M M Forgings Ltd
Directors Reports
The Directors have the pleasure in presenting the 77th Annual Report and the
audited accounts of the Company for the year ended 31st March 2023.
1. FINANCIAL RESULTS FOR THE YEAR ENDED 31ST MARCH 2023:
| S. No. Particulars |
2022-23 |
2021-22 |
| 1.1 Forging sales |
1,39,511.00 |
1,08,798.03 |
| 1.2 Profit before items/ exceptional extraordinary items and Tax |
17,484.41 |
13,289.40 |
| 1.3 Exceptional/Extraordinary Items |
0.65 |
0.13 |
| 1.4 Profit Before Tax |
17,485.06 |
13,289.53 |
| 1.5 Tax |
|
|
| For current year |
4,625.00 |
2,599.52 |
| Relating to previous years |
- |
84.55 |
| Deferred Tax / MAT credit |
301.19 4,926.19 |
1,429.48 4,113.55 |
| 1.6 Profit after Tax |
12,558.22 |
9,175.99 |
2. DIVIDEND AND FINANCIAL RESULTS
| . Particulars |
2022-23 |
2021-22 |
| 2.1 Profit after Tax |
12,558.22 |
9,175.99 |
| 2.2 Balance in P & L Account |
123.71 |
121.17 |
| 2.3 Profit available for appropriation |
12,681.93 |
9,297.16 |
| 2.4 Transfer to General Reserve |
11,110.00 |
7,725.00 |
| 2.5 Proposed Dividend |
1,448.45 |
1,448.45 |
| 2.6 Balance carried forward |
123.48 |
123.71 |
The Directors declared 60% dividend (C6/- per share) of face value of C10/- each, in
their meeting held on 17 May 2023. The record date fixed for determining the shareholders
for payment of dividend is 29 May 2023. The Directors does not recommend any final
dividend for the FY 2022-23. The dividend pay-out is in accordance with the Company's
Dividend Distribution Policy.
3. SHARE CAPITAL:
There was no change in the share capital during the year.
4. HIGHLIGHTS OF THE COMPANY'S OPERATIONAL PERFORMANCE:
4.1. The Company has overall Revenue, of above C1,400 crores. 4.2. The Company's PBT is
C174.85 crores.
4.3. The Company's PAT stands at C125.58 crores.
4.4. The Company continues to be a net foreign exchange earner. The net foreign
exchange earnings during the current year were C430.53 crores.
4.5. The Company has retained its ISO 9001 and TS 16949 Certification for its Quality
Management.
4.6. The domestic sales is C906 crores and the export sales stands at C490 crores. 4.7.
The Company has declared an interim dividend of 60% dividend for the year.
5. INDIAN ACCOUNTING STANDARD (IND AS) IFRS CONVERGED STANDARDS:
Pursuant to the notification of the Companies (Indian Accounting Standard) Rules, 2015
by the Ministry of Corporate Affairs (MCA) on 16 February 2015, the Company has adopted
Indian Accounting standards (IND AS).
6. EXPENSES MADE MORE THAN 10 % OF THE TURNOVER:
Raw Material - C734.36 Crores (51.52 %)
7. MANAGEMENT DISCUSSION AND ANALYSIS
Economic Overview – Global ?
The year 2022 proved to be a tumultuous period for the global economy. Just as the
world was on the mend post multiple waves of COVID, the Russia-Ukraine conflict induced a
trail of irreversible economic, social and political effects. Global inflation touched an
all-time high of 8.7% with many developed economