, the Board at its meeting held on May 6, 2020 has appointed Mr. Kaleeswaran Arunachalam as the Chief Financial Officer of the Company with effect from May 6, 2020 in place of Mr. Lalit Malik, who is continuing as the Chief Commercial Officer of the Company. There has been no other change in the Directors and Key Managerial Personnel of the Company during the financial year under view.
THE COMPANY''S POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION
The Company''s Hiring & Employment Policy:
A number of factors are considered towards selecting candidates at the Board level which include:
⦠Ability to contribute to strategic thinking
⦠Proficiency in Governance norms, policies and mechanisms at the Board level
⦠Relevant cross industry/functional experience, educational background, skills and experience
⦠Wherever relevant, independence of Directors in terms of applicable regulations.
With respect to core competencies and personal reputation, our practices ensure through the selection process that all Directors:
⦠Exhibit integrity and accountability
⦠Exercise informed judgement
⦠Are financially literate
⦠Are mature and confident individuals
⦠Operate with high performance standards
Removal of Directors
Under extreme circumstances and in highly unusual situations it may become necessary to remove a member from the Board of Directors. Reasons for doing so, may relate to any of the following (indicative; other than as provided under the Companies Act, 2013):
i. Breach of confidentiality in anyway
ii. Failure to meet obligatory procedures in the disclosure of conflict of interest
iii. Failure to fulfil the fiduciary duties of a Director for the Company
iv. Acting in any other manner which is against the interests of the Company
The Company''s Remuneration Policy
The Company''s Compensation Strategy defines the principles underlying compensation philosophy for its employees. Compensation is a critical piece of overall human-resources strategy and broadly refers to all forms of financial returns and tangible benefits that employees receive as a part of their employment relationship.
The Remuneration/Compensation Policy of the Company is designed to attract, motivate and retain manpower. This Policy applies to Directors and Senior Management including Key Managerial Personnel (KMP) and other employees of the Company.
The remuneration of the Managing Director, Executive Director, Key Managerial Personnel (KMPs) and CXOs of the Company is recommended by the Nomination and Remuneration Committee based on criteria such as industry benchmarks, the Company''s performance vis-a-vis the industry, responsibilities and performance assessment. The Company pays remuneration by way of salary, perquisites and allowances (fixed component), incentive remuneration and/or commission (variable components).
Loans/advances may be extended to employees for various personal purposes or to aid business functions, from time to time, on a case to case basis, in accordance with the relevant Human Resource guidelines/policies in force or as may be approved by the Chief Financial Officer, the Chief Human Resource Officer of the Company, or any person authorized by them, including for relocation viz. school deposits/ expenses, travel/logistics expenses, housing advance, housing deposits/brokerage, any other expenses towards relocation; advance submission of tax deducted at source by the Company on behalf of employee; advance towards medical insurance premiums; loans granted to enable grantees exercise ESOPs and towards deposit of perquisite tax thereon; loans/advances covered under Employees Union recognized by the Company as per Union Agreement; medical emergency advances etc.
Additionally, in the event of exigencies arising due to calamities, the Company may provide financial assistance to any affected employee by way of extending interest free loan in an amount not exceeding his/her two months'' gross salary.
Remuneration by way of commission to the Non-Executive Directors shall be decided by the Board of Directors within the ceiling of a sum, not exceeding 1% of the annual net profits of the Company in each of the financial year, calculated in accordance with the provisions of the Act and as approved by the members by passing a resolution in the general meeting.
Remuneration of KMPs and employees largely consists of basic remuneration, perquisites, allowances, performance incentives and employee stock options granted pursuant to the Employees Stock Option Plan of the Company. The components of remuneration vary for different employee levels and are governed by industry patterns, qualifications and experience of the employee and his/her responsibility areas, employee performance assessment etc.
The said Policy is also available on the website of the Company at http://www.eicher.in/uploads/1561782697_remuneration-policy.pdf
ANNUAL EVALUATION OF BOARD, COMMITTEES AND INDIVIDUAL DIRECTORS
During the financial year under review, formal annual evaluation of the Board, its committees and individual Directors was carried out at the Board meeting held on February 10, 2021.
The Nomination and Remuneration Committee specified the criteria for effective performance evaluation of the Board, its Committees and Individual Directors of the Company. The performance of the Board and Committees was evaluated after seeking inputs from all the Directors on the basis of the criteria such as Board/ Committee constitution, frequency of meetings, effectiveness of processes etc. The performance of individual Directors (including Independent Directors) was evaluated by the Board (excluding the Director being evaluated) after seeking inputs from all Directors on the basis of the criteria such as thought contribution, business insights and applied knowledge. Once the evaluation process is complete, the Nomination & Remuneration Committee reviews the implementation of the manner specified by it for performance evaluation & effectiveness of the process.
MEETINGS OF BOARD OF DIRECTORS
Seven (7) meetings of the Board of Directors of the Company were conducted during the financial year under review. The details of Board/Committees/Shareholder meetings are provided under the Corporate Governance Report which forms part of the Annual Report.
DETAILS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE ACT
The details of loans, guarantees and investments made by the Company during the financial year under review which are covered under Section 186 of the Companies Act, 2013 form part of the notes to the financial statements provided in this Annual Report.
particulars OF RELATED pARTY TRANSACTIONS
All contracts/ arrangements/ transactions entered into by the Company during the financial year with related parties are in compliance with the applicable provisions of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. Requisite approval of the Audit Committee and the Board (wherever required) was obtained by the Company for all Related Party Transactions.
There were no materially significant Related Party Transactions made by the Company with Promoters, Directors or Key Managerial Personnel, subsidiaries, joint ventures and associate Companies which may have a potential conflict with the interest of the Company. There are no transactions that are required to be reported in Form AOC-2, hence the said form does not form part of this report. However, the details of the transactions with Related Parties are provided in the Company''s financial statements in accordance with Indian Accounting Standards.
The Company has a Policy on materiality of and dealing with Related Party Transactions, as approved by the Board, which is available on its website www.eichermotors.com.
The Audit Committee of the Company is constituted pursuant to the requirements of the Companies Act, 2013 and SEBI (LODR) Regulations, 2015. At present, members of the Audit Committee are:
SI. No. |
Name of Members |
1 Mr. S Sandilya (Chairman) |
|
2 |
Mr. Siddhartha Lal |
3 |
Ms. Manvi Sinha |
4 |
Mr. Inder Mohan Singh |
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM
The Company has formulated a Whistle Blower Policy to establish a vigil mechanism for Directors, employees, dealers and vendors of the Company to report concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct or Ethics Policy or to report genuine concerns or grievances including instances of leak or suspected leak of unpublished price sensitive information pursuant to SEBI (Prohibition of Insider Trading) Regulations, 2015. The Whistle Blower Policy of the Company is available at https://www.eicher.in/uploads/1581075167_whistle_blower_ policy.pdf
SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES
Highlights of performance of subsidiaries and joint venture Companies and their contribution to the overall performance of the Company during the year under review
Royal Enfield North America Limited (RENA)
RENA was incorporated in March 2015 as a 100% subsidiary of Eicher Motors Limited to manage the distribution and sales of Royal Enfield products and services including, motorcycles, spares, apparels and accessories in North America. It sold 3,820 motorcycles (excluding 324 motorcycles sold to Royal Enfield Canada Limited, 100% subsidiary of RENA) during the year 2020-21 and achieved revenue of Rs. 141.82 crores (including revenue of Rs. 11.17 crores by sales to Royal Enfield Canada Limited). As of March 2021, RENA had contracted with 121 multi brand outlets in USA.
Royal Enfield Canada Limited (RECA)
RECA is a 100% subsidiary of RENA. RECA was incorporated in April 2016 in Canada to manage the distribution and sales of Royal Enfield products and services including, motorcycles, spares and gear in Canada. During the year 2020-21, the company sold 324 motorcycles and achieved revenue of Rs. 11.91 crores. As of March 2021, RECA had contracted with 13 multi brand outlets in Canada.
Royal Enfield Brasil Comercio De Motocicletas Ltda. (REBRA)
Royal Enfield started its operations in Brazil through a direct distribution company by the name of Royal Enfield Brasil Comercio de Motocicleta LTDA in 2016. Over 4 years, the company has grown by an average of 50% year over year. During the year 2020-21, the company sold 2,718 motorcycles and achieved a revenue of Rs. 46.86 crores.
Royal Enfield (Thailand) Ltd (RETH)
Royal Enfield (Thailand) Ltd. was incorporated on September 18, 2018 and commenced sales operations from September 2019. The Company''s footprints have grown to 15 exclusive stores, 3 studio stores and 15 authorized sales & service points. In the year 2020-21, the company received two awards from the Grand Prix group for Meteor being the "Best Modern Classic" and Himalayan being "Best Lightweight Tourer" motorcycle. During the year 2020-21, the company sold 2,373 motorcycles and achieved revenue of Rs. 98.75 crores.
Royal Enfield (UK) Limited (REUK)
Royal Enfield UK Ltd, was incorporated in August, 2019 and commenced sales operations from June 2020. The company''s footprints have grown to 8 exclusive stores and 52 Authorized Sales & Service Points. In the year 2020-21, the company received 2 awards from the Motorcycle News for Interceptor being the "Best Retro of the year for 2019 and 2020". During the year 2020-21, the company sold 1,740 motorcycles and achieved revenue of Rs. 42.74 crores.
Eicher Polaris Private Limited (EPPL)
Eicher Polaris Private Limited, a joint venture company, was involved in manufacturing and sales of personal utility vehicles.
The Board of Directors and Shareholders of EPPL at their respective meetings held on February 18, 2020 approved voluntary liquidation (solvent liquidation) of EPPL and appointed an insolvency professional as the liquidator. The liquidation process is under progress currently.
VE Commercial Vehicles Limited and its step-down subsidiaries
Overview of performance covered separately in the Annual Report.
Report containing salient features of financial statements of subsidiaries and joint venture Companies
Pursuant to the provisions of Section 129(3) of the Act, a report containing salient features of the financial statements of the Company''s subsidiaries and joint venture Company in Form AOC-1 is attached as Annexure-2.
COMPANIES WHICH HAVE BECOME OR CEASED TO BE THE COMpANY''S SUBSIDIARIES,JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE FINANCIAL YEAR
No Company has become or ceased to be the Company''s subsidiary, joint venture or associate company during the financial year 2020-21.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND THE COMPANY''S OPERATIONS IN FUTURE There are no significant and material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations. However, members'' attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the Financial Statements.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Details of internal financial control and its adequacy are included in the Management Discussion and Analysis Report, which forms part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted a Corporate Social Responsibility (CSR) Committee and has framed a Corporate Social Responsibility Policy and identified Local Area Development, Social Mission (Responsible Travel) and Road safety, as themes which will be given preference while formulating Annual Actions Plans. The Company will continue to support social projects that are consistent with the Policy.
Corporate Social Responsibility Committee of the Company is constituted as follows:
1. Mr. S Sandilya - Chairman
2. Mr. Siddhartha Lal
3. Mr. Inder Mohan Singh
4. Ms. Manvi Sinha
During the year under review, the Board at its Meeting held on March 31, 2021, appointed Ms. Manvi Sinha, Non-Executive Independent Director as Member of the Corporate Social Responsibility Committee.
Annual Report on CSR activities is annexed as Annexure-3.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordance with the requirements of Indian Accounting Standard ("Ind AS")-110 "Consolidated Financial Statements" and Ind AS 28 "Investment in Associates and Joint ventures", prescribed under Section 133 of the Companies Act, 2013, read with the rules issued thereunder. The consolidated financial statements are provided in the Annual Report. A statement containing the salient features of the financial statements of each of the subsidiary and joint venture company in the prescribed Form AOC-1 is attached.
Pursuant to Section 136 of the Act, the financial statements, consolidated financial statements and separate accounts of the subsidiaries are available on the website of the Company
at www.eichermotors.com. The Company shall provide the copies of the financial statements of the Company and its subsidiary Companies to the shareholders upon their request received on [email protected]. The consolidated total Comprehensive income of the Company and its subsidiaries amounted to Rs. 1,381.24 crores for the financial year 2020-21 as compared to Rs. 1,838.62 crores for the previous financial year 2019-20.
(a) Statutory Auditors and Their Report
M/s S.R. Batliboi & Co., LLP, Chartered Accountants (Firm Registration Number: FRN 301003E/E300005) were appointed as Statutory Auditors in the 35th (Thirty Fifth) Annual General Meeting (AGM) of the Company for a period of five years, from the conclusion of 35th AGM till the conclusion of the 40th AGM of the Company, subject to ratification of their appointment at every AGM by the shareholders, if required pursuant to the provisions of the Companies Act, 2013 ("Act"). Central Government vide the Companies (Amendment) Act, 2017 has amended the provisions of Section 139 of the Act and ratification of appointment of Statutory Auditors in every AGM is no longer required. The Statutory Auditors have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules made thereunder to continue to act as Statutory Auditors of the Company.
The Statutory Auditors had carried out audit of financial statements of the Company for the financial year ended March 31, 2021 pursuant to the provisions of the Act. The reports of Statutory Auditors form part of the Annual Report. The reports are self-explanatory and do not contain any qualifications, reservations or adverse remarks. The Statutory Auditors had not reported any fraud under Section 143(12) of the Companies Act, 2013.
(b) Secretarial Auditors and Their Report
The Board of Directors has appointed M/s. Shweta Banerjee & Associates, Company Secretaries, to conduct Secretarial Audit for the financial year ended March 31, 2021. As required under Section 204 of the Companies Act, 2013, the Secretarial Audit Report is annexed as Annexure-4 to this Report. The Secretarial Auditors'' Report is self-explanatory.
One of the observations made by the Secretarial Auditor in its report is not conducting the Risk Management Committee meeting by the Company during the financial year 2020-21. Response on the above observation is as follows:
The process of risk prioritisation and mitigation has been presented, discussed and reviewed at the Board level regularly at meetings attended by the Committee members. Various measures have been adopted as outcome of such discussions, a comprehensive
risk inventory drawn, mitigation framework being designed, Centre of Excellence - Internal Controls set up etc. While a separate meeting exclusively of the members of the Risk Management Committee has not been held in the relevant period during the financial year ended March 31, 2021, its members have been actively involved in fulfilling the terms of reference. Furthermore, given the fact that review of industrial operations is considered key, holding a meeting / review of such operations has been a challenge in the wake of Covid crisis and travel restrictions (and risks associated with it).
Further, pursuant to provisions of Regulation 24A of the SEBI (LODR) Regulations, 2015, VE Commercial Vehicles Limited (VECV) is a material subsidiary of the Company in terms of Regulation 16(1)(c) of the SEBI (LODR) Regulations, 2015. The Secretarial Audit Report submitted by the Secretarial Auditors of VECV is also annexed as Annexure-5 to this Report.
(c) Cost Auditor
In terms of Section 148 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, it is hereby confirmed that the cost accounts and records are made and maintained by the Company as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013.
M/s. Jyothi Satish & Co, a qualified Cost Accountant Firm (Firm registration No. 101197), has been appointed as the cost auditor to carry out audit of the cost records of the Company for the financial year 2020-21 pursuant to the provisions of the Companies Act, 2013. The Cost auditor shall submit its report to the Board of Directors within the time prescribed under the Companies Act, 2013 and the rules made thereunder.
CORPORATE GOVERNANCE, MANAGEMENT DISCUSSION & ANALYSIS AND BUSINESS RESPONSIBILITY REPORTS
As per SEBI (LODR) Regulations, 2015, Corporate Governance Report together with the Auditors'' certificate regarding compliance of conditions of Corporate Governance, Management Discussion & Analysis Report and Business Responsibility Report form part of the Annual Report.
The Company voluntarily has prepared an Integrated Report this year which will help stakeholders to understand the Company''s economic, environmental, social and governance performance more effectively and analyzing the financial and non-financial performance of the Company. With this, stakeholders shall also have a better understanding of the Company''s long term perspective. The report is available on the website of the Company at www.eichermotors.com.
The Annual Return as required under Section 92 and Section 134 of the Companies Act, 2013 read with Rule 12 of the Companies (Management and Administration) Rules, 2014 is available on the website of the Company and the weblink for the same is https://www.eicher.in/uploads/1626338501_form_ mgt-7-2020-21.pdf
DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:
a) that in the preparation of the Annual Financial Statements for the year ended March 31, 2021, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
b) that such accounting policies as mentioned in Note no. 3 of the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2021 and of the profits of the Company for the year ended on that date;
c) that proper and sufficient care has been taken 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) that the Annual Financial Statements have been prepared on a going concern basis;
e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively; and
f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
Disclosures 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:
1) Ratio of the remuneration of each director to the median remuneration of the employees of the Company and the percentage increase in remuneration of Directors & KMPs in the financial year:
Sl. No. |
Name of the Director/ KMP |
Designation |
Ratio of Remuneration of each Director to median Remuneration of Employees |
Percentage Increase in Remuneration for FY 2020-21 over FY 2019-20 |
1. |
Mr. S Sandilya |
Chairman & Non-Executive Independent Director |
11.1 |
10.51 |
2. |
Mr. Siddhartha Lal |
Managing Director |
340.3 |
9.97 |
3. |
Mr. Vinod K. Dasari |
Whole-time Director and CEO-Royal Enfield |
404.2 |
1.88 |
4. |
Mr. Inder Mohan Singh |
Non-Executive Independent Director |
2.8 |
12.03 |
5. |
Ms. Manvi Sinha |
Non-Executive Independent Director |
2.8 |
6.74 |
6. |
Mr. Kaleeswaran Arunachalam |
Chief Financial Officer |
- |
NA* |
7. |
Mr. Manhar Kapoor |
General Counsel and Company Secretary |
- |
7.55 |
*Percentage increase in remuneration for FY 2020-21 over FY 2019-20 not applicable since Mr. Kaleeswaran Arunachalam was appointed as Chief Financial Officer w.e.f May 6, 2020.
Note: Mr. Vinod K. Aggarwal, Non-Executive Director, is not entitled for any remuneration by way of sitting fees or commission or otherwise, in the Company.
2) Percentage increase in the median remuneration of the employees in the financial year: 1%
3) Number of permanent employees on the rolls of Company as at March 31, 2021: 5,005 employees.
4) The average increase in median remuneration of the employees other than managerial personnel was 1% as compared to the increase in the managerial remuneration by 2%.
5) It is hereby affirmed that the remuneration is paid as per the Remuneration Policy of the Company.
Further, a statement containing particulars of top ten employees in terms of the remuneration drawn and employees drawing remuneration in excess of the limits set out in Rule 5(2) & (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are provided as part of the Directors Report. However, in terms of provisions of Section 136 of the said Act, the Annual Report is being sent to all the members of the Company and others entitled thereto, excluding the said statement. Any member interested in obtaining such particulars may write to the Company Secretary at [email protected].
Requisite information is provided under Management Discussion and Analysis Report which forms part of the Annual
Rpnnrt
COMPLIANCE OF SECRETARIAL STANDARDS
During the financial year under review, the Company has complied with applicable Secretarial Standards specified by the Institute of Company Secretaries of India pursuant to Section 118 of the Companies Act, 2013.
SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Requisite information is provided under Corporate Governance Report which forms part of the Annual Report.
We thank our customers, business associates and bankers for their continued support during the financial year.
We wish to convey our deep appreciation to the dealers of the Company for their achievements in the area of sales and service, and to suppliers/ vendors for their valuable support.
We also place on record our sincere appreciation for the enthusiasm and commitment of the Company''s employees for the growth of the Company and look forward to their continued involvement and support.
For Eicher Motors Limited
Siddhartha Lal S. Sandilya
Managing Director Chairman
DIN: 00037645 DIN:00037542
Place: London, UK Place: Chennai, Tamil Nadu
Date: May 27, 2021
Mar 31, 2019
To the Members of Eicher Motors Limited
The Directors have pleasure in presenting the Thirty Seventh Annual Report along with the Audited Financial Statements of your Company for the financial year ended March 31,2019.
FINANCIAL RESULTS
Your Company achieved an all-time high top line growth during the financial year 2018-19 with Net revenue from operations at Rs. 9,794.48 crores. The profit before depreciation and interest amounted to Rs. 2,944.38 crores, which is 30.1% of the total revenue. After accounting for other income of Rs. 508.04 crores, interest expense of Rs. 2.99 crores and depreciation of Rs. 298.93 crores, profit before exceptional item and tax amounted to Rs. 3,150.50 crores.
In March 2018, the Board of directors of Eicher Polaris Private Limited, a 50:50jointventure with Polaris Industries Inc. US decided to wind down the operations of Eicher Polaris Private Limited. As a consequence, the Company recorded an impairment loss of Rs. 311.98 crores and Rs. 17.52 crores (exceptional items) during the previous year and current year respectively.
Profit after exceptional item and before tax is Rs. 3,132.98 crores. Profit after tax amounted to Rs. 2,054.44 crores after income tax provision of Rs. 1,078.54 crores. Total Comprehensive income for the year, net of tax amounted to Rs. 2,048.67 crores.
The financial results are summarized below:
Rs. in Crores |
||
Particulars |
For the financial year ended |
For the financial year ended |
March 31, 2019 |
March 31, 2018 |
|
Net Revenue from operations |
9,794.48 |
8,957.51 |
Protit before depreciation and interest |
2,944.38 |
2,853.20 |
Interest |
2.99 |
3.04 |
Depreciation |
298.93 |
222.34 |
Protit before other income and tax |
2,642.46 |
2,627.82 |
Other income |
508.04 |
332.43 |
Protit before exceptional items and tax |
3,150.50 |
2,960.25 |
Exceptionalltems |
17.52 |
311.98 |
Protit before tax |
3,132.98 |
2,648.27 |
Provision for tax (including Deferred tax) |
1,078.54 |
935.36 |
Net protit after tax |
2,054.44 |
1,712.91 |
Other comprehensive income |
(5.77) |
10.85 |
Total Comprehensive income for the year/period, net of tax |
2,048.67 |
1,723.76 |
Balance in statement of profit and loss brought forward from previous year |
4,871.26 |
3,476.61 |
Amount available for appropriation (Excluding Exchange differences in |
6,924.79 |
5,188.38 |
translation of foreign operations): |
||
Dividend for FY 2017-18, paid in FY 2018-19 |
- |
299.93 |
Dividend proposed for FY 2018-19, to be paid in 2019-20 |
341.03 |
- |
Earnings per share |
||
- Basic (Rs.) |
753.37 |
629.07 |
- Diluted (Rs.) |
752.54 |
627.88 |
CHANGE IN THE NATURE OF BUSINESS, IF ANY
There is no change in the nature of business of the Company during the financial year under review.
MATERIAL CHANGES AI^D COMMITMENTS AFFECTING THE FINANCIAL POSITION OF T^ COMPANY THAT HAVE OCCURRED AFTER MARCH 3% 2019TILL DATE OF THS REPORT
There are no material changes or commitments affecting the financial position of the Company which have occurred after March 31,2019 till the date of this report.
DIVIDEND
The Board of Directors in their meeting held on MaylO, 2019, has recommended for approval of the shareholders payment of dividend of Rs. 125/- per Equity Share (@1250%) of face value of Rs. 10/- out of the profits for the financial year 2018-19 in accordance with the Dividend Distribution Policy of the Company.
The dividend, if approved by the shareholders, shall be paid in the following manner:
a) To all Beneficial Owners in respect of shares held in dematerialized form as per the data made available by the National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL) as of the close of business hours on July 25,2019;
b) To all Members in respect of shares held in physical form after giving effect to valid transfer/transmission in respect of transfer/transmission requests properly lodged with the Company on or before the close of business hours on July 25,2019.
AMOUNTS TRANSFERREDTORESERVES
During the financial year 2018-19, no amountwas transferred to General Reserve of the Company.
BRIEF DESCRIPTION OF THE STATE OF COMPANYâS AFFAIRS/BUSINESS PERFORMANCE
Your Company continues to grow significantly. It sold 8,23,828 motorcycles in the financial year 2018-19, 0.4% more when compared to 2017-18 sales of 8,20,492 motorcycles. Out of 8,23,828 motorcycles sold in 2018-19,20,825 motorcycles were exported, a growth of 8.1% over previous year volume of 19,262 motorcycles in 2017-18.
Net Revenue from operations for 2018-19 yearwas Rs. 9,794.48 crores, 9.3% growth over previous year (Rs. 8,957.51 crores). Net Sales of spare parts, gears and services increased to Rs. 1,056.39 crores in 2018-19 from Rs. 841.79 crores in the previous year, registering a growth of 25.5%.
Maximizing operating leverage is a key focus in your Company. Your Companyâs profit before depreciation, interest, exceptional item and taxwas Rs. 2,944.38 crores in 2018-19, a growth of 3.2% over Rs. 2,853.20 crores recorded in 2017-18
MARKET AW FUTURE PROSPECTS
Please refer to Management Discussion & Analysis Report which forms part of the Annual Report.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION Aim FOREIGN EXCHANGE EARMNGS AW OUTGO
Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be given pursuant to the provisions of Section 134 of the Companies Act, 2013 (âthe Actâ), read with the Companies (Accounts) Rules, 2014 is provided under Arrexure-H
DISCLOSURE REGARDINGISSUE OF SWEAT EQUITY SHARES Am EQUITY SHARES WITH DIFFERENTIAL RIGHTS
The Company has not issued any sweat equity shares or equity shares with differential rights during the financial year 2018-19.
CHANGES IN SHARE CAPITAL AEIC^ER EMPLOYEE STOCK OPTION PLAN 2006
The paid up Equity Share Capital of the Company as on March 31,2019, was Rs. 27,28,25,700/-. During the year under review, the Company has issued 27,021 Equity Shares of face value of Rs. 10/- each pursuant to its Employees Stock Option Plan, 2006.
A Statement giving complete details as at March 31,2019, pursuant to Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 is available on the website of the Company and the weblink for the same is http://www.eicher.in/ uploads/1561783757_ES0P-details-forming-part-of-directors-report.pdf
The Employee Stock Option Plan for grant of stock options has been implemented in accordance with the SEBI Regulations. A certificate from M/s S.R. Batliboi & Co., LLP, Statutory Auditors, in this regard would be placed at the ensuing Annual General Meeting for inspection by the members. The Company has not changed its Employee Stock Option Plan during the year.
Further, details of options granted and exercised are included in Note no. 47 in the notes to accounts forming part of consolidated financial statements.
DEPOSITS
The Company has not accepted any deposits from the public/members under Section 73 of the Act read with Companies (Acceptance of Deposits) Rules, 2014 during the financial year under review. The Company has not renewed/ accepted fixed deposits after May 29, 2009.There are no deposits that remain unclaimed.
DIRECTORS AMKEY MANAGERIAL PERSONNEL
In accordance with Section 149(7) of the Act, all the Independent Directors of the Company have given written declarations to the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16 of SEBI LODR Regulations, 2015.
In accordance with the provisions of Section 152 and other applicable provisions of the Act & the Articles of Association of the Company, Mr. Siddhartha Lai, Managing Director, retires by rotation and being eligible offers himself for reappointment at the ensuing AGM. During the year under review, Mr. Prateek Jalan, Non-Executive Independent Director of the Company, resigned from the Board w.e.f. October 13,2018. Mr. Inder Mohan Singh, Non-Executive Independent Director was appointed as an Additional Director on the Board of the Companyw.e.f Novemberl2,2018, Mr.Vinod Kumar Dasari, Whole-time Director & CEO-Royal Enfield and Mr. Vinod Kumar Aggarwal, Non-Executive Director, were also appointed as Additional Directors on the Board of the Company w.e.f. April 1,2019, subject to requisite approval of the shareholders at the ensuing Annual General Meeting.There has been no other change in the Directors and Key Managerial Personnel of the Company during the financial year under review.
COMPANYâS POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION
Companyâs Hiring $ Employment Policy:
A number of factors are considered towards selecting candidates at the Board level which include:
- Ability to contribute to strategic thinking
- Proficiency in Governance norms, policies and mechanisms at the Board level
- Relevant cross industry/functional experience, educational background, skills and experience
- Wherever relevant, independence of Directors in terms of applicable regulations.
It is expected that the Individual Board members are willing to learn the business of the Company and to devote the necessary time and effort to be well-informed.
With respect to core competencies and personal reputation, our practices ensure through the selection process that all Directors:
- Exhibit integrity and accountability
- Exercise informed judgement
- Are financially literate
- Are mature and confident individuals
- Operate with high performance standards
Removal of Directors
Under extreme circumstances and in highly unusual situations it may become necessary to remove a member from the Board of Directors. Reasons for doing so, may relate to any of the following (indicative;other than as provided under the Companies Act, 2013):
i. Breach of confidentiality in anyway
ii. Failure to meet obligatory procedures in the disclosure of conflict of interest
iii. Failure to fulfil the fiduciary duties of a Director for the Company
iv. Acting in any other manner which is against the interests of the Company
Companyâs Remuneration Policy:
The Companyâs Compensation Strategy defines the principles underlying compensation philosophy for its employees. Compensation is a critical piece of overall human-resources strategy and broadly refers to all forms of financial returns and tangible benefits that employees receive as a part of their employment relationship.
The Remuneration/Compensation Policy of the Company is designed to attract, motivate and retain manpower. This Policy applies to Directors and Senior Management including Key Managerial Personnel (KMP) and other employees of the Company.
The remuneration of the Managing Director, Executive Director, Key Managerial Personnel (KMPs) and CXOs of the Company is recommended by the Nomination and Remuneration Committee based on criteria such as industry benchmarks, the Companyâs performance vis-a-vis the industry, responsibilities and performance assessment.The Company pays remuneration by way of salary, perquisites and allowances (fixed component), incentive remuneration and/or commission (variable components).
Loans/advances may be extended to employees for various personal purposes or to aid business functions, from time to time, on a case to case basis, in accordance with the relevant Human Resource guidelines/policies in force or as may be approved by the Chief Financial Officer, the Chief Human Resource Officer of the Company, or any person authorized by them, including for relocation viz. school deposits/ expenses, travel/logistics expenses, housing advance, housing deposits/brokerage, any other expenses towards relocation;advance submission of tax deducted at source by the Company on behalf of employee;advance towards medical insurance premiums;loans granted to enable grantees exercise ESOPs and towards deposit of perquisite tax thereon;loans/advances covered under Employees Union recognized by Company as per Union Agreement-medical emergency advances etc.
Additionally, in the event of exigencies arising due to calamities, the Company may provide financial assistance to any affected employee by way of extending interest free loan in an amount not exceeding his/her two monthsâ gross salary.
Remuneration by way of commission to the Non-Executive Directors shall be decided by the Board of Directors within the ceiling of a sum not exceeding 1% per annum of the net profits of the Company, calculated in accordance with the provisions of the Act and as approved by the members from time to time by passing a resolution in the general meeting.
Remuneration of KMPs and employees largely consists of basic remuneration, perquisites, allowances, performance incentives and employee stock options granted pursuant to the Employees Stock Option Plan of the Company.The components of remuneration vary for different employee levels and are governed by industry patterns, qualifications and experience of the employee and his/her responsibility areas, employee performance assessment etc.
The said Policy is also available on the website of the Company at http://www.eicher.in/uploads/1561782697_remuneration-policy.pdf
ANNUAL EVALUATION OF BOARD COMMITTEES AND INDIVIDUAL DIRECTORS
During the financial year under review, formal annual evaluation of the Board, its committees and individual Directors was carried out pursuant to the Board Performance Evaluation Policy of the Company and provisions of the Companies Act, 2013 and SEBI LODR Regulations, 2015.
The performance of the Board and Committees was evaluated after seeking inputs from all the Directors on the basis of the criteria such as Board/ Committee constitution, frequency of meetings, effectiveness of processes etc.The performance of individual Directors (including Independent Directors) was evaluated by the Board and Nomination t Remuneration Committee (excluding the Director being evaluated) after seeking inputs from all Directors on the basis of the criteria such as thought contribution, business insights and applied knowledge.
A separate meeting of Independent Directors was also held to review the performance of the Managing Director, performance of the Board as a whole and performance of the Chairperson of the Company. Review of the performance of the Chairperson was done after taking into account the views of the Executive Director and Non-Executive Directors (excluding the Chairperson being evaluated).
MEETINGS OF BOARD OF DIRECTORS
Five (5) meetings of the Board of Directors of the Company were conducted during the financial year. The details of Board/Committee/Shareholder meetings are provided under the Corporate Governance Report which forms part of the Annual Report.
DETAIL OFLOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE ACT
The details of loans, guarantees and investments made by the Company during the year under review which are covered under Section 186 of the Act forms part of the notes to the financial statements provided in this Annual Report.
PARTICULARS OF RELATED PARTY TRANSACTIONS
All contracts/ arrangements/ transactions entered into by the Company during the financial year with related parties are in compliance with the applicable provisions of the Companies Act, 2013 and SEBI LODR Regulations, 2015. Requisite approval of the Audit Committee and the Board (wherever required) was obtained by the Company for all Related Party Transactions.
There were no materially significant Related Party Transactions made by the Company with Promoters, Directors or Key Managerial Personnel, subsidiaries, joint ventures and associate Companies which may have a potential conflict with the interest of the Company. There are no transactions that are required to be reported in Form AOC-2, hence the said form does not form part of this report. However, the details of the transactions with Related Parties are provided in the Companyâs financial statements in accordance with Indian Accounting Standards.
The Company has a Policy on materiality of and dealing with Related PartyTransactions, as approved by the Board, which is available on its website www.eichermotors.com.
AUDIT COMMTTEE
The Audit Committee of the Company is constituted pursuant to the requirements of the Companies Act, 2013 and SEBI LODR Regulations, 2015. At present, members of the Audit Committee are:
Sl. No. |
Name of Members |
|
1 |
Mr.SSandilya(Chairman) |
|
2 |
Mr. Siddhartha Lal |
|
3 |
Ms. ManviSinha |
|
During the year under review, Mr. Prateekjalan, Non-Executive Independent Director, a member of the Audit Committee, resigned from the Board w.e.f. October 13,2018.The Board at its Meeting held on November 12,2018, appointed Ms. Manvi Sinha, Non-Executive Independent Director as Member of the Audit Committee.
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM
The Company has formulated a Whistle Blower Policy to establish a vigil mechanism for Directors, employees, dealers and vendors of the Company to report concerns about unethical behavior, actual or suspected fraud or violation of the Companyâs Code of Conduct or Ethics Policy or to report genuine concerns or grievances including instances of leak or suspected leak of unpublished price sensitive information pursuant to SEBI (Prohibition of InsiderTrading) Regulations, 2015. The Whistle Blower Policy is available on the website of the Company.
SUBSIDIARIES, ASSOCIATE ANDJOMT VENTURE COMPANIES
Highlights of performance of subsidiaries and joint venture Companies and their contribution to the overall performance of the Company during the year under review
Royal Enfield North America Limited (RENA)
RENA was incorporated in March 2015 as a 100% subsidiary of Eicher Motors Limited to manage the distribution and sales of Royal Enfield products and services including, motorcycles, spares and gear in North America. It sold 1,731 motorcycles (excluding sales to Royal Enfield Canada Limited, 100% subsidiary of RENA) during the year 2018-19 and achieved revenue of Rs. 55.56 crores. As of March 2019, RENA had contracted with 85 multi brand outlets in USA.
Royal Enfield Canada Limited (RECA)
RECA is a 100% subsidiary of RENA. RECA was incorporated in April 2016 in Canada to manage the distribution and sales of Royal Enfield products and services including, motorcycles, spares and gear in Canada. During the year 2018-19, the company sold 105 motorcycles and achieved revenue of Rs. 3.21 crores. As of March 2019, RECA had contracted with 11 multi brand outlets in Canada.
Royal Enfield Brasil Comercio De Motocicletas Ltda.
Royal Enfield started its operations in Brazil through a direct distribution company by the name of Royal Enfield Brasil Comercio De Motocicletas LTDA in 2016-17. During the year 2018-19, the company sold 649 motorcycles and achieved revenue of Rs. 11.75 crores.
Royal Enfield (Thailand) Ltd
Royal Enfield (Thailand) Ltd. was incorporated on September 18, 2018 to engage in wholesale business of motorcycles, apparels, spares t accessories and assembly of CKD motorcycles locally in Thailand through a local assembler. The company has received approval to initiate trading business in March 2019 and is in the process of getting various other manufacturing and trading related licenses.
The company is yet to commence trading operations as at end of March 2019.
VE Commercial Vehicles Limited
Overview of performance covered separately in the Annual Report.
Report containing salient features of financial statements of subsidiaries and joint venture Companies
Pursuant to the provisions of Section 129(3) of the Act, a report containing salient features of the financial statements of Companyâs subsidiaries and joint venture Company in Form AOC-1 is attached as Annexure-2t
COMPANIES WHICH HAVE BECOME OR CEASED TO BE COMPANYâS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPARES DURING THE FINANCIAL YEAR
During the financial year under review, Royal Enfield (Thailand) Ltd. (âRETHâ) was incorporated on Septemberl8, 2018 as wholly owned subsidiary of the Company. No other Company has become or ceased to be Companyâs subsidiary, joint venture or associate company during the financial year 2018-19.
DETAILS OF SIGNIFICANT AW MATERIAL ORDERS PASSED BY T^ REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOINGCONCERNSTATUS AW COMPANYâS OPERATIONS IN FUTURE
There are no significant material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations. However, membersâ attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the Financial Statements.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Details of internal financial control and its adequacy are included in the Management Discussion and Analysis Report, which forms part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted a Corporate Social Responsibility (CSR) Committee and has framed a Corporate Social Responsibility Policy and identified Healthcare, Childrenâs education, Road safety, Environmental sustainability, Local Area Development in, including but not limited to, areas around Companyâs establishments t in Himalayas and Livelihood development including vocational training for underprivileged as some of the key areas. The Company will continue to support social projects that are consistent with the Policy.
Corporate Social Responsibility Committee of the Company is constituted as follows:
1. Mr.SSandilya-Chairman
2. Mr.SiddharthaLal
3. Mr.Inder Mohan Singh
Annual Report on CSR activities is annexed as Anresur&3
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordance with the requirements of Indian Accounting Standard (âInd ASâ)-110âConsolidated Financial Statementsâ and Ind AS 28 âInvestment in Associates and Joint venturesâ, prescribed under Section 133 of the Companies Act, 2013, read with the rules issued thereunder. The Company, its subsidiaries and jointly controlled entities adopted Ind AS from April 1,2016.The consolidated financial statements are provided in the Annual Report. A statement containing the salient features of the financial statements of each of the subsidiary andjointventure in the prescribed Form AOC-1 is attached.
Pursuant to Section 136 of the Act, the financial statements, consolidated financial statements and separate accounts of the subsidiaries are available on the website of the Company at www.eichermotors.com. These are also available for inspection by the shareholders at the Registered Office of the Company during business hours. The Company shall provide free of cost, the copies of the financial statements of the Company and its subsidiary Companies to the shareholders upon their request. The consolidated total Comprehensive income of the Company and its subsidiaries amounted to Rs. 2,196.53 Crores for the financial year 2018-19 as compared to Rs. 1,969.64 crores for the previous period 2017-18.
AUDITORS
(a) STATUTORY AUDITORS AND THEIR REPORT
M/s S.R. Batliboi t Co., LLP, Chartered Accountants (Firm Registration Number: FRN 301003E/E300005) were appointed as Statutory Auditors in the 35th (Thirty Fifth) Annual General Meeting (AGM) of the Company for a period of five years, from the conclusion of 35th AGM till the conclusion of the 40th AGM of the Company, subject to ratification of their appointment at every AGM by the shareholders, if required pursuant to the provisions of the Companies Act, 2013 (âActâ). Central Government vide Companies (Amendment) Act, 2017 has amended the provisions of Section 139 of the Act and ratification of appointment of Statutory Auditors in every AGM is no longer required.
The Statutory Auditors have confirmed their eligibility, under Section 141 of Companies Act, 2013 and the Rules made thereunder, to continue to act as Statutory Auditors of the Company.
The Statutory Auditors had carried out audit of financial statements of the Company for the financial year ended March 31,2019 pursuant to the provisions of the Act. The reports of Statutory Auditors forms part of the Annual Report. The reports are self-explanatory and does not contain any qualifications, reservations or adverse remarks.
(b) SECRETARIAL AUDITORS AND THEIR REPORT
The Board of Directors has appointed M/s. RDA & Associates, Company Secretaries, to conduct Secretarial Audit for the financial year ended March 31, 2019. As required under Section 204 of the Companies Act, 2013, the Secretarial Audit Report is annexed as Annexure-4 to this Report. The Secretarial Auditorsâ Report is self-explanatory and does not contain any qualifications or adverse remarks which require any clarification or explanation.
(c) COST AUDITOR
In terms of Section 148 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, it is hereby confirmed that the cost accounts and records are made and maintained by the Company as specified by the Central Government under sub-section (1) of Section 148 of the Companies Act, 2013.
Mr. V Kalyanaraman, a qualified Cost Accountant, has been appointed as the cost auditor to carry out audit of the cost records of the Company for the financial year 2018-19 pursuant to the provisions of the Companies Act, 2013. The Cost auditor shall submit his report to the Board of Directors within the time prescribed under Companies Act, 2013 and the rules made thereunder.
CORPORATE GOVERNANCE, MANAGEMENT DISCUSSION & ANALYSIS AND BUSINESS RESPONSIBILITY REPORTS
As per SEBI LODR Regulations, 2015, Corporate Governance Report together with the Auditorsâ certificate regarding compliance of conditions of Corporate Governance, Management Discussion & Analysis Report and Business Responsibility Report form part of the Annual Report.
EXTRACT OF AMUAL RETURN
Pursuant to the provisions of Sections 134 & 92(3) of the Act, the details forming part of the extract of the Annual Return in Form MGT-9 is annexed as Annexure-5 to this Report and which is also available on the website of the Company www.eichermotors.com.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:
a) that in the preparation of the annual Financial Statements for the year ended March 31,2019, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
b) that such accounting policies as mentioned in Note no. 3 of the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2019 and of the profits of the Company for the year ended on that date;
c) that proper and sufficient care has been taken 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) that the annual Financial Statements have been prepared on a going concern basis;
e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively; and
f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
PARTICULARS OF EMPLOYEES
Disclosures 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:
1) Ratio of the remuneration of each director to the median remuneration of the employees of the Company and the percentage increase in remuneration of Directors & KMPs in the Financial Year:
Sl. No. |
Name of the Director/KMP |
Designation |
Ratio of Remuneration of each Director to Median Remuneration of Employees |
Percentage Increase in Remuneration for FY 2018-19 over FY 2017-18 |
1 |
Mr. S Sandilya |
Chairman & Non-Executive Independent Director |
9.5 |
9.12 |
2 |
Mr. Siddhartha Lal |
Managing Director |
194.6 |
25.47 |
3 |
Mr. Inder Mohan Singh |
Non-Executive Independent Director |
0.8 |
N.A.* |
4 |
Mr. Prateekjalan |
Non-Executive Independent Director |
3.1 |
N.A.* |
5 |
Ms. ManviSinha |
Non-Executive Independent Director |
2.2 |
21.21 |
6 |
Mr. Lalit Malik |
Chief Financial Officer |
- |
127.78# |
7 |
Mr. Manhar Kapoor |
General Counsel and Company Secretary |
- |
124.64# |
*Mr. PrateekJalan,Non- Executive Independent Director of the Company resigned from the Board w.e.f October 13,2018 and Mr. Inder Mohan Singh,Non-Executive Independent Director, was appointed by the Board w.e.f. November 12,2018 as an additional Director. Hence,percentage increase in remuneration for both is not applicable.
fPercent age increase in remuneration forFY2018-19 overFY2017-18ismainlydue to perguisite on exercising shares under ESOP during the financial year. Lt shall be 2.13% and 3.16% for Mr. Lalit Malik and Mr. Manhar Kapoor, respectively, without considering perguisite on exercising shares under ESOP.
2) Percentage increase in the median remuneration of the employees in the financial year: (6%)
3) Number of permanent employees on the rolls of Company as at March 31,2019:4,082 employees.
4) The average increase in median remuneration of the employees other than managerial personnel was (6%) as compared to the increase in the managerial remuneration by 48%*.
5) It is hereby affirmed that the remuneration is paid as per the Remuneration Policy of the Company.
Increase by48%for managerial personnel is due to perguisites on exercising shares under ESOP during the financial year. The increase will be 20% for managerial personnel without considering perguisites on exercising shares under ESOP.
Further, a statement containing particulars of top ten employees in terms of the remuneration drawn and employees drawing remuneration in excess of the limits set out in Rule 5(2) & (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are provided as part of the Directors Report. However, in terms of provisions of Section 136 of the said Act, the Annual Report is being sent to all the members of the Company and others entitled thereto, excluding the said statement. Any member interested in obtaining such particulars may write to the Company Secretary. The said information is also available for inspection at the Registered Office of the Company during working hours till the date of Annual General Meeting.
RISK MANAGEMENT
Requisite information is provided under Management Discussion and Analysis Report which forms part of the Annual Report.
COMPLIANCE OF SECRETARIAL STANDARDS
During the financial year under review, the Company has complied with applicable Secretarial Standards specified by the Institute of Company Secretaries of India pursuant to Section 118of the Companies Act, 2013.
SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION PROHIBITION AND REDRESSAL) ACT, 2013
Requisite information is provided under Corporate Governance Report which forms part of the Annual Report.
ACKNOWLEDGEMENT
We thank our customers, business associates and bankers for their continued support during the financial year.
We wish to convey our deep appreciation to the dealers of the Company for their achievements in the area of sales and service, and to suppliers/ vendors for their valuable support.
We also place on record our sincere appreciation for the enthusiasm and commitment of Companyâs employees for the growth of the Company and look forward to their continued involvement and support.
For Eicher Motors Limited
Siddhartha Lal S. Sandilya
Managing Director Chairman
DIN: 00037645 DIN:00037542
Place: Gurugram,Haryana
Date: May 10,2019
Mar 31, 2018
DIRECTORS'' REPORT
To the Members of Eicher Motors Limited
The Directors have pleasure in presenting the Thirty Sixth Annual Report along with the Audited Financial Statements of your Company for the financial year ended March 31, 2018.
FINANCIAL RESULTS
Your Company achieved an all-time high top line growth during the financial year 2017-18 with Net revenue from operations at Rs. 8,957.51 crores. The profit before depreciation and interest amounted to Rs. 2,853.20 crores, which is 31.9% of the total revenue. After accounting for other income of Rs. 332.43 crores, interest expense of Rs. 3.04 crores and depreciation of Rs. 222.34 crores, profit before exceptional item and tax amounted to Rs. 2,960.25 crores.
In March 2018, the Board of Directors of Eicher Polaris Private Limited, a 50:50 joint venture with Polaris Industries Inc, decided to wind down the operations of Eicher Polaris Private Limited. As a consequence, the Company recorded an impairment loss of Rs. 311.98 crores (exceptional item) during the year in the standalone financial statement.
Profit after exceptional item and before tax is Rs. 2,648.27 crores. Profit after tax amounted to Rs. 1,712.92 crores after income tax provision of Rs. 935.36 crores. Total Comprehensive income for the year, net of tax amounted to Rs. 1,723.76 crores.
The financial results are summarized below:
1 Rs. in Crores |
||
Particulars |
For the financial year ended |
For the financial year ended |
March 31, 2018 |
March 31, 2017 |
|
Net Revenue from operations |
8,957.51 |
7,037.97 |
Profit before depreciation and interest |
2,853.20 |
2,205.81 |
Interest |
3.04 |
2.79 |
Depreciation |
222.34 |
153.34 |
Profit before other income and tax |
2,627.82 |
2,049.68 |
Other income |
332.43 |
227.31 |
Profit before exceptional items and tax |
2,960.25 |
2,276.99 |
Exceptional Items |
311.98 |
- |
Profit before tax |
2,648.27 |
2,276.99 |
Provision for tax (including Deferred tax) |
935.36 |
716.97 |
Net profit after tax |
1,712.92 |
1,560.02 |
other comprehensive income |
10.85 |
(0.08) |
Total comprehensive income for the year, net of tax |
1,723.76 |
1,559.94 |
Balance in statement of profit and loss brought forward from previous year |
3,476.61 |
1,916.67 |
Amount available for appropriation |
5,200.37 |
3,476.61 |
Dividend for FY 2016-17, paid in FY 2017-18 |
- |
272.22 |
Dividend proposed for FY 2017-18 |
299.81 |
- |
Earnings per share |
||
- Basic (Rs.) |
629.07 |
573.75 |
- Diluted (Rs.) |
627.88 |
572.17 |
CHANGE IN THE NATURE OF BUSINESS, IF ANY
There is no change in the nature of business of the Company during the financial year under review.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY THAT HAVE OCCURRED AFTER MARCH 31, 2018 TILL THE DATE OF THIS REPORT
There are no material changes or commitments affecting the financial position of the Company which have occurred after March 31, 2018 till the date of this report.
DIVIDEND
The Board of Directors in their meeting held on May 9, 2018, has recommended for approval of the shareholders payment of dividend of Rs. 110/- per Equity Share (@1100%) of face value of Rs. 10/- out of the profits for the financial year 2017-18.
The dividend, if approved by the shareholders shall be paid in the following manner:
a) To all Beneficial Owners in respect of shares held in dematerialized form as per the data made available by the National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL) as of the close of business hours on August 3, 2018;
b) To all Members in respect of shares held in physical form after giving effect to valid transfer/transmission in respect of transfer/transmission requests lodged with the Company on or before the close of business hours on August 3, 2018.
AMOUNTS TRANSFERRED TO RESERVES
During the financial year 2017-18, no amount was transferred to General Reserve of the Company.
BRIEF DESCRIPTION OF THE STATE OF COMPANY''S AFFAIRS/ BUSINESS PERFORMANCE
Your Company''s Royal Enfield unit continues to grow significantly. It sold 8,20,492 motorcycles in the financial year 2017-18, 23.1% more when compared to 2016
17 sales of 6,66,493 motorcycles. Out of 8,20,492 motorcycles sold in 2017-18, 19,262 motorcycles were exported, a growth of 25.2% over previous financial year 2016-17 volume of 15,383 motorcycles.
Net Revenue from operations for 2017-18 year was Rs. 8,957.51 crores, 27.3% growth over previous year (Rs. 7,037.97 crores). Net Sales of spare parts, gear and services increased to Rs. 841.79 crores in 2017-18 from Rs. 581.38 crores in the previous year, registering a growth of 44.8%.
Maximizing operating leverage is a key focus in your Company. This enabled your Company to grow profits faster than revenue from operations. Your Company''s profit before depreciation, interest, exceptional item and Tax was Rs. 2,853.20 crores in 2017-18, a growth of 29.3% over Rs. 2,205.81 crores recorded in 2016-17
MARKET AND FUTURE PROSPECTS
Please refer to Management Discussion & Analysis Report which forms part of the Annual Report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be given pursuant to the provisions of Section 134 of the Companies Act, 2013 ("the Act"), read with the Companies (Accounts) Rules, 2014 is provided under Annexure-1.
DISCLOSURE REGARDING ISSUE OF SWEAT EQUITY SHARES AND EQUITY SHARES WITH DIFFERENTIAL RIGHTS
The Company has not issued any sweat equity shares or equity shares with differential rights during the financial year.
CHANGES IN SHARE CAPITAL & EICHER EMPLOYEE STOCK OPTION PLAN, 2006
The paid up Equity Share Capital of the Company as on March 31, 2018, was Rs. 27,25,55,490/-. During the year under review, the Company has issued 45,300 Equity Shares of face value of Rs. 10 each pursuant to its Employees Stock Option Plan, 2006.
A Statement giving complete details as at March 31, 2018, pursuant to Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 is available on the website of the Company and the weblink for the same is http://www.eicher.in/uploads/1530017922_ directors-report-ESOP-annexure-2017-18.pdf
The Employee Stock Option Plan for grant of stock options has been implemented in accordance with the SEBI Regulations. A certificate from M/s S.R. Batliboi & Co.,
LLP, Statutory Auditors, in this regard would be placed at the ensuing Annual General Meeting for inspection by the members. The Company has not changed its Employee Stock Option Plan during the year.
Further, details of options granted and exercised are included in Note no. 47 in the notes to accounts forming part of consolidated financial statements.
DEPOSITS
The Company has not accepted any deposits from the public/ members under Section 73 of the Act read with Companies (Acceptance of Deposits) Rules, 2014 during the financial year under review. The Company has not renewed/accepted fixed deposits after May 29, 2009. There are no deposits that remain unclaimed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with Section 149(7) of the Act, all the Independent Directors of the Company have given written declarations to the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1) of SEBI LODR, Regulations, 2015.
During the year under review, Mr. Priya Brat, Non Executive Independent Director of the Company resigned from the Board w.e.f. June 16, 2017. Further, Mr. M.J. Subbaiah, Non Executive Independent Director of the Company resigned from the Board w.e.f. March 31, 2018. There has been no other change in the Directors and Key Managerial Personnel of the Company during the financial year under review.
COMPANY''S POLICY ON DIRECTORS'' APPOINTMENT AND REMUNERATION
company''s Hiring & Employment Policy:
A number of factors are considered towards selecting candidates at the Board level which include:
- Ability to contribute to strategic thinking
- Proficiency in Governance norms, policies and mechanisms at the Board level
- Relevant cross industry/functional experience, educational background, skills and experience
- Wherever relevant, independence of Directors in terms of applicable regulations.
It is expected that the Individual Board members are willing to learn the business of the Company and to devote the necessary time and effort to be well-informed.
With respect to core competencies and personal reputation, our practices ensure through the selection process that all Directors:
- Exhibit integrity and accountability
- Exercise informed judgment
- Are financially literate
- Are mature and confident individuals
- Operate with high performance standards
Removal of Directors
Under extreme circumstances and in highly unusual situations it may become necessary to remove a member from the Board of Directors. Reasons for doing so, may relate to any of the following (indicative; other than as provided under the Companies Act, 2013):
i. Breach of confidentiality in anyway
ii. Failure to meet obligatory procedures in the disclosure of conflict of interest
iii. Failure to fulfil the fiduciary duties of a Director for the Company
iv. Acting in any other manner which is against the interests of the Company
company''s Remuneration Policy:
The Company''s Compensation Strategy defines the principles underlying compensation philosophy for its employees. Compensation is a critical piece of overall human-resources strategy and broadly refers to all forms of financial returns and tangible benefits that employees receive as a part of their employment relationship.
The Remuneration/Compensation Policy of the Company is designed to attract, motivate and retain manpower. This Policy applies to Directors and Senior Management including Key Managerial Personnel (KMP) and other employees of the Company.
The remuneration of the Managing Director, Executive Director, KMPs and CXOs of the Company is recommended by the Nomination and Remuneration Committee based on criteria such as industry benchmarks, the Company''s performance vis-a-vis the industry, responsibilities and performance assessment. The Company pays remuneration by way of salary, perquisites and allowances (fixed component), incentive remuneration and/or commission (variable components).
Loans/ advances may be extended to employees below the executive level subject to approval of Human Resources department. The maximum amount of loan/ advance that can be granted to an employee shall not exceed one month''s gross salary or Rs. 40,000, whichever is higher.
Additionally, in the event of exigencies arising due to calamities, the Company may provide financial assistance to any affected employee by way of extending interest-free loan for an amount not exceeding his/her two months'' gross salary.
Remuneration by way of commission to the Non-Executive Directors shall be decided by the Board of Directors within the ceiling of a sum not exceeding 1% per annum of the net profits of the Company, calculated in accordance with the provisions of the Act and as approved by the members from time to time by passing a resolution in the general meeting.
Remuneration of KMPs and employees largely consists of basic remuneration, perquisites, allowances, performance incentives and employee stock options granted pursuant to the Employees Stock Option Plan of the Company. The components of remuneration vary for different employee levels and are governed by the compensation trends in the industry, qualifications and experience of the employee and his/her responsibility areas, employee performance assessment, etc.
ANNUAL EVALUATION OF BOARD, COMMITTEES AND INDIVIDUAL DIRECTORS
During the financial year under review, formal annual evaluation of the Board, its committees and individual Directors was carried out pursuant to the Board Performance Evaluation Policy of the Company and provisions of the Companies Act, 2013 and SEBI LODR Regulations, 2015.
The performance of the Board and Committees was evaluated after seeking inputs from all the Directors on the basis of the criteria such as Board/ Committee constitution, frequency of meetings, effectiveness of processes etc. The performance of individual Directors (including Independent Directors) was evaluated by the Board and Nomination & Remuneration Committee (excluding the Director being evaluated) after seeking inputs from all Directors on the basis of the criteria such as thought contribution, business insights and applied knowledge.
A separate meeting of Independent Directors was also held to review the performance of the Managing Director, performance of the Board as a whole and performance of the Chairperson of the Company. Review of the performance of the Chairperson was done after taking into account the views of the Executive Director and Non-Executive Directors (excluding the Chairman being evaluated).
MEETINGS OF BOARD OF DIRECTORS
Four (4) meetings of the Board of Directors of the Company were conducted during the financial year. The details of Board/Committee/Shareholder meetings are provided under the Corporate Governance Report which forms part of the Annual Report.
DETAIL OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE ACT
The details of loans, guarantees and investments made by the Company during the year under review which are covered under Section 186 of the Act are provided under Annexure-2.
PARTICULARS OF RELATED PARTY TRANSACTIONS
All contracts/ arrangements/ transactions entered into by the Company during the financial year with related parties are in compliance with the applicable provisions of the Companies Act, 2013 and SEBI LODR Regulations, 2015. Requisite approval of the Audit Committee and the Board (wherever required) was obtained by the Company for all Related Party Transactions.
There were no materially significant Related Party Transactions made by the Company with Promoters, Directors or Key Managerial Personnel, subsidiaries, joint ventures and associate Companies which may have a potential conflict with the interest of the Company. There are no transactions that are required to be reported in Form AOC-2, hence the said form does not form part of this report. However, the details of the transactions with Related Parties are provided in the Company''s financial statements in accordance with Indian Accounting Standards.
The Company has a Policy on materiality of and dealing with Related Party Transactions, as approved by the Board, which is available at its website www.eichermotors.com.
AUDIT COMMITTEE
The Audit Committee of the Company is constituted pursuant to the requirements of the Companies Act, 2013 and SEBI LODR Regulations, 2015. At present, members of the Audit Committee are:
Sl. No. |
Name of Members |
1 Mr. S Sandilya (Chairman) |
|
2 |
Mr. Siddhartha Lal |
3 |
Mr. Prateek Jalan |
During the year under review, Mr. Priya Brat, Non Executive Independent Director, Member of the Audit Committee and Mr. M J Subbaiah, Non Executive Independent Director, Chairman of the Audit Committee, resigned from the Board w.e.f. June 16,
2017 and March 31, 2018, respectively.
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM
The Company has formulated a Whistle Blower Policy to establish a vigil mechanism for Directors, employees and vendors of the Company to report concerns about unethical behavior, actual or suspected fraud or violation of the Company''s Code of Conduct or Ethics Policy. The Whistle Blower Policy is available on the website of the Company.
SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES
Highlights of performance of subsidiaries and joint venture companies and their contribution to the overall performance of the company during the year under review
Royal Enfield North America Limited (RENA)
RENA was incorporated in March 2015 as a 100% subsidiary of Eicher Motors Limited to manage the distribution and sales of Royal Enfield products and services including, motorcycles, spares and gear in North America. It sold 754 motorcycles during the year 2017-18 and achieved revenue of Rs.19.69 crores. As of March 2018, RENA had contracted with 71 multi brand outlets in USA.
Royal Enfield canada Limited (REcA)
RECA is a 100% subsidiary of RENA. RECA was incorporated in April 2016 in Canada to manage the distribution and sales of Royal Enfield products and services including, motorcycles, spares and gear in Canada. During the year 2017-18, the company sold 78 motorcycles and achieved revenue of Rs.2.24 crores. As of March 2018, RECA had contracted with 11 multi brand outlets in Canada.
Royal Enfield Brasil comercio de Motocicletas Ltda.
Royal Enfield started its operations in Brazil through a direct distribution company by the name of Royal Enfield Brasil Comercio De Motocicletas LTDA in 2016-17, with the launch of its first stand-alone exclusive store in Sao Paulo. The Company started its commercial sales from April 2017 with the launch of an exclusive store. During the first year of its operation in 2017-18, the company sold 429 motorcycles and achieved revenue of Rs.11.08 crores.
VE Commercial Vehicles Limited
Overview of performance covered separately in the Annual Report.
Report containing salient features of financial statements of subsidiaries and joint venture companies
Pursuant to the provisions of Section 129(3) of the Act, a report containing salient features of the financial statements of Company''s subsidiaries and joint venture Companies in Form AOC-1 is attached as Annexure-3.
COMPANIES WHICH HAVE BECOME OR CEASED TO BE COMPANY''S SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR
During the financial year under review, no Company has become or ceased to be Company''s subsidiary, joint venture or associate company.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY''S OPERATIONS IN FUTURE
There are no significant material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the Company and its future operations. However, members'' attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the Financial Statements.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Details of internal financial control and its adequacy are included in the Management Discussion and Analysis Report, which forms part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
The Company has constituted a Corporate Social Responsibility (CSR) Committee and has framed a Corporate Social Responsibility Policy and identified Healthcare, Children''s education, Road safety, Environmental sustainability, Local Area Development in, including but not limited to, areas around Company''s establishments & in Himalayas and Livelihood development including vocational training for underprivileged as some of the key areas. The Company will continue to support social projects that are consistent with the Policy.
Corporate Social Responsibility Committee of the Company is constituted as follows:
1. Mr. S Sandilya - Chairman
2. Mr. Siddhartha Lal
3. Mr. Prateek Jalan
Annual Report on CSR activities is annexed as Annexure-4.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordance with the requirements of Ind AS-110 "Consolidated Financial Statements" and Ind AS 28 "Investment in Associates and Joint ventures", prescribed under Section 133 of the Companies Act, 2013, read with the rules issued thereunder. The Company, its subsidiaries and jointly controlled entities adopted Indian Accounting Standard ("Ind AS") from April 1, 2016. The consolidated financial statements are provided in the Annual Report. A statement containing the salient features of the financial statements of each of the subsidiary and joint venture in the prescribed Form AOC-1 is attached.
Pursuant to Section 136 of the Act, the financial statements, consolidated financial statements and separate audited accounts of the subsidiaries are available on the website of the Company at www.eichermotors.com. These are also available for inspection by the shareholders at the Registered Office of the Company during business hours. The Company shall provide free of cost, the copies of the financial statements of the Company and its subsidiary Companies to the shareholders upon their request. The consolidated total Comprehensive income of the Company and its subsidiaries amounted to Rs. 1969.64 Crores for the financial year 2017 18 as compared to Rs. 1,664.65 crores for the previous period 2016-17.
AUDITORS
(a) statutory auditors AND THEiR REPoRT
M/s S.R. Batliboi & Co., LLP, Chartered Accountants (Firm Registration Number: FRN 301003E/E300005) were appointed as Statutory Auditors in the 35th (Thirty Fifth) Annual General Meeting (AGM) of the Company for a period of five years, from the conclusion of 35th AGM till the conclusion of the 40th AGM of the Company, subject to ratification of their appointment at every AGM by the shareholders, if required pursuant to the provisions of the Companies Act, 2013 ("Act"). Central Government vide Companies (Amendment) Act, 2017 has amended the provisions of Section 139 of the Act and ratification of appointment of Statutory Auditors in every AGM is no longer required. Therefore matter relating to ratification of appointment of M/s S.R. Batliboi & Co., LLP, Statutory Auditors of the Company is not required to be placed before the members at the ensuing 36th Annual General Meeting.
The Statutory Auditors had carried out audit of financial statements of the Company for the financial year ended March 31, 2018 pursuant to the provisions of the Act.
The reports of Statutory Auditors forms part of the Annual Report. The reports are self-explanatory and does not contain any qualifications, reservations or adverse remarks.
(b) SECRETARIAL AUDITORS AND THEIR REPORT
The Board of Directors has appointed M/s. RDA & Associates, Company Secretaries, to conduct Secretarial Audit for the financial year ended March 31, 2018.
As required under Section 204 of the Companies Act, 2013, the Secretarial Audit Report is annexed as Annexure-5. The Secretarial Auditors'' Report is self-explanatory and does not contain any qualifications or adverse remarks.
(c) COST AUDITOR
Mr. V Kalyanaraman, a qualified Cost Accountant, has been appointed as the cost auditor to carry out audit of the cost records of the Company for the financial year 2017-18 pursuant to the provisions of the Companies Act, 2013. The Cost auditor shall submit his report to the Board of Directors within the time prescribed under Companies Act, 2013 and the rules made hereunder.
CORPORATE GOVERNANCE, MANAGEMENT DISCUSSION & ANALYSIS AND BUSINESS RESPONSIBILITY REPORTS
As per SEBI LODR Regulations, 2015, Corporate Governance Report together with the Auditors'' certificate regarding compliance of conditions of Corporate Governance, Management Discussion & Analysis Report and Business Responsibility Report form part of the Annual Report.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 92(3) of the Act, the details forming part of the extract of the Annual Return in Form MGT-9 is annexed as Annexure-6.
DIRECTORS RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:
a) that in the preparation of the annual Financial Statements for the year ended March 31, 2018, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
b) that such accounting policies as mentioned in Note no. 3 of the Notes to the Financial Statements have been selected and applied consistently and judgment and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profits of the Company for the year ended on that date;
c) that proper and sufficient care has been taken 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) that the annual Financial Statements have been prepared on a going concern basis;
e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively; and
f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
PARTICULARS OF EMPLOYEES
Disclosures 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:
1) Ratio of the remuneration of each director to the median remuneration of the employees of the Company and the percentage increase in remuneration of Directors & KMPs in the Financial Year:
Sl. No. |
Name of the director/KMP |
designation |
Ratio of Remuneration of each director to Median Remuneration of Employees |
Percentage increase in Remuneration for FY 2017-18 over FY 2016-17 |
1 |
Mr. S Sandilya |
Chairman & Non-Executive Independent Director |
8.2 |
9.40 |
2 |
Mr. Siddhartha Lal |
Managing Director and CEO |
137.8 |
0.12 |
3 |
Mr. Priya Brat* |
Non-Executive Independent Director |
0.10 |
N.A.* |
4 |
Mr. M J SubbaiahA |
Non-Executive Independent Director |
1.7 |
3.76 |
5 |
Mr. Prateek Jalan |
Non-Executive Independent Director |
3.7 |
(12.22) |
6 |
Ms. Manvi Sinha |
Non-Executive Independent Director |
1.7 |
17.18 |
7 |
Mr. Lalit Malik |
Chief Financial Officer |
- |
(17.97) |
8 |
Mr. Manhar Kapoor |
General Counsel and Company Secretary |
- |
7.34 |
*Mr Priya Brat, Non Executive Independent Director, resigned from the Board w.e.f. June 16,2017. Hence, percentage increase in remuneration is not applicable.
Mr. M.J. Subbalah, Non Executive Independent Director, resigned from the Board w.e.f. March 31, 2018.
2) Percentage increase in the median remuneration of the employees in the financial year: 10%
3) Number of permanent employees on the rolls of Company as at March 31, 2018: 3,085 employees.
4) The average increase in median remuneration of the employees other than managerial personnel was 10% as compared to the increase in the managerial remuneration by -4%.
5) It is hereby affirmed that the remuneration is paid as per the Remuneration Policy of the Company.
Further, a statement containing particulars of top ten employees in terms of the remuneration drawn and employees drawing remuneration in excess of the limits set out in Rule 5(2) & (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are provided as part of the Directors Report. However, in terms of provisions of Section 136 of the said Act, the Annual Report is being sent to all the members of the Company and others entitled thereto, excluding the said statement. Any member interested in obtaining such particulars may write to the Company Secretary. The said information is also available for inspection at the Registered Office of the Company during working hours.
RISK MANAGEMENT
Requisite information is provided under Management Discussion and Analysis Report which forms part of the Annual Report.
COMPLIANCE OF SECRETARIAL STANDARDS
During the financial year under review, the Company has complied with applicable Secretarial Standards on Board and General Meetings specified by the Institute of Company Secretaries of India pursuant to Section 118 of the Companies Act, 2013.
SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has zero tolerance towards sexual harassment at the workplace and towards this end, has adopted a policy in line with the provisions of Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 ("Act") and the Rules made hereunder. All employees (permanent, contractual, temporary, trainees) are covered under the said policy. An Internal Complaints'' Committee has also been set up to redress complaints received on sexual harassment. No complaint of sexual harassment was pending at the beginning of the financial year. During the financial year under review, the Company received one complaint of sexual harassment. The said complaint was investigated and disposed of in the month of April 2018 in accordance with the Act and the Company''s Policy on Prevention, Prohibition and Redressal of Sexual Harassment at workplace.
The Company also conducts various programs in the organization on a continuous basis in order to build awareness in this area.
ACKNOWLEDGEMENT
We thank our customers, business associates and bankers for their continued support during the financial year.
We wish to convey our deep appreciation to the dealers of the Company for their achievements in the area of sales and service, and to suppliers/ vendors for their valuable support.
We also place on record our sincere appreciation for the enthusiasm and commitment of Company''s employees for the growth of the Company and look forward to their continued involvement and support.
For Eicher Motors Limited
Siddhartha Lal S. Sandilya
Managing Director Chairman
& Chief Executive Officer DIN: 00037542 DIN: 00037645
Place: Gurugram, Haryana
Date: May 9, 2018
Mar 31, 2017
To the Members of Eicher Motors Limited
The Directors have pleasure in presenting the Thirty Fifth Annual Report along with the Audited Financial Statements of your Company for the financial year ended March 31, 2017.
FINANCIAL RESULTS
Your Company achieved an all-time high top line growth during the financial year 2016-17 with Net revenue from operations at Rs. 7,037.97 crores. The profit before depreciation and interest amounted to Rs. 2,205.81 crores, which is 31.3% of the Net revenue. After accounting for other income of Rs. 227.31 crores, interest expense of Rs. 2.79 crores and depreciation of Rs. 153.34 crores, profit before tax amounted to Rs. 2,276.99 crores. Profit after tax amounted to Rs. 1,560.02 crores after income tax provision of Rs. 716.97 crores. Total comprehensive income for the year, net of tax amounted to Rs. 1,559.94 crores.
The financial year under review commenced on April 1, 2016 and ended on March 31, 2017, being a period of 12 (twelve) months. The preceding period for which comparative figures are given commenced on January 1, 2015 and ended on March 31, 2016, being a period of 15 (fifteen) months. The financial results are summarised below:
Rs. in Crores |
||
Particulars |
For the financial year ended March 31, 2017 (12 months period) |
For the financial year ended March 31, 2016 (15 months period) |
Revenue from operations (net) |
7,037.97 |
6,186.19 |
Profit before depreciation and interest |
2,205.81 |
1,708.19 |
Interest |
2.79 |
2.12 |
Depreciation |
153.34 |
136.55 |
Profit before other income and tax |
2,049.68 |
1,569.52 |
Other income |
227.31 |
283.49 |
Profit before tax |
2,276.99 |
1,853.01 |
Provision for tax (including deferred tax) |
716.97 |
543.79 |
Net profit after tax |
1,560.02 |
1,309.22 |
Other comprehensive income |
(0.08) |
(0.46) |
Total comprehensive income for the year/period, net of tax |
1,559.94 |
1,308.76 |
Balance in statement of profit and loss brought forward from previous year |
1,916.67 |
1,199.10 |
Amount available for appropriation: |
3,476.61 |
2,507.86 |
Interim dividend |
- |
271.61 |
Final dividend (proposed) |
272.10 |
- |
Earnings per share |
||
- Basic (Rs.) |
573.75 |
482.45 |
- Diluted (Rs.) |
572.17 |
480.68 |
CHANGE IN THE NATURE OF BUSINESS, IF ANY
There is no change in the nature of business of the Company during the financial year under review.
MATERIAL CHANGES AND COMMITMENTS AFFECTING THE FINANCIAL POSITION OF THE COMPANY THAT HAVE OCCURRED AFTER MARCH 31, 2017 TILL THE DATE OF THIS REPORT
There are no material changes or commitments affecting the financial position of the Company which have occurred after March 31, 2017 till the date of this report.
DIVIDEND
The Board of Directors in their meeting held on May 5, 2017 had approved payment of dividend of Rs. 100/- per Equity Share (@ 1000%) of face value of Rs. 10/- each out of the profits for the financial year 2016-17.
The dividend, if approved by the shareholders shall be paid in the following manner:
a) To all Beneficial Owners in respect of shares held in dematerialised form as per the data made available by the National Securities Depository Limited (NSDL) and the Central Depository Services (India) Limited (CDSL) as of the close of business hours on August 1, 2017.
b) To all Members in respect of shares held in physical form after giving effect to valid transfer/transmission in respect of transfer/transmission requests lodged with the Company on or before the close of business hours on August 1, 2017.
AMOUNTS TRANSFERRED TO RESERVES
During the financial year 2016-17, no amount was transferred to General Reserve of the Company.
BRIEF DESCRIPTION OF THE STATE OF COMPANYâS AFFAIRS/BUSINESS PERFORMANCE
Your Companyâs Royal Enfield unit continues to grow significantly. It sold 6,66,493 motorcycles in the financial year 2016-17 (12 months), 10.9% more when compared to financial year 2015-16 (15 months) sales of 6,00,944 motorcycles. Out of 6,66,493 motorcycles sold in 2016-17 (12 months), 15,383 were exported, a growth of 32% over previous year volume of 11,653 motorcycles in 2015-16 (15 months).
Net Revenue from operations for financial year 2016-17 (12 months) was Rs. 7,037.97 crores, 13.8% growth over previous year (Rs. 6,186.19 crores for 15 months). Net sales of spare parts, gears and services increased to Rs. 581.38 crores in 2016-17 (12 months) from Rs. 445.25 crores in the previous year (15 months), registering a growth of 30.6%.
Maximising operating leverage is a key focus in your Company. This enabled your Company to grow profits faster than revenue from operations. Your Companyâs profit before depreciation, interest and tax was Rs. 2,205.81 crores in 201617 (12 months), a growth of 29.1% over Rs. 1,708.19 crores recorded in 2015-16 (15 months).
MARKET AND FUTURE PROSPECTS
Please refer to Management Discussion & Analysis Report which forms part of the Annual Report.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO
Information on conservation of energy, technology absorption and foreign exchange earnings & outgo, as required to be given pursuant to the provisions of Section 134 of the Companies Act, 2013 (âthe Actâ), read with the Companies (Accounts) Rules, 2014 is provided under Annexure-1.
DISCLOSURE REGARDING ISSUE OF SWEAT EQUITY SHARES AND EQUITY SHARES WITH DIFFERENTIAL RIGHTS
The Company has not issued any sweat equity shares or equity shares with differential rights during the financial year.
CHANGES IN SHARE CAPITAL & EICHER EMPLOYEES STOCK OPTION PLAN 2006
The paid-up Equity Share Capital of the Company as on March 31, 2017 was Rs. 27,21,02,490/-. During the year under review, the Company has issued 49,066 Equity Shares of face value of Rs. 10 each pursuant to its Employees Stock Option Plan.
A Statement giving complete details pursuant to Regulation 14 of the SEBI (Share Based Employee Benefits) Regulations, 2014 is available on the website of the Company and the weblink for the same is http://www.eicher.in/ uploads/1498884728_ESOP%20Statement%202016-17.pdf
The Employee Stock Option Plan for grant of stock options has been implemented in accordance with the SEBI Regulations. A certificate from M/s Deloitte Haskins & Sells, Statutory Auditors in this regard would be placed at the ensuing Annual General Meeting for inspection by the members. The Company has not changed its Employees Stock Option Plan during the year.
Further, details of options granted and exercised are included in Note no. 47 in the notes to accounts forming part of financial statements.
DEPOSITS
The Company has not accepted any deposits from the public/ members under Section 73 of the Act read with Companies (Acceptance of Deposits) Rules, 2014 during the financial year under review. The Company has not renewed / accepted fixed deposits after May 29, 2009. There are no deposits that remain unclaimed.
DIRECTORS AND KEY MANAGERIAL PERSONNEL
The shareholders of the Company in the 34th (thirty fourth) Annual General Meeting (AGM) held on June 18, 2016 had approved re-appointment of Mr. Siddhartha Lal as Managing Director of the Company for a term of 5 years effective from May 1, 2016. Mr. Siddhartha Lal, being a non-resident Indian, his reappointment required approval of Ministry of Corporate Affairs and the same was obtained vide Central Government approval letter dated October 25, 2016.
The Nomination & Remuneration Committee and the Board at their respective meetings held on May 5, 2017 have, subject to the approval of the shareholders, approved the remuneration payable to Mr. Siddhartha Lal as Managing Director of the Company w.e.f. May 1, 2017. Details of remuneration proposed to be paid to Mr. Siddhartha Lal is set out in the Notice convening the 35th (thirty fifth) AGM to be read with the explanatory statement attached thereto, for approval of the shareholders in the AGM.
In accordance with Section 149(7) of the Act, all the Independent Directors of the company have given written declarations to the Company confirming that they meet the criteria of independence as laid down under Section 149(6) of the Act and Regulation 16(1) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
There has been no change in the Directors and Key Managerial Personnel of the Company during the year under review.
COMPANYâS POLICY ON DIRECTORSâ APPOINTMENT AND REMUNERATION
Companyâs Hiring & Employment Policy:
A number of factors are considered towards selecting candidates at the Board level which include:
- Ability to contribute to strategic thinking
- Proficiency in governance norms, policies and mechanisms at the Board level
- Relevant cross industry/functional experience, educational background, skills and experience
- Wherever relevant, independence of Directors in terms of applicable regulations
It is expected that the Individual Board members are willing to learn the business of the Company and to devote the necessary time and effort to be well-informed.
With respect to core competencies and personal reputation, our practices ensure through the selection process that all Directors:
- Exhibit integrity and accountability
- Exercise informed judgement
- Are financially literate
- Are mature and confident individuals
- Operate with high performance standards
Removal of Directors
Under extreme circumstances and in highly unusual situations it may become necessary to remove a member from the Board of Directors. Reasons for doing so, may relate to any of the following (indicative; other than as provided under the Companies Act, 2013):
i. Breach of confidentiality in anyway
ii. Failure to meet obligatory procedures in the disclosure of conflict of interest
iii. Failure to fulfil the fiduciary duties of a Director for the company
iv. Acting in any other manner which is against the interests of the company
Companyâs Remuneration Policy:
The Companyâs Compensation Strategy defines the principles underlying compensation philosophy for its employees. compensation is a critical piece of overall human-resources strategy and broadly refers to all forms of financial returns and tangible benefits that employees receive as a part of their employment relationship.
The Remuneration/Compensation Policy of the Company is designed to attract, motivate and retain manpower. This Policy applies to Directors and Senior Management including Key Managerial Personnel (KMP) and other employees of the Company.
The remuneration of the Managing Director, Executive Director, KMPs and CXOs of the Company is recommended by the Nomination & Remuneration Committee based on criteria such as industry benchmarks, the Companyâs performance vis-a-vis the industry, responsibilities and performance assessment. The Company pays remuneration by way of salary, perquisites and allowances (fixed component), incentive remuneration and/or commission (variable components).
Loans/advances may be extended to employees below the executive level subject to approval of Human Resource department. The maximum amount of loan/advance that can be granted to an employee shall not exceed one monthâs gross salary or Rs. 40,000, whichever is higher.
Additionally, in the event of exigencies arising due to calamities, the Company may provide financial assistance to any affected employee by way of extending interest-free loan for an amount not exceeding his/her two monthsâ gross salary.
Remuneration by way of commission to the Non-Executive Directors shall be decided by the Board of Directors within the ceiling of a sum not exceeding 1% per annum of the net profits of the Company, calculated in accordance with the provisions of the Act and as approved by the members from time to time by passing a resolution in the general meeting.
Remuneration of KMPs and employees largely consists of basic remuneration, perquisites, allowances, performance incentives and employee stock options granted pursuant to the Employees Stock Option Plan of the Company. The components of remuneration vary for different employee levels and are governed by the compensation trends in the industry, qualifications and experience of the employee and his/her responsibility areas, employee performance assessment, etc.
ANNUAL EVALUATION OF BOARD, COMMITTEES AND INDIVIDUAL DIRECTORS
During the financial year under review, formal annual evaluation of the Board, its committees and individual Directors was carried out pursuant to the Board Performance Evaluation Policy of the Company and provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.
The performance of the Board and committees was evaluated after seeking inputs from all the Directors on the basis of the criteria such as Board/committee constitution, frequency of meetings, effectiveness of processes, etc. The performance of individual Directors (including Independent Directors) was evaluated by the Board and Nomination & Remuneration committee (excluding the Director being evaluated) after seeking inputs from all Directors on the basis of the criteria such as thought contribution, business insights and applied knowledge.
A separate meeting of Independent Directors was also held to review the performance of the Managing Director, performance of the Board as a whole and performance of the Chairperson of the Company. Review of the performance of the Chairperson was done after taking into account the views of the Executive Director and Non-Executive Directors (excluding the Chairman being evaluated).
MEETINGS OF BOARD OF DIRECTORS
Six (6) meetings of the Board of Directors of the Company were conducted during the financial year. The details of Board/Committee/Shareholder meetings are provided under the corporate Governance Report which forms part of the Annual Report.
DETAIL OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 186 OF THE ACT
The details of loans, guarantees and investments made by the Company during the year under review which are covered under Section 186 of the Act are provided under Annexure-2.
PARTICULARS OF RELATED PARTY TRANSACTIONS
All contracts/arrangements/transactions entered into by the Company during the financial year with related parties are in compliance with the applicable provisions of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Requisite approval of the Audit Committee and the Board (wherever required) was obtained by the Company for all Related Party Transactions. During the year under review, the Company has paid stamp duty on behalf of Eicher Goodearth Private Limited (EGPL), a related party to facilitate certain transaction between EGPL and a third party. Stamp Duty was repaid to the Company on the same day.
There were no materially significant Related Party Transactions made by the Company with Promoters, Directors, Key Managerial Personnel or other designated persons, subsidiaries, joint ventures and associate Companies which may have a potential conflict with the interest of the Company. There are no transactions that are required to be reported in Form AOC-2, hence the said form does not Form part of this report. However, the details of the transactions with Related Parties are provided in the Companyâs financial statements in accordance with Indian Accounting Standards.
The Company has a Policy on materiality of and dealing with Related Party Transactions, as approved by the Board, which is available at its website www.eichermotors.com.
AUDIT COMMITTEE
The Audit committee of the company is constituted pursuant to the requirements of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Members of the Audit Committee are:
Sl. No. |
Name |
|
1 |
Mr. M J Subbaiah, Chairman |
|
2 |
Mr. S Sandilya |
|
3 |
Mr. Siddhartha Lal |
|
4 |
Mr. Priya Brat |
|
5 |
Mr. Prateek Jalan |
|
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM
The Company has formulated a Whistle Blower Policy to establish a vigil mechanism for Directors and employees of the Company to report concerns about unethical behaviour, actual or suspected fraud or violation of the companyâs code of conduct or ethics policy. The Whistle Blower Policy is available on the website of the Company.
SUBSIDIARIES, ASSOCIATE AND JOINT VENTURE COMPANIES
Highlights of performance of subsidiary and joint venture companies and their contribution to the overall performance of the Company during the year under review
Royal Enfield North America Limited (RENA)
RENA was incorporated in March 2015 as a 100% subsidiary of Eicher Motors Limited to manage the distribution and sales of Royal Enfield products and services including, motorcycles, spares and gear in North America. During the year it opened the first showroom in Milwaukee, Wisconsin. It sold 561 motorcycles during the year 2016-17 and achieved revenue of Rs.16.26 crores. As of March 2017, RENA had contracted with 42 multi brand outlets in USA.
Royal Enfield Canada Limited (RECA)
RECA is a 100% subsidiary of RENA. RECA was incorporated in April 2016 in Canada to manage the distribution and sales of Royal Enfield products and services including, motorcycles, bikes, spares and gear in Canada. During the first year of its operation in 2016-17, the company sold 52 motorcycles and achieved revenue of Rs.1.61 crores. As of March 2017, RECA had contracted with 8 multi brand outlets in Canada.
Royal Enfield Brasil Comercio De Motocicletas Ltda.
Royal Enfield started its operations in Brazil through a direct distribution company by the name of Royal Enfield Brasil Comercio De Motocicletas LTDA in 2016-17, with the launch of its first stand-alone exclusive store in Sao Paulo. The Company started its commercial sales from April 2017 with the launch of an exclusive store. The store is located in Av. Republica do Libano, Moema, an upscale neighbourhood in the Central/South area of Sao Paulo City. Along with the motorcycles, an exclusive range of gear consisting of lifestyle apparels, riding gear and lifestyle accessories were also introduced into the Brazilian market.
VE Commercial Vehicles Limited
Overview of performance covered separately in the Annual Report.
Eicher Polaris Private Limited
Overview of performance covered separately in the Annual Report.
Report containing salient features of financial statements of subsidiaries and joint venture companies
Pursuant to the provisions of Section 129(3) of the Act, a report containing salient features of the financial statements of Companyâs subsidiary and joint venture Companies in Form AOC-1 is attached as Annexure-3.
COMPANIES WHICH HAVE BECOME OR CEASED TO BE COMPANYâS SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES DURING THE YEAR
During the year under review, Royal Enfield Canada Limited was incorporated w.e.f. April 19, 2016, as a wholly-owned subsidiary of Royal Enfield North America Limited, which is a wholly-owned subsidiary of the Company. Also, Eicher Engineering Solutions, Inc. and its wholly-owned subsidiaries, Eicher Engineering Solutions (Shanghai) Co. Ltd and Eicher Engineering Solutions (Beijing) Co. Ltd. have ceased to be subsidiaries of VE Commercial Vehicles Limited, a subsidiary of the Company, and in turn, have also ceased to be subsidiaries of the Company w.e.f. March 17, 2017.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANYâS OPERATIONS IN FUTURE There are no significant material orders passed by the Regulators or Courts or Tribunals which would impact the going concern status of the company and its future operations. However, members attention is drawn to the statement on contingent liabilities, commitments in the notes forming part of the Financial Statements.
DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THE FINANCIAL STATEMENTS
Details of internal financial controls and its adequacy are included in the Management Discussion & Analysis Report, which forms part of the Annual Report.
CORPORATE SOCIAL RESPONSIBILITY
The company has constituted a corporate Social Responsibility (CSR) Committee and has framed a Corporate Social Responsibility Policy and identified Healthcare, Childrenâs Education, Road Safety and Environmental Sustainability as some of the key areas. The Company will continue to support social projects that are consistent with the Policy.
Corporate Social Responsibility Committee of the Company is constituted as follows:
1. Mr. S Sandilya - Chairman
2. Mr. Siddhartha Lal
3. Mr. Prateek Jalan
Annual Report on CSR activities is annexed as Annexure-4.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements have been prepared by the Company in accordance with the requirements of Ind AS-110 âConsolidated Financial Statementsâ and Ind AS-28 âInvestment in Associates and Joint Venturesâ, prescribed under Section 133 of the Companies Act, 2013, read with the rules issued thereunder. The Company, its subsidiaries and jointly controlled entities adopted Indian Accounting Standards (âInd ASâ) from April 1, 2016. The consolidated financial statements are provided in the Annual Report. A statement containing the salient features of the financial statements of each of the subsidiary and joint venture in the prescribed Form AOC-1 is attached.
Pursuant to Section 136 of the Act, the financial statements, consolidated financial statements and separate audited accounts of the subsidiaries and joint venture companies will be made available on the website of the Company at www.eichermotors.com. These are also available for inspection by the shareholders at the Registered Office of the Company during business hours. The Company shall provide free of cost, the copy of the financial statements of its subsidiary and joint venture companies to the shareholders upon their request. The consolidated Total Comprehensive income of the Company and its subsidiaries amounted to Rs. 1,664.65 crores for the financial year 2016-17(12 months) as compared to Rs. 1,337.65 crores for the previous period 2015-16 (15 months).
AUDITORS
(a) STATUTORY AUDITORS AND THEIR REPORT
M/s Deloitte Haskins & Sells, Chartered Accountants (Firm Registration Number: 015125N) were re-appointed as Statutory Auditors in the 33rd (thirty third) Annual General Meeting (AGM) of the Company for a period of three years, subject to ratification of their appointment at every AGM by the shareholders.
The shareholders of the Company in the 34th (thirty fourth) AGM held on June 18, 2016 had ratified the appointment of M/s Deloitte Haskins & Sells as Statutory Auditors to hold office as such from the conclusion of 34th (thirty fourth) AGM until the conclusion of the 35th (thirty fifth) AGM. The Statutory Auditors had carried out audit of financial statements of the Company for the financial year ended March 31, 2017 pursuant to the provisions of the Act. The reports of Statutory Auditors forms part of the Annual Report. The reports are self-explanatory and does not contain any qualifications, reservations or adverse remarks.
(b) ROTATION OF STATUTORY AUDITORS
Pursuant to Ministry of Corporate Affairs order dated June 30, 2016, the Company is required to rotate its statutory auditors at the ensuing 35th (thirty fifth) Annual General Meeting.
In this regard, the Company invited proposals from a few leading chartered accountant firms for appointment as Statutory Auditors of the Company. The proposals submitted by the chartered accountant firms were reviewed and evaluated by the Audit Committee.
The Audit Committee recommended M/s. S R Batliboi & Co. LLP, Chartered Accountants (Firm Registration Number: FRN 301003E/E300005), to the Board of Directors for appointment as statutory auditors of the Company for a period of five years. The Board of Directors in their meeting held on February 1, 2017 have decided to recommend appointment of M/s. S R Batliboi & Co.
LLP, Chartered Accountants, as Statutory Auditors of the Company for a period of five years, from the conclusion of 35th AGM till the conclusion of the 40th AGM of the Company, to the shareholders for their approval at the ensuing 35th (thirty fifth) Annual General Meeting.
M/s. S R Batliboi & Co. LLP, Chartered Accountants, have furnished a certificate to the effect that their appointment, if made, would be in accordance with the provisions of Sections 139 and 141 of the Act. As required under the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, the Auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.
(c) SECRETARIAL AUDITORS AND THEIR REPORT
The Board has appointed M/s. RDA & Associates, Company Secretaries, to conduct Secretarial Audit for the financial year ended March 31, 2017. As required under Section 204 of the Companies Act, 2013, the Secretarial Audit Report is annexed as Annexure-5 to this Report. The Secretarial Audit Report is self-explanatory and does not contain any qualifications or adverse remarks which require any clarification or explanation.
(d) COST AUDITOR
Mr. V Kalyanaraman, a qualified Cost Accountant, has been appointed as the cost auditor to carry out audit of the cost records of the Company for the financial year 2016-17 pursuant to the provisions of the Companies Act, 2013. The cost auditor shall submit his report to the Board of Directors.
CORPORATE GOVERNANCE, MANAGEMENT DISCUSSION & ANALYSIS AND BUSINESS RESPONSIBILITY REPORTS
As per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, Corporate Governance Report together with the Auditorsâ certificate regarding compliance of conditions of Corporate Governance, Management Discussion & Analysis Report and Business Responsibility Report form part of the Annual Report.
EXTRACT OF ANNUAL RETURN
Pursuant to the provisions of Section 92(3) of the Act, the details forming part of the extract of the Annual Return in Form MGT-9 is annexed as Annexure-6.
DIRECTORSâ RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013:
a) that in the preparation of the annual Financial Statements for the year ended March 31, 2017, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any;
b) that such accounting policies as mentioned in Note no. 3 of the Notes to the Financial Statements have been selected and applied consistently and judgement and estimates have been made that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company as at March 31, 2017 and of the profits of the Company for the year ended on that date;
c) that proper and sufficient care has been taken 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) that the annual Financial Statements have been prepared on a going concern basis;
e) that proper internal financial controls to be followed by the Company have been laid down and that the financial controls are adequate and were operating effectively; and
f) that proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
PARTICULARS OF EMPLOYEES
Disclosures 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 are as under:
1) Ratio of the remuneration of each Director to the median remuneration of the employees of the company and the percentage increase in remuneration of Directors & KMPs in the Financial Year:
Sl. No. |
Name of the Director/KMP |
Designation |
Ratio of Remuneration of each Director to Median Remuneration of Employees |
Percentage Increase in Remuneration during 2016-17 over 2015-16* |
1 |
Mr. S Sandilya |
Chairman & Non-Executive Independent Director |
8.2 |
-11% |
2 |
Mr. Siddhartha Lal |
Managing Director and CEO |
150.8 |
40% |
3 |
Mr. Priya Brat |
Non-Executive Independent Director |
1.8 |
-11% |
4 |
Mr. M J Subbaiah |
Non-Executive Independent Director |
1.8 |
-9% |
5 |
Mr. Prateek Jalan |
Non-Executive Independent Director |
4.6 |
-12% |
6 |
Ms. Manvi Sinha |
Non-Executive Independent Director |
1.6 |
-13% |
7 |
Mr. Lalit Malik |
Chief Financial Officer |
- |
10% |
8 |
Mr. Manhar Kapoor |
General counsel and company Secretary |
- |
24% |
2) Percentage increase in the median remuneration of the employees in the financial year: -10%*.
3) Number of permanent employees on the rolls of Company as at March 31, 2017: 2274.
4) The average increase in median remuneration of the employees other than managerial personnel was -10%* as compared to the increase in the managerial remuneration by 25%.
5) It is hereby affirmed that the remuneration is paid as per the Remuneration Policy of the Company.
*NOTE: The financial year under review (2016-17) is a period of twelve (12) months, whereas the previous financial year (2015-16) was for a period of fifteen (15) months. Accordingly figures for 2016-17 appear to be lower than those for2015-16.
Further, a statement containing particulars of top ten employees in terms of the remuneration drawn and employees drawing remuneration in excess of the limits set out in Rule 5(2) & (3) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, as amended, are provided in the Directorsâ Report. However, in terms of provisions of Section 136 of the Act, the Annual Report is being sent to all the members of the Company and others entitled thereto, excluding the said statement. Any member interested in obtaining such particulars may write to the Company Secretary. The said information is also available for inspection at the Registered Office of the Company during working hours.
RISK MANAGEMENT
Requisite information is provided under Management Discussion & Analysis Report which forms part of the Annual Report.
SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has zero tolerance towards sexual harassment at the workplace and towards this end, has adopted a policy in line with the provisions of Sexual Harassment of Women at
Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made thereunder. All employees (permanent, contractual, temporary, trainees) are covered under the said policy. An Internal Complaintsâ Committee has also been set up to redress complaints received on sexual harassment. During the financial year under review, the Company has not received any complaint of sexual harassment from any employees of the Company. No complaint of sexual harassment was pending at the beginning of the financial year.
ACKNOWLEDGEMENT
We thank our customers, business associates and bankers for their continued support during the financial year.
We wish to convey our deep appreciation to the dealers of the company for their achievements in the area of sales and service, and to suppliers/vendors for their valuable support.
We also place on record our sincere appreciation for the enthusiasm and commitment of companyâs employees for the growth of the Company and look forward to their continued involvement and support.
For and on behalf of the Board
Siddhartha Lal S. Sandilya
Managing Director Chairman
& Chief Executive Officer DIN: 00037542
DIN: 00037645
Place: Gurugram
Date: May 5, 2017
CIN: L34102DL1982PLC129877
Regd. Off: 3rd Floor-Select Citywalk
A-3 District Centre, Saket
New Delhi - 110 017
Phone: 0124-4415600 Fax: 0124-4415807
Website: www.eichermotors.com
E-mail: [email protected]
Dec 31, 2014
Dear Members,
The Board of Directors has pleasure in presenting the Thirty Third
Annual Report along with the Audited Accounts for the year ended
December 31, 2014.
FINANCIAL RESULTS
Your Company achieved an all-time high top-line growth during the
financial year 2014 with totalrevenue from operations (net) at Rs.
3031.22 crores. The profit before depreciation and interest amounted to
Rs. 733.56 crores, which is 24.2% of the total revenue. After
accounting for interest and dividend income of Rs. 116.30 crores,
interest expense of Rs. 1.67 crores and depreciation of Rs. 50.16
crores, profit before tax amounts to Rs. 798.03 crores. Profit after
tax amounts to Rs. 558.92 crores after income tax provision of Rs.
239.11 crores.
The financial results are summarized below:
Particulars For the year ended For the year ended
December 31, 2014 December 31, 2013
Gross sales 3303.72 1910.68
Less: Excise duty 289.01 215.29
net sales 3014.71 1695.39
Other operating revenue 16.51 7.08
Total revenue from operations
(net) 3031.22 1702.47
Profit before depreciation and
interest 733.56 313.73
Interest 1.67 0.27
Depreciation 50.16 30.41
Profit before other income
and tax 681.73 283.05
Interest and dividend income 116.30 80.10
Profit before tax 798.03 363.15
Provision for tax (including
Deferred tax) 239.11 84.53
Net profit after tax 558.92 278.62
Balance brought forward from
previous year 618.54 455.76
Amount available for
appropriation 1177.46 734.38
Proposed Dividend 135.52 81.12
Corporate Dividend Tax 18.94 6.86
Transfer to General Reserve
Account 55.89 27.86
Balance carried to Balance
Sheet 967.11 618.54
Earnings per share
- Basic (Rs.) 206.38 103.15
- Diluted (Rs.) 205.37 102.58
DIVIDEND
The Directors are pleased to recommend a dividend of 500% (Rs. 50/- per
Equity Share of Rs. 10/- each) for the year ended December 31, 2014.
Last year, your Company has paid dividend of 300% (Rs. 30/- per Equity
Share of Rs. 10/- each) to the shareholders of the Company.
BUSINESS Performance
Your Company''s Royal Enfield unit continues to grow strongly. It sold
3,02,592 motorcycles in the year 2014, 69.9% growth over 2013 sales
volume of 1,78,121 motorcycles. Of 3,02,592 motorcycles sold in 2014,
6,221 were exported, a growth of 46.2% over 2013 volume of 4,256
motorcycles.
Total revenue from operations (net) for the year was Rs. 3031.22
crores, 78.0% growth over previous year (Rs. 1702.47 crores). Net Sales
of spare parts and services increased to Rs. 229.31 crores in 2014 from
Rs. 147.62 crores in the previous year, registering a growth of 55.3%.
Maximising operating leverage is a key focus in your company. This
enabled your company to grow profits faster than net sales from
operations. Your Company''s profit before depreciation and interest was
Rs. 733.56 crores, a growth of 133.8% over Rs 313.73 crores recorded in
2013.
MARKET AND FUTURE PROSPECTS
Your Company''s motorcycle business - Royal Enfield - enjoys high
credibility and has seen phenomenal growth over the years. Your
Company''s focused marketing efforts, improved product quality and
expanded distribution network have enabled the brand to expand its
reach to a much larger customer base.
Your Company has set its goal to be a leader in the global mid-size
motorcycle market. In order to achieve this goal, your Company will
invest in increasing manufacturing capacity, strengthening supply
chain, developing product development infrastructure and expanding
distribution network. Your Company will invest in all these areas to
seize the significant opportunities for growth that it believes lie in
India and international markets.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREiGN EXCHANGE
EARNiNGS AND OUTGO UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956,
READ WiTH THE COMPANiES (DiSCLOSURE OF PARTiCULARS iN THE REPORT OF
BOARD OF DIRECTORS) RULES, 1988
CONSERVATION Of ENERGY
The following new initiatives were taken to conserve energy during the
year 2014:
1. ConventionalDiode rectifiers in Plating Shop replaced by high
efficient IGBT (Integrated Gate Bi-polar Transistor) rectifiers
resulted in savings of 25,660 KWH per annum.
2. Flush coolant pump & Chip conveyor motor of CNC machines in Machine
Shop replaced by Chip Trays resulted in savings of 49,005 KWH per
annum.
3. Drilling machine running time reduction by switching off the motor
after completing each operation in Machine Shop Crank Case and Cover
Cell resulted in savings of 9,450 KWH per annum.
4. Tube lights and lamps replaced by LED lights resulted in savings of
33,426 KWH per annum.
5. PTCED (Pre Treatment Cathodic Electro Deposition) chiller
temperature in Paint Shop optimised using temperature controller
resulted in savings of 10,800 KWH per annum.
6. Street light running time reduced by timer control and old Air-
conditioners replaced by Star rated Split Air-conditioners resulted in
savings of 13,872 KWH per annum.
7. Work area ASU (Air Supply Unit) mancoolers in Paint Shop running
time reduced by temperature controller resulted in savings of 7,800 KWH
per annum.
8. Fuel tank Line - Buffing & Exhaust Blower motor running time reduced
by timer controlresulted in savings of 6,240 KWH per annum.
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
In the following areas, we have designed and developed new systems:
1. Introduction of Maintenance free VRLA Battery for better performance
and extended life.
2. Introduction of double heat treatment process in place of single
heat treatment to achieve the consistency in heat treatment parameters
for Cam Gears to increase wear resistance.
3. Robot welding introduced in the Frame welding process for better
consistent welding.
4. Columbia Homologation approval - Optimisation of after treatment to
suit both Euro II and BS III models to reduce variant.
5. Introduction of Double Side Coated (Electrolytic Zinc coating) sheet
metal for Fuel Tank.
6. Introduction of SS guard in place of Chrome plated sheet metal to
improve corrosion resistance and reduce chrome.
7. Introduction of spigot design in the exhaust system for improved
life and consistent welding process.
8. Introduction of torque controlled clip for hose clamping.
RESEARCH AND DEVELOPMENT
The focus on Research and Development accelerated in 2014. The Company
continues to invest in the development of new products and improvement
in existing products and value engineering projects. Your Company
continues to invest in infrastructure and talent for conducting
research and development activities, as a result of which Rs. 14.75
crores (Previous year Rs. 10.89 crores) was incurred on capital account
and Rs. 19.26 crores (Previous year Rs. 20.88 crores) were spent on
revenue account of Research and Development.
FOREIGN EXCHANGE EARNINGS / EXPENDITURE
During the year, totalexports (FOB value) were Rs. 91.73 crores
(Previous year Rs. 69.01 crores).
Foreign Exchange amounting to Rs. 93.23 crores (Previous year Rs. 66.42
crores) was used on account of import of components, spare parts,
capital goods, business travel and consulting fees during the year
under review.
Please also refer to Points Nos. 46 to 48 of notes to accounts forming
part of AnnualAccounts for further details of Foreign Exchange earnings
and expenditure.
EICHER EMPLOYEE STOCK OPTION PLAN 2006
27,900 stock options have been issued out of the forfeited stock
options during the year ended December 31, 2014 (5,000 stock options
net of forfeited in the previous year).
The Statement giving complete details as at December 31, 2014, pursuant
to Clause 12 (Disclosure in the Directors'' Report) of the
Securities and Exchange Board of India (Employee Stock Option Scheme
and Employee Stock Purchase Scheme) Guidelines 1999, forms part of the
Directors'' Report.
Further, details of options granted and exercised is included at Note
2(iv) in the notes to accounts forming part of Annual Accounts.
PUBLIC DEPOSITS
As on December 31, 2014, there are no public deposits. There are no
deposits that remain unclaimed. The company has not renewed/ accepted
fixed deposits after May 29, 2009.
BOARD OF DIRECTORS
In terms of section 152 of the Companies Act, 2013, the Board has
revised the terms and conditions of appointment of Mr. Siddhartha Lal,
Managing Director of the Company and made him liable to retire by
rotation.
The Board, pursuant to the provisions of Section 149 and 152 of the
Companies Act, 2013 and subject to the approval of shareholders in the
ensuing Annual General Meeting, has appointed Ms. Manvi Sinha as an
Independent Director of the Company for a period of five years, not
liable to retire by rotation.
The Board, pursuant to the provisions of Section 149 and 152 of the
Companies Act, 2013 and subject to the approval of shareholders in the
ensuing Annual General Meeting, has appointed Mr. S. Sandilya, Mr.
Priya Brat, Mr. M.J. Subbaiah and Mr. Prateek Jalan as Independent
Directors of the Company for a period of five years. Mr. S. Sandilya,
Mr. Priya Brat, Mr. M.J. Subbaiah and Mr. Prateek Jalan are existing
directors and were liable to retire by rotation as per the provisions
of the Companies Act, 1956. However in terms of the Companies Act,
2013, they shall not be liable to retire by rotation.
Brief resume of Directors proposed to be appointed along with
additional information pursuant to Clause 49 of the listing agreement
is provided in the notice of this meeting.
Consequent to the expiry of his term on December 31, 2014, Mr. R.L.
Ravichandran had ceased to be a director.
CHANGE IN FINANCIAL YEAR
The financial year of the Company commences on January 1 and ends on
December 31 every year. Pursuant to the provisions of Section 2(41) of
the Companies Act, 2013, the Company is required to change its
financial year, within a period of two years of commencement of the
Act, such that it ends on March 31 every year.
In order to comply with the above statutory requirement, the Board of
Directors at its Meeting held on February 13, 2015, has approved the
change in financial year from ''January-December'' to ''April-March''. The
current financial year of the Company (that commenced on January 1,
2015) will be extended up to March 31, 2016 (being a period of 15
months). Subsequently, the financial year of the Company shall commence
on April 1 and end on March 31 every year.
DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM
The Company has formulated a Whistle Blower Policy to establish a vigil
mechanism for Directors and employees of the Company to report concerns
about unethical behavior, actual or suspected fraud or violation of the
company''s code of conduct or ethics policy. The Whistle Blower Policy
is available on the website of the Company.
SOCIAL CONTRIBUTION
The Company continues to support social causes and has, like in the
previous years, made contributions for promotion of education in
certain backward areas during the year. The Company has constituted a
Corporate SocialResponsibility Committee and has framed a Corporate
SocialResponsibility Policy and identified Healthcare, Children''s
education, Road safety and Environmental sustainability as some of the
key areas. The Company will continue to support social projects that
are consistent with the policy.
UNLISTED SUBSIDIARIES OF EICHER MOTORS LIMITED - VE COMMERCIAL VEHICLES
LIMITED (VECVL)
VE Commercial Vehicles Limited (VECVL), an unlisted subsidiary of your
company, continued to perform exceedingly well despite adverse market
conditions and posted good financial results in a difficult year.
Total revenue from operations (net) at Rs. 5758.06 crores increased by
13.5% as against Rs. 5071.55 crores during the previous financial year
ended December 31, 2013. The profit before depreciation and interest
amounted to Rs. 383.05 crores at 6.7% of net sales as against profit
before depreciation and interest of Rs. 338.95 crores during the
previous year at 6.7% of net sales. After accounting for interest
income of Rs. 35.59 crores (previous year Rs. 58.87 crores), interest
expense of Rs. 8.09 crores (previous year Rs. 7.59 crores) and
depreciation of Rs. 169.66 crores (previous year Rs. 99.63 crores),
profit before tax amounts to Rs. 240.89 crores (previous year Rs.
290.60 crores). After providing for tax of Rs. 51.46 crores, profit
after tax amounts to Rs. 189.43 crores (previous year Rs. 230.15
crores).
Please refer to the section on VECVL for details on financial and
operational performance.
EiCHER POLARiS PRivATE LiMiTED (EPPL) is 50:50 joint venture with
Polaris Industries Inc., US. During 2014, EPPL made satisfactory
progress on all fronts of the project including product development and
construction of manufacturing facility.
Operations & Financial Results of EPPL
EPPL was incorporated on October 10, 2012 and the commercial
production/operationsoftheCompanyareyettobecommenced.During the year
ended December 31, 2014, the company recorded loss before tax amount to
Rs. 9.45 crores and pre-operative expenses amount to Rs. 33.24 crores.
Future outlook of EPPL
EPPL is expected to commence commercial production in 2015.
PARTICULARS UNDER SECTION 212 Of THE COMPANIES ACT, 1956
In terms of a General Circular No. 2/2011 dated February 8, 2011,
issued by the Ministry of Corporate Affairs, the Board of Directors of
the Company has accorded consent at its meeting held on February 13,
2015, for not attaching the copies of Balance Sheets, Statement of
Profit and Loss, report of the Board of Directors and Auditors'' Report
of the subsidiaries (including step down subsidiaries) as required
under the provisions of Section 212 of the Companies Act, 1956 and to
comply with the conditions laid down under the said circular.
The annualaccounts and related detailed information of the subsidiary
companies (including step down subsidiaries) will be made available to
the shareholders of the company and its subsidiary companies (including
step down subsidiaries) upon request and will also be available for
inspection during official working hours.
However, as directed by the Central Government the financial data of
the subsidiaries have been furnished under the section on Financial
Information of Subsidiary Companies forming part of the Annual Report.
The statement pursuant to Section 212 of the Companies Act, 1956 forms
part of the Annual Report (please refer to Note 40 of Consolidated
Financial Statements).
KEY MANAGERIAL PERSONNEL
The following employees were designated as whole-time key managerial
personnel by the Board of Directors during the year under review:
(i) Mr. Siddhartha Lal, Managing Director
(ii) Mr. R.L. Ravichandran,* Whole Time Director
(iii) Mr. Lalit Malik, Chief Financial Officer; and
(iv) Mr. Manhar Kapoor, Company Secretary
*Mr. R.L. Ravichandran ceased to be a director with effect from
December 31, 2014.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard AS-21 on Consolidated
Financial Statements read with Clause 32 of the Listing Agreement, the
Consolidated Audited Financial Statements and Consolidated
Cash Flow Statement for the year ended December 31, 2014 are provided
in the Annual Report.
AUDITORS'' REPORT
The Auditors'' Report is annexed hereto and forms part of the Annual
Report.
STATUTORY AUDITORS
M/s Deloitte Haskins & Sells, Chartered Accountants, (Firm Registration
Number: 015125N) are the Statutory Auditors of the Company, holding
office as such till the conclusion of the ensuing AnnualGeneralMeeting
(AGM) and being eligible have offered themselves for reappointment.
Pursuant to the provisions of Section 139 of the Companies Act, 2013
and the Rules framed there under, the Board proposes reappointment of
M/s Deloitte Haskins & Sells as Statutory Auditors of the Company for a
period of three years subject to ratification of such appointment by
shareholders at every AGM. M/s Deloitte Haskins & Sells have furnished
a certificate to the effect that the proposed re-appointment, if made,
will be in accordance with the provisions of Section 139 and 141 of the
Companies Act, 2013.
COST AUDITORS
In conformity with the provisions of Section 148 of the Companies Act,
2013 and Companies (Cost Records and Audit) Rules, 2014, the Company
has appointed Mr. V. Kalyanaraman, Cost Accountants, Chennai, as the
Cost Auditors to carry out audit of the cost records of the Company
pertaining to manufacture of engines and parts thereof and also
pertaining to manufacture of motorcycles if required under the Act,
applicable rules or otherwise considered desirable by the management of
the Company.
CORPORATE GOVERNANCE AND MANAGEMENT DiSCUSSiON & ANALYSIS REPORT
As per Clause 49 of the Listing Agreement with Stock Exchanges, a
Management Discussion and Analysis report is annexed to this report. A
report on Corporate Governance together with the Auditors'' Certificate
regarding the compliance of conditions of Corporate Governance forms
part of the Annual Report.
PARTICULARS OF EMPLOYEES
The statement of particulars of employees as per Sub-section (2A) of
Section 217 of the Companies Act, 1956, read with Companies (Particular
of Employees) Rules, 1975, for the year ended December 31, 2014, is
annexed hereto and forms part of this Report.
STATEMENT OF RESPONSiBiLiTY
As required under section 217(2AA) of the Companies (Amendment) Act,
2000, the Board of Directors confirms that:
a. the applicable accounting standards have been followed in
preparation of the annual accounts;
b. the accounting policies have been applied consistently, judgments
and estimates have been reasonable and prudent thereby giving a true
and fair view of the state of affairs of the Company at the end of the
financial year and of the profit of the Company for that year;
c. proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting frauds and other irregularities;
d. the annual accounts have been prepared on a going concern basis.
APPLiCABiLiTY OF SECTiON 134 OF THE COMPANiES ACT 2013
The Ministry of Corporate Affairs, Government of India, has, vide its
General Circular number 08/2014 issued on April 4, 2014, clarified that
the financial statements (and documents required to be attached
thereto), Auditors report and Board''s report in respect of financial
years that commenced earlier than April 1, 2014 shall be governed by
the relevant provisions/schedules/rules of the Companies Act, 1956 and
that in respect of financial years commencing on or after April 1,
2014, the provisions of the new Act shall apply. This Directors'' Report
is in relation with the financial year commencing on January 1, 2014
and has been prepared in accordance with the requirements of the
Companies Act 1956.
ACKNOWLEDGEMENT
We thank our customers, business associates and bankers for their
continued support during the last year.
We wish to convey our deep appreciation to the dealers of the Company
for their achievements in the area of sales and service, and to
suppliers/vendors for their valuable support.
We also place on record our sincere appreciation for the enthusiasm and
commitment of Company''s employees for the growth of the Company and
look forward to their continued involvement and support.
For and on behalf of the Board
Place: Gurgaon Siddhartha Lal S. Sandilya
Date: February 13, 2015 Managing Director Chairman
DIN 00037645 DIN 00037542
Dec 31, 2013
The Board of Directors has pleasure in presenting the Thirty Second
Annual Report along with the Audited Accounts for the year ended
December 31, 2013.
financial results
Your Company achieved an all time high top line growth during the
financial year 2013 with total revenue from operations (net) at Rs.
1702.47 crores. The proft before depreciation and interest amounted to
Rs. 313.73 crores, which is 18.4% of the total revenue. After
accounting for interest and dividend income of Rs. 80.1 crores,
interest expense of Rs. 0.27 crores and depreciation of Rs. 30.41
crores, profit before tax amounts to Rs. 363.15 crores. Profit after tax
amounts to Rs. 278.62 crores after income tax provision of Rs. 84.53
crores.
dividend
The Directors are pleased to recommend a dividend of 300% (Rs. 30/- per
Equity Share of Rs. 10/- each) for the year ended December 31, 2013.
Last year, your Company has paid dividend of 200% (Rs. 20/- per Equity
Share of Rs. 10/- each) to the shareholders of the Company.
Business Performance
Your Company''s Royal Enfield unit continues to grow significantly. It
sold 1,78,121 motorcycles in the year 2013, 57.0% more when compared to
2012 sales of 1,13,432. Of 178,121 motorcycles sold in 2013, 4256 were
exported, a growth of 20.5% over previous year.
The financial results are summarized below:
Rs. in crores
Particulars for the year
ended for the year
ended
December 31,
2013 December 31,
2012
Gross sales 1910.68 1173.79
Less : Excise duty 215.29 130.04
net sales 1695.39 1043.75
Other operating revenue 7.08 5.51
Total revenue from operations (net) 1702.47 1049.26
Profit before depreciation and interest 313.73 145.43
Interest 0.27 0.26
Depreciation 30.41 17.15
Profit before other income and tax 283.05 128.02
Interest and dividend income 80.10 45.78*
Profit before tax 363.15 173.80
Provision for tax (including Deferred
tax) 84.53 29.04
Net profit after tax 278.62 144.76
Balance brought forward from previous year 455.76 381.62
Amount available for appropriation 734.38 526.38
Proposed Dividend 81.12 54.00
Corporate Dividend Tax 6.86 2.14
Transfer to General Reserve Account 27.86 14.48
Balance carried to Balance Sheet 618.54 455.76
Earnings per share
- Basic (Rs.) 103.15 53.62
- Diluted (Rs.) 102.58 53.31
* Dividend @ Rs. 75/- per equity share which was declared by the
Company''s subsidiary, VE Commercial Vehicles Limited (VECV) in its
shareholders'' meeting held on January 31, 2013, was not included in the
financial results for the year ended December 31, 2012. This is due to
change in Schedule VI to Companies Act, 1956. Hitherto in terms of the
earlier Schedule VI to the Companies Act, 1956, the Company was
recognising income from dividend declared by its subsidiary company,
i.e. VE Commercial Vehicles Limited (VECV) pertaining to the period on
or before the Balance Sheet date. The requirement no longer exists in
the revised Schedule VI. Accordingly, the Company as per ASÂ9 ''Revenue
Recognition'' has recognised dividend from subsidiary companies as
income only when the right to receive dividends is established as on
the Balance Sheet date. Had the Company recognised dividend from VECV
as income as per old Schedule VI, the profit for the year 2012 would
have been higher by Rs. 40.80 crores.
Total revenue from operations (net) for the year was Rs. 1,702.47
crores, 62.2% growth over previous year (Rs. 1,049.26 crores). Net
Sales of spare parts and services increased to Rs. 135.89 crores in
2013 from Rs. 100.14 crores in the previous year, registering a growth
of 35.70%.
Royal Enfield has also substantially expanded and upgraded its network
across the country. In 2013 it added 75 new dealerships taking the
total dealership network to 307. The Company plans to continue to
expand its distribution aggressively over the next few years, so that
it is more convenient for Royal Enfield customers to purchase a bike and
have it repaired and simultaneously to purchase accessories and apparel
as well. The Company''s focus is on providing a very unique, friendly
and technically sound experience at its dealerships so that the
customer fully appreciates every contact with the Company.
market and future Prospects
Your Company continues to enlarge and enrich its product portfolio. On
11th September 2013, the much awaited Continental GT was launched in
Brook lands, UK. Prominent media representatives and personalities from
the automotive world were invited for the launch. Along with the
motorcycle, a Continental GT range of apparel and accessories was also
launched. The international media and distributor/dealer community were
extremely impressed by the motorcycle  its ride and handling, ft and
finish and how true the product is to its intent  café racing. This
motorcycle has set the tempo for meaningful presence for Royal Enfield
in the international markets. The Continental GT was launched in India
in October 2013 along with accessories. Your Company is extremely
satisfied with the customer response to the motorcycle. Prior to the
Continental GT, the Bullet 500 was launched in India in early 2013 and
received a heartening response.
Your Company has set its goals to be a significant player in the
mid-size motorcycle market. It calls for investments in manufacturing
capacity, supply chain, product platforms and distribution. Your
Company will invest in all these areas to seize the significant
opportunities for growth in that it believes lies in India and
international markets.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION and foreign exchange
earnings and outgo Under SECTION 217(1)(e) OF THE COMPANIES ACT, 1956,
READ With the companies (disclosure of Particulars In THE REPORT OF
BOARD OF DIRECTORS) RULES, 1988
conservation of energy
The following new initiatives were taken to conserve energy during the
year 2013:
1. Replacement of Exhaust Blower Motor with Additional Ducting from
existing Air Replacement Plant (ARP) exhaust system in Paint Shop that
resulted in savings of 13824 KWH per annum.
2. Modification of Electric Circuit which resulted in reduced running
time of Hydraulic Power Pack for Fixtures in Machine Shop (From
8hr/Shift to 1.2hr/Shift) resulting in savings of 35925 KWH per annum.
3. Automation of Motors in Spindle Drilling Machine in Machine Shop
through Spindle Position Sensors resulted in savings of 18630 KWH per
annum.
4. Replacement of Energy Efficient Air Conditioners resulted in savings
of 3974 KWH per annum.
5. Efficient usage of Lightings in Machine Shop Line through automatic
control resulted in savings of 7500 KWH per annum.
6. Reduction in Power consumption by using Sigma Air managers in
Compressors resulted in savings of 31000 KWH per annum.
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
In the following areas, we have designed and developed new systems:
1. Aluminum alloy wheel rim for better handling and weight reduction.
2. Clip on handle bar for better ergonomics.
3. Cradle type frame for better handling and manufacturing.
4. Spring damping system to reduce vibration in handle bar.
5. Needle bearing on swing arm for enhanced life.
6. Plastic seat pan for ease of manufacturing.
7. Introduction of Zinc Iron plating for fasteners  for improved
corrosive resistance.
8. Introduction of improved Fuel Tank with pre coated (Electrolytic
Zinc Coating) Sheet metal.
9. Introduction of double lip oil seal for Gear shift lever for better
sealing.
10. Cam Clutch for starting arrangement to have better Cold Start
ability and life.
11. Introduction of Polyamide gauge Bearing on Crank shaft for
enhanced life.
12. Introduction of Aluminum Sealing Plug for the oil gallery for
better sealing.
13. Introduction of graphite filled copper Exhaust Gasket for better
exhaust sealing.
14. Silencer end cup by extrusion process to avoid multiple parts
welding.
15. Introduction of U nut for Engine mounting for better torque
retention.
16. Introduction of Metal Injection Molding (MIM) for exhaust cam lift
pin.
research and development
The focus on Research and Development accelerated in 2013. The Company
continues to invest in the development of new products and improvement
in existing products and value engineering projects. Your Company
continues to invest in infrastructure and talent for conducting
research and development activities, as a result of which Rs. 10.89
crores (Previous year Rs. 3.95 crores) were incurred on capital account
and Rs. 20.88 crores (Previous year Rs. 16.75 crores) were spent on
revenue account of Research and Development.
Please also refer to Note No. 31 of Notes to Accounts forming part of
the Annual Report for further details of Research and Development.
foreign exchange earnings/expenditure
During the current year, total exports (FOB value) were Rs. 69.01
crores (Previous year Rs. 54.89 crores).
Foreign Exchange amounting to Rs. 66.42 crores (Previous year Rs. 24.50
crores) was used on account of import of components, spare parts,
capital goods, business travel and consulting fees during the year
under review.
Please also refer to Note No. 46 to 48 of Notes to Accounts forming
part of Annual Accounts for further details of Foreign Exchange
earnings and expenditure.
eicher employee Stock option Plan 2006
5,000 stock options have been issued out of the forfeited stock options
during the year ended December 31, 2013 (5,400 stock options net of
forfeited in the previous year).
1,77,000 options (net of forfeited options) that were granted on
September 30, 2006 under the Employee Stock Option Plan 2006 have
vested with employees on October 1, 2009. Out of these, 1,77,000
options (1,70,600 options up to previous year and 6,400 options during
the year under review) have been exercised by the employees.
2,08,900 options (net of forfeited options) that were granted on
October 22, 2007 under the Employee Stock Option Plan 2006 have vested
with employees on October 22, 2010. Out of these, 1,76,900 options
(1,45,400 options up to previous year and 31,500 options during the
year under review) have been exercised by the employees.
The Statement giving complete details as at December 31, 2013, pursuant
to Clause 12 (Disclosure in the Directors'' Report) of the Securities
and Exchange Board of India (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines 1999, forms part of the Directors''
Report.
Public deposits
As on December 31, 2013, there are no public deposits. There are no
deposits that remain unclaimed. The Company has not renewed/ accepted
fixed deposits after May 29, 2009.
Board of directors
Mr. S. Sandilya  Director retires by rotation and, being eligible,
offers himself for reappointment.
The Board recommends his reappointment pursuant to applicable
provisions of the Companies Act, 1956. Resolution seeking your approval
on said item along with the terms and conditions are included in the
Notice convening the Annual General Meeting together with brief resume
of the Director being reappointed.
Subsidiaries of eicher motors Limited commercial vehicles Limited
(vecvl)
VE Commercial Vehicles Limited (VECVL), a subsidiary of your Company,
continued to perform well despite adverse market conditions. In 2013,
the domestic sales volume of commercial vehicles industry (5 Tonne and
above) decreased by 25.1% over 2012. This is the 2nd successive year of
sales decline in the industry. However, VECVL posted better sales
volume number in 2013 than the industry and arrested its sales volume
decline to 15.5%, increasing its market share to 13.9% for the year
2013. 2013 was a landmark year for VECVL as it commercialised many
strategic projects including medium duty engine project, bus body
project etc. It unveiled a new range of trucks and buses that will
replace its current fleet over time.
In 2013, VECVL posted total revenue from operations (net) at Rs.
5,069.6 crores as against Rs. 5,297.6 crores during the previous
financial year ended December 31, 2012, a decline of 4.3%. The profit
before depreciation and interest amounted to Rs. 401.9 crores at 8.1%
of net sales as against proft before depreciation and interest of Rs.
410.4 crores during the previous year at 7.8% of net sales, a decline
of 2.1%. The profit before tax amounts to Rs. 349.8 crores (previous
year Rs. 431.5 crores). After providing for tax of Rs. 60.7 crores,
profit after tax amounts to Rs. 289.1 crores (previous year Rs. 336.7
crores).
Please refer to the section on VECVL for details on financial and
operational performance.
eicher Polaris Private Limited (EPPL)
Eicher Polaris Private Limited (EPPL) is a 50:50 joint venture with
Polaris Inc., US. EPPL is in the project phase and will begin
commercial production in 2015. During 2013, EPPL made satisfactory
progress on all fronts of the project including product development and
construction of manufacturing facility.
Operations & Financial Results of EPPL
EPPL was incorporated on October 10, 2012 and the commercial
production/operations of the Company are yet to be commenced. During
the year ended December 31, 2013, profit before tax amount to Rs. (0.18)
crore and pre-operative expenses amount to Rs. 9.3 crores.
Future Outlook of EPPL
EPPL is working towards achieving start of production in 2015.
Particulars Under Section 212 of the companies ACT, 1956
In terms of a General Circular No. 2/2011 dated February 8, 2011,
issued by the Ministry of Corporate Afairs, the Board of Directors of
the Company has accorded consent at its meeting held on February 12,
2014, for non-attachment of the copies of Balance Sheets, Statement of
Profit and Loss, reports of the Board of Directors and Auditors'' Report
of the subsidiaries (including step down subsidiaries) as required
under the provisions of Section 212 of the Companies Act, 1956 and to
comply with the conditions laid down under the said circular.
The annual accounts and related detailed information of the subsidiary
company (including step down subsidiaries) will be made available to
the shareholders of the Company and its subsidiary company (including
step down subsidiaries) at any point of time and will also be available
for inspection during official working hours.
However, as directed by the Central Government the financial data of the
subsidiaries have been furnished under Financial Information of
Subsidiary Companies forming part of the Annual Report. Further,
pursuant to Accounting Standard AS-21 specified in the Companies
(Accounting Standards) Rules, 2006, the Consolidated Financial
Statements presented by the Company include financial information of its
subsidiaries. The statement pursuant to Section 212 of the Companies
Act, 1956 forms part of the Annual Report (please refer to Note 40 of
Consolidated Financial Statements).
consolidated financial Statements
In accordance with the Accounting Standard AS-21 on Consolidated
Financial Statements read with Clause 32 of the Listing Agreement, the
Consolidated Audited Financial Statements and Consolidated Cash Flow
Statement for the year ended December 31, 2013 are provided in the
Annual Report.
auditors report
The Auditors'' Report is annexed hereto and forms part of the Annual
Report.
Statutory auditors
M/s Deloitte Haskins & Sells, Chartered Accountants, have expressed
their willingness to continue in ofce as Statutory Auditors, if re-
appointed. A certificate has been obtained from them to the effect that
the appointment, if made, will be in accordance with the limits
specified in sub-section (1B) of section 224 of the Companies Act, 1956.
cost auditors
In conformity with the directives of the Central Government, the
Company has appointed Mr. V Kalyanaraman, Cost Accountants, Chennai, as
the Cost Auditors under Section 233B of the Companies Act, 1956, for
the audit of cost accounts for Motor Vehicles (Two Wheelers) unit of
the Company for the year ending December 31, 2014. The Cost Audit
Report for the year ended December 31, 2012 was fled on June 21, 2013.
corporate Governance
As per Clause 49 of the Listing Agreement with Stock Exchanges, a
Management Discussion and Analysis is annexed to this report. A report
on Corporate Governance together with the Auditors'' Certificate
regarding the compliance of conditions of Corporate Governance forms
part of the Annual Report.
Particulars of employees
The statement of particulars of employees as per sub-section (2A) of
section 217 of the Companies Act, 1956, read with Companies (Particular
of Employees) Rules, 1975, for the year ended December 31, 2013 is
annexed hereto and forms part of this Annual Report.
Statement of responsibility
As required under section 217(2AA) of the Companies (Amendment) Act,
2000, the Board of Directors confirms that:
a. the applicable accounting standards have been followed in
preparation of the annual accounts;
b. the accounting policies have been applied consistently, judgments
and estimates have been reasonable and prudent thereby giving a true
and fair view of the state of affairs of the Company at the end of the
financial year and of the profit of the Company for that year;
c. proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
Companies Act, 1956, for safeguarding the assets of the Company and for
preventing and detecting frauds and other irregularities;
d. the annual accounts have been prepared on a going concern basis.
acknowledgement
Your Directors place on record their sincere gratitude to the
continuing patronage and trust of our valued customers, bankers and
financial institutions, business associates, shareholders and other
statutory authorities who have extended their precious continued
support and encouragement to your Company. Your Directors wish to
convey their deep appreciation to the dealers of the Company for their
achievements in the area of sales and service, and to suppliers /
vendors and other business associates for their valuable support.
Your Directors also place on record, their sincere appreciation for the
enthusiasm and commitment of its employees for the growth of the
Company and look forward to their continued involvement and support.
For and on behalf of the Board
Place: Gurgaon Siddhartha Lal S. Sandilya
Date: February 12, 2014 Managing Director Chairman
Dec 31, 2012
The Board of directors has pleasure in presenting the Thirty First
Annual Report along with the Audited Accounts for the year ended
december 31, 2012.
FINANCIAL RESULTS
Your company achieved an impressive top line growth during the
financial year 2012 with total revenue from operations (net) at
Rs.1,049.26 crores. The profit before depreciation and interest
amounted to Rs. 145.43 crores, which is 13.9% of the total revenue.
After accounting for interest and dividend income of Rs. 45.78 crores,
interest expense of Rs. 0.26 crore and depreciation of Rs. 17.15
crores, profit before tax amounts to Rs. 173.80 crores. Profit after
tax amounted to Rs. 144.76 crores after income tax provision of Rs.
29.04 crores. The financial results are summarised below:
DIVIDEND
The directors are pleased to recommend a dividend of 200% (Rs. 20/- per
Equity share of Rs.10/- each) for the year ended december 31, 2012.
BUSINESS PERFORMANCE
Your company''s Royal Enfield unit crossed a major milestone of
producing and selling 1,00,000 motorcycles in the year 2012.
The Royal Enfield unit sold 52.0% more motorcycles in 2012 as compared
to 2011. Total sales volume in 2012 was 1,13,432 motorcycles as
compared to 74,626 in 2011. Total revenue from operations (net) for the
year was Rs. 1,049.26 crores, 56.3% growth over the previous year (Rs.
671.45 crores).
EICHER MOTORS LIMITED (STANDALONE)
Rs. in crores
Particulars For the year ended For the year ended
December 31, 2012 December 31, 2011
Gross 1,173.79 737.35
Less: Excise 130.04 71.38
Net 1,043.75 665.97
Oother operating revenue 5.51 5.48
Total revenue from operations (net) 1,049.26 671.45
Profit before depreciation
and interest 145.43 80.09
Interest 0.26 2.02
Depreciation 17.15 13.02
Profit before other income and tax 128.02 65.05
Interest and dividend income* 45.78 76.78
Profit before 173.80 141.83
Provision for tax (including
deferred tax) 29.04 17.28
Net profit after 144.76 124.55
Balance brought forward from
previous year 381.62 313.11
Amount available for appropriation 526.38 437.66
Proposed dividend 54.00 43.19
Corporate dividend 2.14 0.39
Transfer to General Reserve Account 14.48 12.46
Balance carried to Balance sheet 455.76 381.62
Earnings per share
- Basic 53.62 46.18
- Diluted (Rs.) 53.31 46.00
* Dividend @ Rs. 75/- per equity share was declared by the company''s
subsidiary, VE commercial Vehicles Limited (VEcV) in its
shareholders'' meeting held on January 31, 2013, is not included in
the financial results for the year ended december 31, 2012. This is due
to change in schedule Vi of companies Act, 1956. Hitherto in terms of
the earlier schedule Vi to the companies Act, 1956, the company was
recognising income from dividend declared by its subsidiary company,
i.e. VE commercial Vehicles Limited (VEcV) pertaining to the period on
or before the Balance sheet date. This requirement no longer exists in
the revised schedule Vi. Accordingly, the company as per As - 9
''Revenue Recognition'' has recognised dividend from subsidiary
companies as income only when the right to receive dividends is
established as on the Balance sheet date. Had the company recognised
dividend from VEOV as income as per old Schedule Vi, the profit for the
year 2012 would have been higher by Rs. 40.80 crores.
Total exports in 2012 were 3,532 units, a growth of 10.4% over previous
year.
Net sales of spare parts and services grew to Rs. 100.14 crores in 2012
from Rs. 74.50 crores in the previous year, registering a growth of
34.4%.
This year, your company launched the all new Thunderbird 500 and
Thunderbird 350 motorcycle. These were received by customers with an
overwhelming response. The Thunderbird range with its unique 360-degree
design language and higher powered engine that has Royal Enfield''s
signature flat torque curve, is poised to be the ultimate highway
cruiser on the indian roads. Along with the Thunderbird range of
motorcycles, Royal Enfield also launched a range of well-crafted,
meticulously detailed, purpose-built riding apparel, marking the
brand''s entry into the motorcycle accessories business.
Your company continued to expand its sales, distribution and
after-market network in india and abroad. Royal Enfield products are
now sold through 249 outlets (last year 190 outlets) in india and
exported to 48 countries (last year 36 countries).
MARKET AND FUTURE PROSPECTS
The indian motorcycle industry slowed down in year 2012. However, your
company''s Royal Enfield unit continued its growth trend in 2012. The
exciting variants of classic models such as desert storm and chrome
have expanded the consumer base that look for distinctive style and
leisure riding. The New Thunderbird 500 and Thunderbird 350, positioned
for long distance riding with value added features, are attracting a
wider section of followers and very effective media launches have
generated a healthy order book and brand recall. With the market
evolving towards motorcycling and leisure riding activities, this
growth trend is likely to continue.
PLEASE REFER TO MANAGEMENT DISCUSSION AND ANALYSIS FOR DETAILS.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO UNDER SECTION 217(1)(E) OF THE COMPANIES ACT, 1956,
READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF
BOARD OF DIRECTORS) RULES, 1988
CONSERVATION OF ENERGY
The following new initiatives were taken to conserve energy during the
year 20I2:
1. Reducing the compressor capacity by I8.65 KWH using I25 HP
compressors that resulted in savings of 64,454 KWH per annum.
2. Reduction in power consumption during idle time by using Variable
Frequency Drive (VFD) in compressors resulted in savings of 5I,564 KWH
per annum.
3. Reduction of running time of hydraulic power pack for fixture
clamping from 8 hours per shift to I.2 hours per shift by modifying
electrical circuit that resulted in a saving of 23,950 KWH per annum.
4. Reduction in motor running hours in Three spindle Drilling machine
from 8 hours per shift to 2 hours per shift by introducing the sensor
that resulted in a saving of I5,952 KWH per annum.
5. Reduction in fixed power consumption using star rate split A/c in
place of window A/c that resulted in a saving of 6,359 KWH per annum.
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION IN THE FOLLOWING
AREAS, WE HAVE DESIGNED AND DEVELOPED NEW SYSTEMS:
1. Projection headlamp: Vertically stacked twin headlamp with
projection system for better illumination on-road.
2. Led tail lamp: LED-based tail lamp for better life, light output and
significant power savings. it also serves as an identity of the vehicle
when seen from the rear.
3. improved handlebar mounting arrangements and mirror design help to
reduce vibration level felt by the rider as a vibration reduction.
4. New thicker front suspension (41mm diameter) with friction reduction
bushes for improved stability of the vehicle.
5. Anti-skip gear shift system to avoid false neutral experienced
during gear shifting.
6. TPs (Throttle Position sensor) in carburettor: Precise control of
ignition timing with air/fuel mixture delivery which enhances better
drivability, performance and control in emission of the vehicle.
7. Digital instrument cluster with LED and added tell tales. Wheel
speed deduction changed from mechanical to electronic sensor.
8. introduction of stainless steel exhaust guards instead of chrome
plating as an eco friendly measure.
RESEARCH AND DEVELOPMENT
The focus on Research and development accelerated in 2012. The company
continues to invest in the development of new products and improvement
in existing products and value engineering projects. Your company
continues to invest in infrastructure and talent for conducting
research and development activities, as a result of which Rs. 3.95
crores (Previous year Rs. 5.55 crores) were incurred on capital account
and Rs. 16.75 crores (Previous year Rs. 10.45 crores) were spent on
revenue account of Research and development.
Please also refer Note No. 31 of Notes to Accounts forming part of the
Annual Report for further details of Research and development.
FOREIGN EXCHANGE EARNINGS/EXPENDITURE
During the current year, total exports (FOB value) were Rs. 54.89
crores (Previous year Rs. 45.3 crores).
Foreign Exchange amounting to Rs. 24.50 crores (Previous year Rs. 14.69
crores) was used on account of import of components, spare parts,
capital goods, business travel and consulting fees during the year
under review.
Please also refer Points Nos. 46 to 48 of Notes to Accounts forming
part of the Annual Report for further details of Foreign Exchange
earnings and expenditure.
EICHER EMPLOYEE STOCK OPTION PLAN 2006
12,600 stock options have been issued out of the forfeited stock
options during the year ended december 31, 2012 (1,32,200 stock options
in previous year).
1,77,000 options (net of forfeited options) that were granted on
september 30, 2006 under the Employee stock Option Plan 2006 have
vested with employees on October 1, 2009. Out of these, 1,70,600
options (1,70,600 options up to previous year and no options during the
year under review) have been exercised by the employees.
2,08,900 options (net of forfeited options) that were granted on
October 22, 2007 under the Employee stock Option Plan 2006 have vested
with employees on October 22, 2010. Out of these, 1,45,400 options
(1,37,000 options up to previous year and 8,400 options during the year
under review) have been exercised by the employees.
The statement giving complete details as at december 31, 2012, pursuant
to clause 12 (disclosure in the directors'' Report) of the securities
and Exchange Board of india (Employee stock Option scheme and Employee
stock Purchase scheme) Guidelines 1999, forms part of the directors''
Report.
PUBLIC DEPOSITS
As on december 31, 2012, there are no deposits. during the year under
review, 17 deposits aggregating Rs. 0.10 crore matured and were repaid.
There are no deposits that remain unclaimed. The company has not
renewed/accepted fixed deposits after May 29, 2009.
BOARD OF DIRECTORS
Mr. M.J. subbaiah - director retires by rotation and, being eligible,
offers himself for reappointment.
Mr. R.L. Ravichandran was appointed as Whole Time director of the
company for a period of two years with effect from January 1, 2011. His
tenure has expired on december 31, 2012. The Board of directors in its
meeting held on February 12, 2013 has recommended him for reappointment
as the Whole Time director of the company for a further period of two
years with effect from January 1, 2013.
The Board recommends the above reappointments pursuant to applicable
provisions of the companies Act, 1956. Resolutions seeking your
approval on said items along with the terms and conditions are included
in the Notice convening the Annual General Meeting together with brief
resume of the directors being reappointed.
JOINT VENTURE
Ybur company has entered i nto a strategic joint venture agreement with
Us-based Polaris industries inc. on July 23, 2012, a recognised leader
in the powersports industry, to set up a greenfield project in the
automotive sector with a 50-50 partnership.
Pursuant to the said Joint Venture Agreement, a Joint Venture company
i.e. Eicher Polaris Private Limited has been incorporated on October
I0, 20I2 to design, develop, manufacture and market a full new range of
personal vehicles. The operations of this joint venture will commence
in 20I5. The overall investment in the Joint Venture company over a
three-year period will be approximately Rs. 250 crores.
VE COMMERCIAL VEHICLES LIMITED (VECV) - A SUBSIDARY COMPANY OF EICHER
MOTORS LIMITED
VECV posted a growth of 6.7% in the year 20I2 with total revenue from
operations (net) at Rs. 5,297.63 crores as against Rs. 4,964.21 crores
during the previous financial year ended December 3I, 20II. The profit
before depreciation and interest amounted to Rs. 4I0.43 crores at 7.8%
of net sales as against operating profit before depreciation and
interest of Rs. 5II.74 crores during the previous year at 10.4% of net
sales, a decline of I9.8%. After accounting for interest income of Rs.
88.02 crores (Previous year Rs. I03.22 crores), interest expense of Rs.
2.72 crores (Previous year Rs. 5.22 crores) and depreciation of Rs.
64.25 crores (Previous year Rs. 50.I5 crores), profit before tax
amounts to Rs. 43 1.48 crores (Previous year Rs. 559.59 crores). After
providing for tax of Rs. 94.82 crores, profit after tax amounts to Rs.
336.66 crores (Previous year Rs. 414.11 crores).
The financial results are summarised below:
Rs. in crores
Particulars For the For the
year ended year ended
December December
31, 2012 31, 2011
Gross sales 5,718.30 5,295.05
Less: Excise duty 475.11 374.49
Net Sales 5,243.19 4,920.56
Other operating revenue 54.44 43.65
Total revenue from 5,297.63 4,964.21
operations (net)
Profit before 410.43 511.74
depreciation and interest
Interest 2.72 5.22
Depreciation 64.25 50.15
Profit before other income and tax 343.46 456.37
Interest income 88.02 103.22
Profit before 431.48 559.59
Provision for taxation (94.82) (145.48)
(including Deferred tax)
Net profit after tax 336.66 414.11
VECV posted a creditable 6.7% growth in net revenue. This is a result
of VEcV''s success in gaining market share in tough market conditions
that saw a sharp drop in the industry''s sales volume. segment wise
industry and VEcV''s performance is explained below. Apart from gaining
market share and improving the topline, VEcV posted a strong financial
performance in tough market conditions. it did so by sharp focus on
managing costs and working capital.
AN OVERVIEW OF SUBSIDIARY COMPANY''S BUSINESSES
Eicher Trucks and Buses (ETB):
After a good 20II, wherein the commercial Vehicle industry (5 Tonne and
above) grew by I0.I% over the previous year, the industry declined by
II.7% during 20I2. slowdown in new investments and overall industrial
production marked the year 20I2. As a result, the domestic industry
sales volume ended at 3,60,813 units as against 4,07,338 units in 20II,
a decline of II.4%. The total cV industry (including exports) recorded
sales of 3,95,I80 units as against 20II sales of 4,47,472 units, a
decline of II.7%.
ETB recorded total sales of 48,262 units against 48,337 units in 20II,
a decline of only 0.2% while gaining market share (including exports)
from I0.8% in 20II to I2.2% in 20I2.
Within the domestic cV industry, the Light and Medium duty truck
segment of 5 to I4 Tonne (L&MD), where ETB is a strong player, ended
the year 20I2 with sales of 94,I87 units during 20I2, a drop of 8.4%
over 20II. ETB sold 29,54I units in L&MD segment as against 3I,38I
units during 20II thus recording a drop of 6.2%. This however was
better than industry''s performance and ETB''s market share in this
segment grew from 30.5% in 2011 to 31.2% in 20I2.
The industry''s heavy duty truck segment of I6 Tonne and above (HD) sale
also dropped from 237,239 units in 20IIto I95,I40 units in 20I2 , a
drop of I7.8% in 20I2 as against I2% growth in the previous year.
However, ETB continued to grow in the HD truck segment, riding on the
success of the VE series fuel efficient trucks and ended the year with
a growth of 4.7% in the domestic market over 20II. ETB sold 7,699
trucks in 20I2 as against 7,352 trucks in 20II in the domestic market.
ETB continues to follow sharply focussed strategy of targeting specific
geography and segments with the right fit products in order to ensure
superior value delivery to its customers.
ETB continued to build on its strong performance in the Bus segment. it
recorded its all time high sale of 852I units, a growth of 3I.2% over
previous year. This is a result of its efforts to widen its customer
base and maintain superior product quality.
ETB exported 2,50I units in 20I2 registering a drop of I9.5 % over
20II. This is against the industry drop of I3.2 % in exports.
Volvo Trucks india (VTi)
Volvo Trucks are marketed in niche segments dominated mainly by mining
tippers and over dimensional cargo carrying prime movers. over the
years, Volvo Trucks has established a dominant position in this
segment. Despite intense competition and pricing pressure in a
weakening market due to mining issues, Volvo Trucks has maintained its
supremacy through differentiated products and after market offerings
driving high customer satisfaction.
Volvo Trucks recorded total sales of 569 units against 706 units in
2011, a decline of 19.3%.
Eicher Engineering components (EEc)
The domestic components industry witnessed a tough period with slowdown
in the automobile industry. specifically, all the segments to which EEc
is supplying components i.e. Tractors, commercial Vehicles, Three
Wheelers, etc. witnessed lower demand.
The construction of a new plant at dewas was completed in December 2012
This plant has a capacity of 1,20,000 gears per month and will become
fully operational by early 2013.
Eicher Engineering Solutions (EES)
This business is operated through an Engineering Design centre at
Gurgaon (EEsG) along with Eicher Engineering solution inc., (UsA) and
its two subsidiaries viz. Hoff Auto Design (shanghai) co. Ltd. and Hoff
Auto Design (Beijing) co. Ltd.
The overall business revenue grew 6.5% over last year. EEs successfully
generated business from strategic customers and group companies.
MARKET AND FUTURE PROSPECTS OF SUBSIDIARY COMPANY''S BUSINESSES
VE commercial Vehicles Limited, Eicher Motors 50:50 Joint Venture with
AB Volvo, will complete five years in 2013. The journey has been very
eventful and the symbiosis has been very clearly experienced by all
stakeholders: dealers, suppliers, employees and shareholders. since its
inception in 2008, VEcV has made capital investments of more than Rs.
1,300.00 crores in developing new manufacturing facilities,
progressively upgrading of industrial capacity, developing new products
and setting up world class systems and processes in all areas of the
business.
VE Powertrain (VEPT) is the world class engine manufacturing facility
with modern design and frugal engineering approach. VEPT is the first
plant in india capable of producing Euro 6 engines, with variants of
Euro 3/4 and 5. it has state-of-the-art technology with the highest
level of automation in india. it has immense strategic importance as it
will meet the requirements of Volvo Group''s automotive medium duty
engine and Eicher branded HD commercial vehicles. The terminal capacity
of the plant would be 1,00,000 engines, to be achieved gradually. The
production will commence in the second half of 2013.
The recently installed cED Paintshop is a giant leap in quality. it
will ensure best cabin painting finish in the contemporary trucks in
india. The corrosion resistance is significantly enhanced. The plant
will have a capacity of 72,000 units/year production in the first phase
expandable to 1,00,000 units/year in the second phase. ETB''s new
state-of-the-art Parts Distribution centre has become operational. This
will significantly enhance ETB''s ability to provide a distinctly
superior customer service. The new bus body plant will be completed in
the first half of 2013. increasing ETB''s ability to provide superior
product and better value to its customers. ETB continues to make
excellent progress on developing new LMD and HD product platforms.
EEc created additional capacities for Transmission Gears by setting up
its fourth manufacturing plant at Dewas. This new plant will cater to
the requirements needed for increased volumes of ETB, VEPT, Royal
Enfield and increased share of business from existing customers.
Eicher Trucks and Buses (ETB)
The year 2012 has been quite an eventful year for ETB. Apart from the
excellent progress in various projects, ETB further consolidated its
position with gain in market shares in all the segments.
overall, cV growth in 5 Tonne and above category declined in 2012 as
compared to last year. All categories in the heavy duty truck segment
witnessed decline as the HD segment contracted by 17.8% in 2012. The
high sale of vehicles in 2010 and 2011 in anticipation of high
continuing growth has resulted in excess capacity coupled with the
postponement of replacement demand owing to the current economic
situation. Buses saw a moderate growth of 6.3% in 2012.
ETB recorded an excellent overall performance in 2012 with substantial
increase in market share across all product segments. in 2013, the
L&MD vehicles are expected to continue their strong contribution. it is
also expected that the increasing acceptability and positive customer
response to the ''VE'' series of Heavy Duty trucks and increasing
penetration of Heavy Duty buses would provide incremental volumes in
2013 and lead to improved growth prospects in the future. The new
product platforms of both L&MD and HD commercial vehicles will provide
a significant opportunity to ETB to enhance its customer value
proposition.
There is emerging competition but ETB is in a strong position with the
large number of products in its portfolio, the population base it has
for its vehicles and also a strong, committed and expanding dealer
network.
Volvo Trucks india (VTI)
2012 witnessed tough competition with pressure on price realisation. VT
FM 480 10x4, the innovative Dump Truck launched from the Volvo stable
in october 2012 has evinced strong customer interest. VTi has launched
extensive country- wide customer engagement activities focussing on the
Value enhancers with the complete new range in Volvo Trucks.
Eicher Engineering Components (EEC)
Growth in business with domestic Original Equipment Manufacturers
(OEMs) will be in line with the manufacturing plans of the domestic
OEMs. However, owing to a higher share of business with OEMs,
development of new products, upgradation of technology and meeting the
increasing requirements of new strategic customers would be key for the
long term success of EEc.
Eicher Engineering Solutions (EES)
The Engineering services market continues to be an area of high
opportunity and potential for growth. in 2012, EEs improved its
business from strategic customers and group companies and also deployed
global resources for project execution.
PARTICULARS UNDER SECTION 2I2 OF THE COMPANIES ACT, 1956
In terms of a General circular No. 2/2011 dated February 8, 2011,
issued by the Ministry of corporate Affairs, the Board of directors of
the company has accorded consent at its meeting held on February 12,
2013, for non-attachment of the copies of Balance sheets, statement of
Profit and Loss, reports of the Board of directors and Auditors'' Report
of the subsidiaries (including step down subsidiaries) as required
under the provisions of section 212 of the companies Act, 1956 and to
comply with the conditions laid down under the said circular.
The annual accounts and related detailed information of the subsidiary
company (including step down subsidiaries) will be made available to
the shareholders of the company and its subsidiary company (including
step down subsidiaries) at any point of time and will also be available
for inspection.
However, as directed by the central Government the financial data of
the subsidiaries have been furnished under Financial information of
subsidiary companies forming part of the Annual Report. Further,
pursuant to Accounting standard As- 21 specified in the companies
(Accounting standards) Rules, 2006, the consolidated Financial
statements presented by the company include financial information of
its subsidiaries. The statement pursuant to section 212 of the
companies Act, 1956 forms part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
in accordance with the Accounting standard As-21 on consolidated
Financial statements read with clause 32 of the Listing Agreement, the
consolidated Audited Financial statements and consolidated cash Flow
statement for the year ended December 3I, 20I2 are provided in the
Annual Report.
auditors'' report
With reference to para 5 of the Auditors'' Report on the consolidated
Financial statements for the year ended December 3I, 20I2, please refer
Note No. 35 in the Notes to Accounts of the consolidated Financial
statements for the year ended December 3I, 20I2, which is
self-explanatory.
STATUTORY AUDITORS
M/s Deloitte Haskins & sells, chartered Accountants, have expressed
their willingness to continue in office as statutory Auditors, if
re-appointed. A certificate has been obtained from them to the effect
that the appointment, if made, will be in accordance with the limits
specified in sub-section (IB) of section 224 of the companies Act,
1956.
COST AUDITORS
in conformity with the directives of the central Government, the
company has appointed Mr. V. Kalyanaraman, cost Accountants, chennai,
as the cost Auditors under section 233B of the companies Act, I956, for
the audit of cost accounts for the Motor Vehicles (Two Wheelers) unit
of the company for the year ending December 3I, 20I3.
Pursuant to the General circular No. 43/2012 dated December 26, 20I2
read with General circular Nos.I8/20I2 dated July 26, 2012 and 8/2012
dated May I0, 20I2 (as amended on June 29, 20I2), the Ministry of
corporate Affairs has allowed the companies concerned to file their
cost Audit Reports for the year 20I I-I2 [including the reports
relating to any previous year(s)] with the central Government in the
XBRL mode, within I80 days from the close of the company''s financial
year to which the report relates or by January 3I, 20I3, whichever is
later. Accordingly, the cost Audit Report for the year ended December
3I, 20II was filed on December 3I, 20I2.
CORPORATE GOVERNANCE
As per clause 49 of the Listing Agreement with stock Exchanges, a
Management Discussion and Analysis is annexed to this report. A report
on corporate Governance together with the Auditors'' certificate
regarding the compliance of conditions of corporate Governance forms
part of the Annual Report.
PARTICULARS OF EMPLOYEES
The statement of particulars of employees as per sub-section (2A) of
section 217 of the companies Act, 1956, read with companies (Particular
of Employees) Rules, 1975, for the year ended december 31, 2012 is
annexed hereto and forms part of this Annual Report.
STATEMENT OF RESPONSIBILITY
As required under section 217(2AA) of the companies (Amendment) Act,
2000, the Board of directors confirms that:
a. the applicable accounting standards have been followed in
preparation of the annual accounts;
b. the accounting policies have been applied consistently, judgments
and estimates have been reasonable and prudent thereby giving a true
and fair view of the state of affairs of the company at the end of the
financial year and of the profit of the company for that year;
c. proper and sufficient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of the
companies Act, 1956, for safeguarding the assets of the company and for
preventing and detecting frauds and other irregularities;
d. the annual accounts have been prepared on a going concern basis.
ACKNOWLEDGEMENT
Your directors place on record their sincere gratitude to the
continuing patronage and trust of our valued customers, bankers and
financial institutions, business associates, shareholders and other
statutory authorities who have extended their precious continued
support and encouragement to your company. Your directors wish to
convey their deep appreciation to the dealers of the company for their
achievements in the area of sales and service, and to suppliers/vendors
and other business associates for their valuable support.
Your directors also place on record, their sincere appreciation for the
enthusiasm and commitment of its employees for the growth of the
company and look forward to their continued involvement and support.
For and on behalf of the Board
Place: Gurgaon Siddhartha Lal S. Sandilya
Date: February 12, 2013 Managing Director Chairman
Dec 31, 2010
The Board of Directors has pleasure in presenting the Twenty Ninth
Annual Report along with the Audited Accounts for the year ended
December 31, 2010.
BUSINESS ENVIRONMENT
India maintained its growth buoyancy achieved after the 2008 downturn
in all sectors of economy. The fundamentals of Indian Economy continue
to be strong. In 2009 -10 GDP grew by 7.4% and 2010-11 growth is
forecasted above 8.5%.
The two wheeler industry has recorded a handsome growth in the year
2010. Your Company is a niche player in 350cc and above segment of the
two wheeler industry and secured an all time high growth in terms of
volume and Profitability.
The commercial vehicle industry in which your company operates through
the subsidiary company, namely, VE Commercial Vehicles Limited (VECV),
achieved new peak in sales volumes. VECV capitalised the growth
momentum by recording its highest ever sales volumes. This has
resulted in signifi cantly improved performance over 2009 as refl ected
in very strong Profitability and cash fl ows.
FINANCIAL RESULTS
Your Company achieved impressive top line growth during the financial
year 2010 with total Income at 4426.7 MINR. The operating Profit before
depreciation and interest amounted to 457.9 MINR which is 10.3% of the
total income. After accounting for interest and dividend income of
541.8 MINR, interest expense of 25.7 MINR and depreciation of 107.9
MINR, Profit before tax amounts to 866.1 MINR. Profit after tax amounts
to 754.4 MINR after income tax provision of 111.7 MINR.
The financial results are summarized below: -
(Rs. in millions)
Particulars For the year For the year
ended Dec. ended Dec.
31, 2010 31, 2009
Gross sales 4843.8 4079.9
Less : Excise duty 459.1 329.0
Net sales 4384.7 3750.9
Other income 42.0 29.2
Total income 4426.7 3780.1
Operating Profit before depreciation
and interest (EBIDTA) 457.9 279.3
Interest 25.7 4.2
Depreciation 107.9 101.0
Profit before other income and tax 324.3 174.1
Interest and dividend income* 541.8 292.2
Profit before tax 866.1 466.3
Provision for tax (including Deferred tax)(111.7) (91.0)
Net Profit after tax 754.4 375.3
Balance brought forward from previous
period/year 2752.4 3565.0
Dividend on bought back and extinguished
equity shares no longer payable - 7.0
Corporate dividend tax on above dividend - 1.2
Premium paid on buy back of equity shares - (960.5)
Amount available for appropriation 3506.8 2988.0
Proposed Dividend 296.3 186.9
Corporate Dividend Tax 4.0 8.7
Transfer to General Reserve Account 75.4 40.0
Balance carried to Balance Sheet 3131.1 2752.4
Earnings per share
- Basic (Rs.) 28.17 13.85
- Diluted (Rs.) 28.06 13.81
* Dividend @ Rs 50/- per equity share was declared by VECV in its
shareholders meeting held on 01.02 2011. An amount of 272 MINR being
dividend income on investments in VECV has been accounted for in the
above financial results.
DIVIDEND
The Directors are pleased to recommend a dividend of 110% (Rs. 11/- per
Equity Share of Rs.10/- each) for the year ended December 31, 2010.
TWO WHEELERS BUSINESS
The year 2010 was an excellent year for the entire automobile industry.
The two wheeler industry grew by 31% during the calendar year 2010 as
against 18% growth achieved in the calendar year 2009. Royal Enfi eld
achieved a great win in successfully transitioning its engine platform
from Cast Iron Engine to Unit Construction Engine in October 2010. This
transition and production constraints in certain areas, however,
hampered growth of the production from much beyond 2009 levels.
Total sales volume of Royal Enfi eld in 2010 was 52576 motorcycles. It
was marginally better than previous years volumes of 51955
motorcycles. Your company is carrying a very healthy order book for
execution in 2011 as well.
Royal Enfi eld performed better on the export front. Total exports in
2010 were 2630 motorcycles as against 1953 motorcycles in the previous
year.
Spare parts sales recorded 511.9 MINR in 2010 as against 397.8 MINR in
the previous year, registering a growth of 29%.
MARKET AND FUTURE PROSPECTS
We expect two wheelers demand to remain robust, given strong off take
in both rural and urban areas, continuing rise in rural household
incomes owing to a good monsoon season and various government schemes.
The Economy Segment (100 cc) has posted a growth of 25% and the
Executive Segment ( 125 cc to 250 cc ) has grown by 32%. Both these
trends give a very clear direction on the expected future growth in the
higher cc segments which provide further impetus to your Companys
future prospects.
Further, with the entry of Harley Davidson and other life style bikes,
it is expected that motorcycling culture will grow faster. This will
have a favorable impact for Royal Enfi eld, being a highly treasured
brand in this segment.
EXPORTS:
Your Company unveiled chrome version of Classic and Bullet 500 at the
New York show. These will be marketed this year. Your Company has
entered the state of California USA after meeting the stringent
evaporative emission standards. In 2011, there are plans to expand to
new markets in South Africa, Taiwan, Paraguay and Peru.
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956,
READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF
BOARD OF DIRECTORS) RULES, 1988
CONSERVATION OF ENERGY
The following new initiatives were taken to conserve energy:
1. Modifi ed the blowers in the Air Replacement Plant (ARP) in the
Paint Shop and thereby reduced the motor power from 28 Amps to 22 Amps
which resulted in reduction of power consumption by almost 100 units
per day.
2. Installation of additional timers on Hydraulic power pack (Boring
Machines) for reduction of power consumption during machine idle time.
3. Installation of poly-carbonate sheet in the northern glass area of
Vehicle Assembly roof thereby eliminating need for lighting during day
time.
4. Installation of 10 Nos of additional Turbo Vent in various areas in
the shop fl oor which will enhance the ventilation at work place
without consuming power.
5. Introduction of auto air cut off system in the air gauges
inspection stations resulting in saving of compressed air which in turn
will reduce the power consumption.
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
All domestic models have been suitably adapted to meet BS III emission
norms effective from October 2010.
Evaporative emission technology has been adapted for 500cc Electronic
Fuel Injection (EFI) models of the motorcycles sold in California, USA
in 2010.
RESEARCH AND DEVELOPMENT
The focus on Research and Development activity continued with
development of new products and variants thereof apart from improving
the existing products and value engineering projects. An amount of 12.9
MINR was incurred on capital account and 92.4 MINR on revenue account
in Research and Development.
Please also refer Note No. 5 of Schedule 12 of Notes to Accounts
forming part of Annual Report for further details of Research and
Development.
FOREIGN EXCHANGE EARNINGS / EXPENDITURE
During the current year exports of two wheelers were 329.6 MINR (FOB
value) (Previous year 285.4 MINR).
Foreign Exchange amounting to 109 MINR (Previous year 100 MINR) was
used on account of import of components, spare parts, capital goods,
business travel and consulting fees during the year under review.
The Royal Enfi eld brand has great recognition in foreign markets. It
exports to more than 30 countries.
In order to assess potential and stimulate demand in existing and new
potential markets, your company regularly executes many marketing
initiatives abroad.
Please also refer Point No(s). 6 to 8 of Statement of Additional
Information forming part of Annual Accounts for further details of
Foreign Exchange earnings and expenditure.
EICHER EMPLOYEE STOCK OPTION PLAN 2006
55400 stock options have been issued out of the forfeited stock options
during the year ended December 31, 2010.
177000 options (net of forfeited options) that were granted on
September 30, 2006 under the Employee Stock Option Plan 2006 have
vested with employees on October 1, 2009. Out of these, 154700 options
have been exercised by the employees during the year under review.
208900 options (net of forfeited options) that were granted on October
22, 2007 under the Employee Stock Option Plan 2006 have vested with
employees on October 22, 2010. Out of these, 90200 options have been
exercised by the employees during the year under review.
The Statement giving complete details as at December 31, 2010, pursuant
to Clause 12 (Disclosure in the Directors Report) of the Securities
and Exchange Board of India (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines 1999, forms part of the Directors
Report.
PUBLIC DEPOSITS
As at December 31, 2010, there are 70 deposits aggregating to 5.8 MINR.
During the year under review, 111 deposits aggregating to 8.9 MINR
matured and were repaid. There are no deposits that remain unclaimed.
The Company has not renewed/accepted fixed deposits after May 29, 2009.
BOARD OF DIRECTORS
Mr. Siddhartha Lal was appointed as the Managing Director of the
Company with effect from May 1, 2006 for a period of fi ve years. His
tenure will terminate on April 30, 2011. Mr. Siddhartha Lal has been
recommended for reappointment as the Managing Director of the Company
for a further period of fi ve years with effect from May 1, 2011.
Mr. R.L.Ravichandran, has been appointed as the Additional Director and
Whole Time Director of the Company w.e.f January 1, 2011. Notice
pursuant to Section 257 of the Companies Act, 1956 has been received
from a member proposing Mr. R.L.Ravichandran for the appointment as
Director of your Company.
Mr Prateek Jalan-Director retires by rotation and, being eligible,
offers himself for reappointment.
The Board recommends the above appointments/reappointments pursuant to
applicable provisions of the Companies Act, 1956. Resolutions seeking
your approval on these items along with the terms and conditions are
included in the Notice convening the Annual General Meeting together
with a brief resume of the Directors being appointed/re-appointed.
VE COMMERCIAL VEHICLES LIMITED (VECV) - A SUBSIDARY COMPANY OF EICHER
MOTORS LIMITED
VECV has posted impressive all time high top line during the financial
year 2010 with total operating income at 39398.5 MINR as against
25384.8 MINR during the previous financial year ended December 31,
2009, a phenomenal growth of 55.2%. The operating Profit before
depreciation and interest amounted to 3348.1 MINR at 8.5% of Net Sales
as against operating Profit before depreciation and interest of 1353.8
MINR during the previous year at 5.4%, a growth of 147%. After
accounting for interest income of 764.1 MINR (previous year 735.5
MINR), interest expense of 63.0 MINR (previous year 71.2 MINR) and
depreciation of 457.3 MINR (previous year 377.0 MINR), Profit before
tax and exceptional items amounts to 3591.9 MINR (previous year 1641.1
MINR). After providing for tax of 996.5 MINR, Profit after tax amounts
to 2595.4 MINR (previous year 949.3 MINR).
The financial results are summarized below:
(Rs. in Millions)
For the year For the year
ended 31st ended 31st
Dec 2010 Dec 2009
Gross sales 41760.6 26638.6
Less : Excise duty 2586.4 1406.9
Net sales 39174.2 25231.7
Other operating income 224.3 153.1
Total operating income 39398.5 25384.8
Operating Profit before depreciation 3348.1 1353.8
and interest (EBIDTA)
Interest 63.0 71.2
Depreciation 457.3 377.0
Profit before other income, 2827.8 905.6
exceptional item and tax
Interest income 764.1 735.5
Profit before exceptional item and tax 3591.9 1641.1
Exceptional item - (234.4)
Profit before tax 3591.9 1406.7
Provision for tax (including Deferred tax) (996.5) (457.4)
Net Profit after tax 2595.4 949.3
The major improvement in financial results of VECV is on account of
higher volumes across all product segments and focused cost reductions
in all areas. Further there is an extraction of working capital of 305
MINR inspite of higher volumes and signifi cant increase in fi nished
goods inventory to support higher sales forecast.
AN OVERVIEW OF SUBSIDIARY COMPANYS BUSINESSES
Eicher Trucks and Buses (ETB):
The Commercial Vehicle Industry (5T and above) touched new peak level
at 412454 units registering a growth of 51.4% in 2010 over the previous
year fi gure of 272434 units.
Year 2010 was a year of record breaking performance for ETB. ETB
recorded its highest ever total Commercial Vehicles sales of 38181
against 24264 units in 2009, a growth of 57.4% with growth in numbers
and market share across all product segments.
The 5-12 To n Light & Medium Duty (L&MD) domestic cargo Commercial
Vehicles Industry ended the year 2010 with sales of 93732 as against
65875 in 2009 thus recording a growth of 42.3%. ETB outperformed the
industry in this segment and recorded a sale of 26426 units in 2010 as
against 16889 units in 2009, a growth of 56.5%. Due to higher sales,
ETB gained market share in this segment and ended at a market share of
28.2% vis a vis 25.6% in previous year.
In its strong 7 to 12 T domestic cargo segment, VECV improved its
strong position with a sale of 22787 units in 2010 with a higher market
share of 38.5% as against a sale of 14734 units and a market share of
35.8% with very good acceptability of its fuel effi cient E2 plus
series of Trucks in this segment.
The domestic Heavy Duty truck segment of 16 To n and above (HD)
recorded a growth of around 70%.
In the year 2010 beginning, VECV launched the new "VE" series of fuel
effi cient HD trucks at the Auto Expo. The Value Enhanced "VE" series
offer customers high reliability, superior performance, enhanced
service coverage along with high fuel effi ciency. VECV sold 4219
trucks in domestic cargo HD segment as against 1424 in the previous
year. VECV has followed a focused strategy of targeting specifi c
geography and segments with the right fit product in order to ensure
higher value delivery to the customer and this has started refl ecting
in the increased volumes during the current year.
Domestic Bus industry recorded a sale of 71536 units as against sale of
57296 units in 2009, a growth of 24.9%. VECV sold 4819 buses in 2010 as
against 3286 units in 2009, a growth of 46.7%, thereby gaining market
share from 5.7% in 2009 to 6.7% in 2010.
The exports in L&MD segment for VECV grew by 25.3% with exports of 2080
Trucks and Buses as against industry growth of 23.6%. Overall exports
of the Company in 2010 were 2717 units, a marginal growth as compared
to 2665 units in 2009 mainly because of constrained supply. However,
the pipeline continues to be very healthy.
With continuous focus on productivity, VECV crossed the peak capacity
production of 4000 units per month with production of 4152 units in
December, 2010. This will help in meeting the increased production
requirements in 2011 based on expected growth in industry.
Volvo Trucks India (VTI)
Volvo trucks market witnessed a positive trend in the fi rst quarter of
2010. VECV continued its strong hold in the premium high end of the
market represented by European players. VECV continued to control
around 71.1% market share of this premium segment. The after sales
network was further strengthened with addition of new dealerships and
also upgradation of existing dealerships.
All over the world, Volvo Trucks stand for quality, safety and
environmental care. In India, it has completed its journey of 12 years
and established itself as a premium brand, known for driving progress
in the industry with its modern technology, values and high standards.
Volvo has achieved and maintained its leadership position in select
segments of mining and Over Dimensional Cargo (ODC).
Eicher Engineering Components (EEC)
During the year 2010, Eicher Engineering Components (EEC) achieved the
highest ever turnover of MINR 2038.2 (including inter segment sales)
registering a growth of 55.8%.
The replacement market sales registered a marginal growth over 2009, as
it was constrained due to capacities. However, EEC has been successful
in launching new products and expanding the reach in 2010.
During the year 2010, capacity augmentation at Dewas plant was
successfully completed in transmission gears and Crown-Wheel Pinion and
the plant started meeting 100% captive requirements of Eicher Trucks
and Buses and OEM customer requirements as well.
The commissioning of the new Crown Wheel Pinion (CWP) Plant and
upgradation of machines and robotized furnace at Dewas facility have
provided a much needed stimulus to the EEC business in meeting
customers demand, on time in full.
Eicher Engineering Solutions (EES)
This business is operated through an Engineering Design Centre at
Gurgaon along with Eicher Engineering Solution Inc., (USA) and its two
subsidiaries in China namely M/s Hoff Automotive Design Company (HADC)
and M/s Hoff Technology Service Company, (HTSC).
There was a marginal improvement in the business situation at EES Inc.,
USA as income went up as compared to the previous year. The strategy to
diversify away from the Detroit based auto industry paid off as a
signifi cant portion of the revenue was generated from industries like
Heavy Truck and specialty vehicles.
Various cost reduction measures and streamlining of operations led to
an increase in effi ciency thereby improving the overall Profitability
of VECV and reducing the break-even point.
MARKET AND FUTURE PROSPECTS OF SUBSIDIARY COMPANYS BUSINESSES
Eicher Trucks and Buses (ETB):
With increased focus on infrastructure by Government of India and the
latest estimates of economic growth, the CV industry is expected to do
well in coming years.
Inflation is a concern and will be a big challenge leading to likely
hardening of interest rates in short to medium term in addition to
hardening of commodity prices and thereby have an impact on margins.
VECV has recorded an excellent overall performance in 2010. While L&MD
segment will continue its strong contribution, VECV will continue to
steadily improve the market shares in HD and Bus Segments.
Export has shown steady growth during last few years with a signifi
cant growth potential in future. In order to achieve the ambition from
export and emerging competition in the overseas markets, VECV has put
in place a new collaboration structure to leverage the distribution
network of Volvo and UD Truck Corporation in various developing
countries in Asia as well as outside Asia.
Volvo Trucks India (VTI)
Volvo Trucks India has undertaken different initiatives to grow
business in India. This includes the introduction of Volvo Trucks new
as well as present product range into different emerging application
segments like Port Intercarting, Road, fi re trucks, aerial ladder
trucks, tunneling operations and airport runway sweepers. The go-ahead
to produce the prototype for the new higher capacity mining and coal
tipper with the possibility of opening up of the new segment and
customer-base, will also help in its growth.
With a focus on high performance select segments, VECV is confi dent to
further consolidate its presence in the high growth mining segment and
over dimensional cargo segment.
Eicher Engineering Components (EEC)
EECs captive business from ETB is expected to grow on account of
further growth in Vehicle sales volumes with 100% gears and Crown wheel
requirement being met by EEC.
On domestic front, the business is expected to be in line with
manufacturing plans of the domestic Original Equipment Manufacturers
(OEMs). However, due to higher share of business with OEMs, development
of new products, upgradation of technology and acquisition of new
strategic customers would be the main contributing factors taking the
Companys growth to signifi cant levels. VECV is making the required
investment to increase capacity to meet enhanced demand both internal
and external.
With US market picking up, there is better infl ow of orders both
repeat and fresh. This will result in upward trend in export business
of VECV. In the long term, based on new customer acquisition, VECV
expects to grow signifi cantly in all segments especially in aggregate
assembly business and outsourcing business. VECVs ability to offer
design and build services will add to its ability to attract business.
On inputs front, Steel, Forgings and other raw materials prices are
showing an upward trend, hence recovery of higher input cost specifi
cally in export and replacement market will be a big challenge.
Eicher Engineering Solutions (EES)
The outlook for this business continues to improve over the past 6
months as the Auto companies in the US and their Tier 1/2/3 suppliers
come out of bankruptcy and the recession with a restructured operation
and with the need to revamp their product design and introduce new
models in order to grow. In addition, EES Inc. is well poised to
consolidate on the inroads and gains already made in the heavy truck
and aerospace industries in the previous year. Overall EES Inc. is
expected to do well in the current year.
New Project
Medium Duty Engine Project (MDEP)
VECV has announced an investment of 2880 MINR in its Pithampur Plant
for the production and fi nal assembly of the Volvo groups new global
medium-duty engine platform. Due to this investment, it will be
possible for the Volvo Group to locate most of its production of
medium-duty engines at VECVs plant in Pithampur. VECV has an
established and extensive supplier base in India with effi cient
purchasing channels and is already producing 40,000 engines per year in
its existing Pithampur plant. The new investment in Pithampur will
result in an annual production capacity of an additional 85,000
engines. In addition to production of the base engine itself, the
facility in Pithampur will also conduct fi nal assembly of engines for
India and all of Volvo Groups global markets with Euro 3 and Euro 4
emission requirements.
PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT, 1956
In terms of approval granted by the Central Government under Section
212 (8) of the Companies Act , 1956, copy of Balance Sheets, Profit and
Loss accounts, reports of the Board of Directors and Auditors Report
of the subsidiaries (including step down subsidiaries) have not been
attached with the Balance Sheet of the Company. These documents will be
made available upon request by any investor of the Company or
subsidiary companies and shall be kept for inspection by any investor
at the Registered office of the Company.
However, as directed by the Central Government the financial data of
the subsidiaries have been furnished under Financial Information of
Subsidiary Companies forming part of the Annual Report. Further,
pursuant to Accounting Standard AS-21 specified in the Companies
(Accounting Standards) Rules, 2006, the Consolidated Financial
Statements presented by the Company include financial information of
its Subsidiaries.
The statement pursuant to Section 212 of the Companies Act, 1956 forms
part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard AS-21 on Consolidated
Financial Statements read with Clause 32 of the Listing Agreement, the
Consolidated Audited Financial Statements and Consolidated Cash Flow
Statement are provided in the Annual Report.
STATUTORY AUDITORS
M/s. Deloitte Haskins & Sells, Chartered Accountants, have expressed
their willingness to continue in office as Statutory Auditors, if re-
appointed. A certifi cate has been obtained from them to the effect
that the appointment, if made, will be in accordance with the limits
specified in sub-section (1B) of section 224 of the Companies Act,
1956.
COST AUDITORS
In conformity with the directives of the Central Government, the
Company has appointed Mr V. Kalyanaraman, Cost Accountants, Chennai, as
the Cost Auditors under Section 233B of the Companies Act, 1956 for the
audit of cost accounts for the motorcycles business for the year ending
on December 31, 2011.
CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with Stock Exchanges, a
Management Discussion and Analysis is annexed to this report.
A report on Corporate Governance together with the Auditors Certifi
cate regarding the compliance of conditions of Corporate Governance
forms part of the Annual Report.
PARTICULARS OF EMPLOYEES
The statement of particulars of employees as per sub-section (2A) of
section 217 of the Companies Act, 1956, read with Companies (Particular
of Employees) Rules, 1975, for the year ended December 31, 2010 is
annexed hereto and forms part of this Annual Report.
STATEMENT OF RESPONSIBILITY
As required under section 217 (2AA) of the Companies (Amendment) Act,
2000, the Board of Directors confi rms that:
a. the applicable accounting standards have been followed in
preparation of the annual accounts;
b. the accounting policies have been applied consistently, judgements
and estimates have been reasonable and prudent thereby giving a true
and fair view of the state of affairs of the Company at the end of the
financial year and of the Profit of the Company for the year;
c. proper and suffi cient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of the Company and for preventing and
detecting frauds and other irregularities;
d. the annual accounts have been prepared on a going concern basis.
ACKNOWLEDGEMENT
Your Directors place on record their sincere gratitude to the
continuing patronage and trust of our valued customers, bankers and
financial institutions, business associates, shareholders and other
statutory authorities who have extended their precious continued
support and encouragement to your Company. Your Directors wish to
convey their deep appreciation to the dealers of the Company for their
achievements in the area of sales and service, and to suppliers /
vendors and other business associates for their valuable support.
Your Directors also place on record, their sincere appreciation for the
enthusiasm and commitment of its employees for the growth of the
Company and look forward to their continued involvement and support.
For and on behalf of the Board
Place : New Delhi Siddhartha Lal S. Sandilya
Date : February 5, 2011 Managing Director Chairman
Dec 31, 2009
The Board of Directors has pleasure in presenting the Twenty Eighth
Annual Report along with the Audited Accounts for the year ended
December 31, 2009.
BUSINESS ENVIRONMENT
Indian economic growth is steadily picking momentum. After experiencing
recessionary situation in last quarter of 2008 and the fi rst quarter
of 2009, the economy has bounced back from the second quarter of 2009
with an expected GDP growth of 7% plus for the year 2009. Automobile
Industry also recorded a smart recovery in second half of year 2009.
Your Company is a niche player in 350cc and above segment of two
wheeler industry and in line with improvement in business environment;
two wheeler industry registered a growth of 16% during the year 2009.
The Commercial vehicle industry in which your company operates through
the Subsidiary Company namely VE Commercial Vehicles Limited (VECV),
also recovered in the second half of 2009 with handsome gains in last
quarter of 2009 in all the vehicle segments.
FINANCIAL RESULTS
Your Company achieved impressive top line growth during the fi nancial
year 2009 with total Income at 3780.1 MINR. The previous period fi
gures are not comparable as those are for nine months and also include
revenue from Commercial Vehicle and related components/ Engineering
Services business for the quarter April to June 2008, that was
transferred to VECV w.e.f July 1, 2008. The operating profi t before
depreciation and interest amounted to 279.3 MINR @ 7.4% of the total
income. After accounting for interest and dividend income of 292.2
MINR, interest expense of 4.2 MINR and depreciation of 101.0 MINR,
profi t before tax amounts to 466.3 MINR. Profi t after tax amounts to
375.3 MINR after income tax provision of 91.0 MINR.
The fi nancial results are summarized below:
(Rs. in millions)
As at As at
December December
31, 2009 31, 2008
(April to
December)
Gross sales 4079.9 7717.8
Less : Excise duty 329.0 843.2
Net sales 3750.9 6874.6
Other income 29.2 51.2
Total income 3780.1 6925.8
Operating profit before
depreciation
and interest (EBIDTA) 279.3 120.8
Interest 4.2 35.9
Depreciation 101.0 152.0
Profi t before other income, 174.1 (67.1)
exceptional item & tax
Interest and dividend income* 292.2 212.5
Profi t before exceptional item
and tax 466.3 145.4
Exceptional item - 204.2
Profi t before tax 466.3 349.6
Provision for tax (including
Deferred tax) (91.0) 40.4
Net profit after tax 375.3 390.0
Balance brought forward from
revious period/year 3565.0 3378.4
Dividend on bought back and
extinguished
equity shares no longer payable 7.0 -
Corporate Dividend Tax on above
dividend 1.2 -
Premium paid on buy back of
equity shares (960.5) -
Amount available for
appropriation 2988.0 3768.4
Proposed Dividend 186.9 140.5
Corporate Dividend Tax 8.7 23.9
Transfer to General Reserve
Account 40.0 39.0
Balance carried to Balance
Sheet 2752.4 3565.0
Earnings per share
- Basic (Rs.) 13.85 13.88
- Diluted (Rs.) 13.81 13.88
* Dividend @ Rs. 25 per equity share was declared by VECV in its
shareholdersà meeting held on February 8, 2010. An amount of 136 MINR
being dividend income on investments in VECV has been accounted for in
the above fi nancial results.
DIVIDEND
The Directors are pleased to recommend a dividend of 70% (Rs.7/- per
Equity Share of Rs.10/- each) for the year ended December 31, 2009.
BUY BACK OF EQUITY SHARES OF THE COMPANY
During the year, your Company successfully completed the buy back of
1408969 equity shares of Rs. 10 each at a price of Rs. 691.68 per
share. An amount of 974.6 MINR including premium of 960.5 MINR was
used for this purpose. The promotersà group and AB Volvo, Sweden did
not participate in that.
TWO WHEELERS BUSINESS
The year 2009 has been an extremely good year for your Company with an
all time high sales of 51955 motorcycles against 43298 motorcycles
during 2008, thus registering a growth of 20%. Performance was good in
both domestic as well as export markets with sale of 50002 motor cycles
(previous year 41542) and 1953 motorcycles (previous year 1756)
respectively.
Spare parts sales also recorded a good growth with sales at 397.8 MINR
in 2009 (Previous period 250.9 MINR)
Your Company experienced a very good demand throughout the year and
production lagged the demand month after month. Based on productivity
improvements, investments made in balancing equipment and also
outsourcing of some operations, your Company was able to increase the
production capacity of motorcycles during the year to 5000 motorcycles
per month as against the previous year capacity of 3750 motorcycles per
month. Necessary steps are being taken to jack up the capacity further
during the current year 2010.
Your company operates in the ÃLeisure Cruiserà segment with engine
capacity of 350 cc and above and it continues to be the only domestic
player in this segment in Indian market.
Another major highlight of the year 2009 was introduction of ÃClassicÃ
bike in the two categories of 350cc and 500cc. The ÃClassicà bikes are
powered by a single cylinder 500 cc Unit Construction Engine (UCE)
supported by Electronic Fuel Injection (EFI). The UCE has an integrated
assembly for the engine, gear box and clutch and this reduces the
friction between the movable parts, resulting in lower transmission
losses. These bikes received tremendous response from the market and
also got an excellent media coverage.
MARKET AND FUTURE PROSPECTS
The two wheeler industry outlook has been positive in 2009 with 18%
growth in domestic volumes as compared with 2008. The economy segment
(100 cc) that had stagnated last year has also seen a revival, posting
a growth of 16%. In future, a fraction of this huge segment is likely
to upgrade to higher capacity products which may ensure long term
prospects for the premium and executive segments.
The Power Style and Technology Segment (PST), represented by
motorcycles over 125cc is continuing to show a healthy growth. This
segment has grown by 9% during the year under review. One indicative
example of the good reception in the domestic market for PST segment is
the staggering growth registered by the Completely Built Units (CBU)
imports by International brands.
Further the advent of the biking culture and lifestyle orientation in
the bigger cities in Indian market will trigger growth in this segment.
The Internationally popular players are also focusing now in India
which will help the Leisure Cruiser segments to register stable growth
levels.
Your Company will achieve 100% change over to Unit Construction Engine
(UCE) architecture with effect from April 2010. The new UCE engine
meets the mandatory emission norms that are becoming applicable from
April 1, 2010.
EXPORTS:
A number of new introductions are planned in overseas markets in the
current year. These include:
1. A chrome version of Classic and Battle Green version of Classic in
the world market. These products were unveiled in the January, 2010
Auto Expo at Delhi.
2. Classic 350 version in Japan which will increase the off-take for
Japan.
3. Classic models in the State of California USA after meeting the
evaporative emission standards. This initiative will yield signifi cant
sales potential for your Company in the California State for the fi rst
time.
4. Introduction in new markets namely Canada, Mexico, Brazil and
Belgium.
With all the above initiatives, the potential for further sales growth
is very high during the year 2010 for your Company.
MERGER OF EICHER GOODEARTH INVESTMENTS LIMITED (EGIL)
Pursuant to the Composite Scheme of Arrangement (Ãthe SchemeÃ) between
EGIL, Eicher Goodearth Private Limited (EGPL) and Eicher Motors Limited
(the Company) under section 391 to section 394 of the Companies Act,
1956, approved by the HonÃble High Court of Delhi vide its order dated
October 27, 2009,the ÃResidual EGILÃ, subsequent to demerger of
Investment Business of EGIL into EGPL was transferred to and vested in
the Company in accordance with section 2 (1B) of the Income tax Act,
1961.
EGILÃs main assets were the investments in the equity shares of your
Company and on merger, these investments of EGIL got cancelled and in
lieu thereof, your Company has issued and allotted on January 5, 2010,
14032764 shares of Rs. 10 each aggregating Rs.140.3 millions to the
members of residual EGIL in the proportion in which they held equity
shares in Residual EGIL. The details are given in Note 3 of Schedule
12- Notes to the Accounts forming part of the ÃAnnual Reportà .
ENERGY CONSERVATION, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE
EARNINGS AND OUTGO UNDER SECTION 217(1)(e) OF THE COMPANIES ACT, 1956,
READ WITH THE COMPANIES (DISCLOSURE OF PARTICULARS IN THE REPORT OF
BOARD OF DIRECTORS) RULES, 1988
CONSERVATION OF ENERGY
The following new initiatives were taken to conserve energy :
- Installation of timer on Hydraulic power pack (Boring Machines) for
reduction of power consumption during machine idle time
- Interlocking of machine accessories (Drilling Machines) units for
reduction of power consumption during machine idle time.
- Reduction in power consumption in Machine shop due to introduction of
transparent roof system thereby using natural light
- Installation of 47 Nos of Turbo Vents in various areas in the shop fl
oor which will enhance the ventilation at work place without consuming
power
TECHNOLOGY ABSORPTION, ADAPTATION AND INNOVATION
Electronic Fuel Injection (EFI) technology that was hitherto introduced
in overseas market only, was introduced in the domestic market as well
in the new Classic 500cc bikes segment that was launched during the
year 2009.
UCE with Twin Spark ignition has been used in the domestic model
Classic 350cc as well as Classic 500cc launched in November, 2009.
This UCE Engine will replace the present ÃCast Ironà engines in Electra
and Standard bikes as well to meet the Indian emission norms of BS II
(Euro III) effective from April 2010.
RESEARCH AND DEVELOPMENT
The focus on research and development activities continued with
development of new products and variants thereof apart from improving
the existing products and value engineering projects. An amount of 6.4
MINR was incurred on capital account and 77.7 MINR on revenue account
in Research and Development.
Please also refer Note No.5 of Schedule 12 of Notes to Accounts forming
part of Annual Report for further details of Research and Development.
FOREIGN EXCHANGE EARNINGS / EXPENDITURE
During the current year export of two wheelers were 285.4 MINR (FOB
value) (Previous period 157.5 MINR)
Foreign Exchange amounting to 100 MINR (Previous period 70 MINR) was
used on account of import of components, spare parts, capital goods,
business travel and consulting fees during the accounting year under
review.
Currently Royal Enfi eld motorcycles are primarily exported to western
countries which include UK, USA, Germany, France, Spain and Italy. New
export markets planned for expansion are the Latin America, California
and Canada.
In order to assess potential in these markets, marketing initiatives
like product displays, participation in new exhibitions and market
research are planned during the current year.
Please also refer point No. 7 and 8 of Statement of Additional
Information forming part of Annual Accounts for further details of
Foreign Exchange earnings and expenditure.
EMPLOYEES STOCK OPTION SCHEME 2006
There has been no further issue of stock options during the year ended
December 31, 2009. 181000 options (net of lapsed options) that were
granted on September 30, 2006 under the Employee Stock Option Plan 2006
have vested with employeesà on October 1, 2009. Out of these, 7900
options have been exercised by the employees during the year under
review.
The Statement giving complete details as at December 31, 2009, pursuant
to Clause 12 (Disclosure in the Directorsà Report) of the Securities
and Exchange Board of India (Employee Stock Option Scheme and Employee
Stock Purchase Scheme) Guidelines 1999, forms part of the DirectorsÃ
Report.
PUBLIC DEPOSITS
As at December 31, 2009, there are 181 deposits aggregating to 14.7
MINR. During the year under review, 203 deposits aggregating to 16.3
MINR matured and also have been repaid or renewed. There are no
deposits that remain unclaimed. Considering the surplus funds available
with the Company, the Board decided not to renew/accept the fi xed
deposits after May 29, 2009.
BOARD OF DIRECTORS
Mr S.Sandilya - Director, retires by rotation and, being eligible,
offers himself for reappointment.
VE COMMERCIAL VEHICLES LIMITED (VECV) Ã A SUBSIDARY COMPANY OF EICHER
MOTORS LIMITED
VECV achieved impressive top line growth during the fi nancial year
2009 with total operating income at 25385 MINR as against 9914 MINR
during the previous fi nancial period of six months ended December
2008. The operating profi t amounted to 1354 MINR @ 5.3% of the
operating income as against operating loss of 5.8 MINR during the
previous period. After accounting for interest income of 735.5 MINR
(previous period 342.9 MINR), interest expense of 71.2 MINR (previous
period 53.7 MINR) and depreciation of 377 MINR (previous period 175.4
MINR), profi t before tax and exceptional items amounts to 1641.1 MINR
(previous period 108 MINR). Due to carry forward loss situation and
erosion of net worth in the subsidiary company EES Inc USA, the entire
investments made in the equity capital of EES Inc amounting to 234.4
MINR has been treated as impaired and carrying cost of investment has
been reduced to NIL and fully provided for. After providing for tax of
457.4 MINR, profi t after tax amounts to 949.3 MINR (previous period
165.5 MINR).
The financial results are summarized below: -
(Rs. in millions)
As at Dec As at Dec
31, 2009 31, 2008
(Mar 7 to
Dec 31, 2008)
Gross sales 26638.6 10651.8
Less : Excise duty 1406.9 802.0
Net sales 25231.7 9849.8
Other operating income 153.1 63.8
Total operating income 25384.8 9913.6
Operating profi t before 1353.8 (5.8)
depreciation and interest
(EBIDTA)
Interest 71.2 53.7
Depreciation 377.0 175.4
Profi t before other income,905.6 (234.9)
exceptional item and tax
Interest income 735.5 342.9
Profi t before exceptional 1641.1 108.0
item and tax
Exceptional item (234.4) -
Profi t before tax 1406.7 108.0
Provision for tax
(including (457.4) 57.5
Deferred tax)
Net profi t after tax 949.3 165.5
Another signifi cant improvement in the last fi nancial year has been
the extraction of a huge amount of 2285 MINR from the working capital
with major reduction in inventories and other items of working capital.
AN OVERVIEW OF SUBSIDIARY COMPANYÃS BUSINESSES
Eicher Trucks and Buses (ETB):
The Commercial vehicle industry (5T and above) has slowly and steadily
recovered during the year 2009. The fi rst quarter of January to March
2009 was the worst affected with industry dropping by 48.1% as compared
to the corresponding previous yearÃs quarter. However the situation
kept on improving quarter after quarter with growth of 106.8% in
October to December 2009 quarter. Overall the industry ended at 272486
units for the year 2009 as against 306573 during 2008 with a drop of
11.1%.
As against this, ETB had a marginal growth in 2009 over 2008 with sales
of 24264 against 23775 with a growth of 2.1%.
Within the CV Industry, Light and Medium duty segment of 5 to 12 Ton
(L&MD) in which VECV continues to be a strong player, ended the year
2009 with sales of 104162 as against 97633 in 2008 thus recording a
growth of 6.7%. The domestic cargo segment of L&MD industry ended with
a handsome growth of 13.8% with sales of 65877 during 2009. The Buses
segment of L&MD recorded a growth of 20.4% with sales at 27944 and
exports dropped to 10341 from 16508 during 2008 with drop of 37.4%.
VECV had sales of 21682 Trucks and Buses in L&MD segment as against
20430 during 2008 thus recording a growth of 6.1% almost in line with
industry growth of 6.7%. VECV had a growth of 6.9% in the domestic
Cargo segment with sales of 16893 trucks. In domestic Buses segment of
L&MD industry, the growth for VECV was 17.7% with sales of 3128 Buses.
The exports in L&MD segment for VECV dropped by 15.6% with exports of
1661 Trucks and Buses as against industry drop of 37.4%.
Within the 5 to 12 Ton, VECV sales dropped by 6.2% in 5 To n segment
even though the industry grew by 22% in 2009. This was due to the fi
nancing constraint faced specifi cally in this segment as this segment
is mostly represented by small operators and the fi nancing was a bit
diffi cult for small operators and companies with captive fi nancing
operations made handsome gains. In 7 to 12 T domestic cargo segment,
VECV maintained its strong position with market share of close to 36%
during 2009 with introduction of a new improved E2 plus series of
Trucks in this segment.
The Heavy Duty segment of 16 Ton and above (HD) was the worst affected
in the fi rst two quarters of the year 2009 with drop of 55.7% in
January to March Quarter and 41.2% drop in April to June Quarter over
corresponding previous year quarters. However the situation improved
from July to September Quarter with drop of just 4.3% and last quarter
of October to December recorded a whopping growth of 110.9%.
Overall for the year, HD segment dropped by 19.4% with sales of 168324
against 208940 in 2008. Within this, the drop in domestic Cargo segment
was 23.4% with sales at 124231 Trucks. Sales of Buses grew marginally
to 29273 Buses against 29174 during 2008 based on procurement of buses
under ÃJawaharlal Nehru National Urban Renewal Missionà (JNNURM) scheme
of Government of India.
Exports in HD industry dropped by 16.2% to 14820 trucks and buses over
previous year.
VECV sold 2582 trucks and buses in HD segment as against 3345 in the
previous year with a decline of 22.8% as against decline of 19.4% in
the industry. The decline in domestic cargo segment was high at 42.9%
with sales of 1424 trucks. Exports for VECV recorded a handsome growth
of 77.7% in HD segment with sale of 1004 trucks and buses in overseas
market.
During the year 2009, VECV worked extensively on its HD products to
improve the performance and reliability of these products. A number of
steps were also initiated to tone up the after sales network. After
various improvements and value enhancements, a new series named ÃVEÃ
series of HD trucks has been introduced in the Auto Expo in January
2010.
Volvo Trucks India (VTI)
Volvo Trucks India operates in select premium heavy duty truck
segments. Volvo TruckÃs main offerings are customized to mining, heavy
construction, over-dimensional-cargo and other special applications
e.g. fi re trucks, aviation refueling, sky lift, boom pump.
Volvo trucks market was affected in the fi rst half of the year due to
the liquidity crunch and the delay in projects maturity due to general
elections in April and May 2009. The demand picked up in the second
half of 2009. VECV continued its strong hold in the premium high end of
the market represented by European players including Mercedes and
Scania apart from Volvo. VECV continued to control around 70% market
share of this premium segment. The after sales network was further
strengthened with addition of new dealerships at Bilaspur and Goa and
also upgradations of existing dealerships.
Eicher Engineering Components (EEC)
During the year 2009, Eicher Engineering Components achieved a turnover
of 1308.7 MINR (including inter segment sales) registering a growth of
6%.
The automobile industry in India has been on steady recovery path led
by strong growth in passenger cars segment and an impressive recovery
in CV segment during the year 2009. The fortunes of domestic Components
Industry improved signifi cantly with recovery in Automobile Industry.
However due to heavy downturn in US, the component exports suffered
very badly in the year 2009.
VECV has also been successful in registering itself as approved
supplier to large corporations like John Deere, CNH and Caterpillar.
This would offer a very large potential of business in future.
The replacement market sales observed growth with the expansion of both
product range and distribution network.
During the year 2009, expansion at Dewas plant was successfully
completed in transmission gears and Crown-Wheel Pinion and the plant
started meeting 100% captive requirements of Eicher Trucks and Buses.
The Gear Box Assembly facility at Special Economic Zone (SEZ),
Pithampur was also made operational during 2009.
Eicher Engineering Solutions (EES)
This business is operated through an Engineering Design centre at
Gurgaon along with Eicher Engineering Solution Inc., (USA) and its two
subsidiaries in China namely M/s Hoff Automotive Design Company (HADC)
and M/s Hoff Technology Service Company (HTSC).
Overall this business remained depressed during 2009 as auto business
in USA is yet to recover from sluggish demand. Both assignments of
projects as well proto development jobs were affected adversely in
Detroit, the hub of auto industry in USA, as a result of which not much
off shoring of the design jobs could be done to the Gurgaon Design
centre.
Income at EES Inc USA dropped to USD 8.6 Million resulting in a loss of
USD 1.7 Million for the year 2009. The situation is likely to improve
from 2010.
MARKET AND FUTURE PROSPECTS OF SUBSIDIARY COMPANYÃS BUSINESSES
Eicher Trucks and Buses (ETB):
The Commercial vehicle industry saw a smart recovery in the second half
of 2009 and the industry is continuing the growth path in 2010 as well
with January 2010 recording all time high sales of more than 10000
vehicles in L&MD segment (5 to 12 ton) and more than 20000 in HD
segment.
The government has shown a renewed commitment to road infrastructure
with potential investments of more than Rs. 1000
billion in next 3 years. This is expected to boost Commercial Vehicles
Industry sales, and in particular HD truck volumes driven by
construction sector demand as well as enhanced goods movement.
HD bus sales are expected to grow signifi cantly backed by orders under
ÃJNNURMÃ scheme of Government of India.
On the whole, a robust domestic economy and recovery of global fi
nancial markets is expected to launch a strong business cycle for the
industry. However continued availability of credit will be critical to
sustain the revival in the industry amidst rising infl ation and
concerns of higher interest rates.
Volvo Trucks India (VTI)
Volvo trucks has undertaken different initiatives to grow business in
India. This includes the introduction of Volvo TruckÃs new as well as
present product range into different emerging application segments like
concrete boom pumps, fi re trucks, aerial ladder trucks, tunneling
operations and airport runway sweepers.
The recent launch of the Ãmost powerful truck on Indian roadÃ, the
Volvo FH 520 puller will further strengthen VolvoÃs position in the
premium trucks segment.
With a focus on high performance select segments, VECV is confi dent to
further consolidate its presence in the high growth mining segment and
over-dimensional-cargo segment.
Eicher Engineering Components (EEC)
EECÃs captive business from ETB is expected to grow on account of
higher share of business and also the aggressive plans to capture
higher Market share in HD range. There is also signifi cant opportunity
to get business from Volvo Group worldwide.
On domestic front, the business is expected to be in line with
manufacturing plans of the domestic OEMs. However, due to higher share
of business with OEMs, development of new products, upgradation of
technology and acquisition of new strategic customers would be main
contributing factors taking companyÃs growth to signifi cant levels.
VECVÃs exports to US in the short term are expected to be impacted by
the present conditions in US. However, in the long term, based on new
customer acquisitions, company expects to grow signifi cantly in all
segments especially in aggregate assembly business and outsourcing
business. VECVÃs ability to offer design and build services will add to
its ability to attract business. In the export market other than US,
companyÃs volume is likely to grow signifi cantly with some new
customer acquisitions.
On supplierÃs front, Steel, Forgings and other raw materials prices are
showing the upward trend. Recovery of higher input cost specifi cally
in export and replacement market will be big challenge.
Eicher Engineering Solutions (EES)
The outlook for this business at this time looks very challenging as
the Automobile market in USA is going through recession and recovery is
on very slow path and the business is heavily dependent on Auto sector
in US. However, CompanyÃs strategy of shifting from auto sector to
other sectors would help in growth of business.
VECV is also exploring further business opportunities in the fi eld of
Engineering Design Services along with Vinn Group AB of Sweden by
aligning the existing business with Vinn Group AB through an effi cient
structure. A non binding Memorandum of understanding was signed with
Vinn Group AB during the year.
PARTICULARS UNDER SECTION 212 OF THE COMPANIES ACT, 1956
In terms of approval granted by the Central Government under Section
212 (8) of the Companies Act , 1956, copy of Balance Sheets, Profi t
and Loss accounts, reports of the Board of Directors and AuditorsÃ
Report of the subsidiaries (including step down subsidiaries) have not
been attached with the Balance Sheet of the Company. These documents
will be made available upon request by any investor of the Company or
subsidiary companies and shall be kept for inspection by any investor
at the Registered Offi ce of the Company.
However, as directed by the Central Government the fi nancial data of
the subsidiaries have been furnished under Financial Information of
Subsidiary Companies forming part of the Annual Report. Further,
pursuant to Accounting Standard AS-21 specifi ed in the Companies
(Accounting Standards) Rules, 2006, the Consolidated Financial
Statements presented by the Company includes fi nancial information of
its Subsidiaries.
The statement pursuant to Section 212 of the Companies Act, 1956 forms
part of the Annual Report.
CONSOLIDATED FINANCIAL STATEMENTS
In accordance with the Accounting Standard AS-21 on Consolidated
Financial Statements read with Clause 32 of the Listing Agreement, the
Consolidated Audited Financial Statements and Cash Flow Statement are
provided in the Annual Report.
STATUTORY AUDITORS
M/s. Deloitte Haskins & Sells, Chartered Accountants, have expressed
their willingness to continue in offi ce as Statutory Auditors, if re-
appointed. A certifi cate has been obtained from them to the effect
that the appointment, if made, will be in accordance with the limits
specifi ed in sub-section (1B) of section 224 of the Companies Act,
1956.
COST AUDITORS
In conformity with the directives of the Central Government, the
Company has appointed Mr V. Kalyanaraman, Cost Accountants, Chennai, as
the Cost Auditors under Section 233B of the Companies Act, 1956 for the
audit of cost accounts for the motorcycles business for the year ending
on December 31, 2009.
CORPORATE GOVERNANCE
As per Clause 49 of the Listing Agreement with Stock Exchanges, a
Management Discussion and Analysis is annexed to this report. A report
on Corporate Governance together with the Auditorsà Certifi cate
regarding the compliance of conditions of Corporate Governance forms
part of the Annual Report.
PARTICULARS OF EMPLOYEES
The statement of particulars of employees as per sub-section (2A) of
section 217 of the Companies Act, 1956, read with Companies (Particular
of Employees) Rules, 1975, for the year ended December 31, 2009 is
annexed hereto and forms part of this Annual Report.
STATEMENT OF RESPONSIBILITY
As required under section 217 (2AA) of the Companies (Amendment) Act,
2000, the Board of Directors confi rms that:
a. the applicable accounting standards have been followed in
preparation of the annual accounts;
b. the accounting policies have been applied consistently, judgements
and estimates have been reasonable and prudent thereby giving a true
and fair view of the state of affairs of the Company at the end of the
fi nancial year and of the profi t of the Company for the year;
c. proper and suffi cient care has been taken for the maintenance of
adequate accounting records in accordance with the provisions of this
Act for safeguarding the assets of the Company and for preventing and
detecting frauds and other irregularities;
d. the annual accounts have been prepared on a going concern basis.
ACKNOWLEDGEMENT
Your Directors place on record their sincere gratitude to the
continuing patronage and trust of our valued customers, bankers and fi
nancial institutions, business associates, shareholders and other
statutory authorities who have extended their precious continued
support and encouragement to your Company. Your Directors wish to
convey their deep appreciation to the dealers of the Company for their
achievements in the area of sales and service, and to suppliers /
vendors and other business associates for their valuable support.
Your Directors also place on record, their sincere appreciation to the
enthusiasm and commitment of its employees for the growth of the
Company and look forward to their continued involvement and support.
For and on behalf of the Board
Place : New Delhi Siddhartha Lal S. Sandilya
Date : February 13, 2010 Managing Director Chairman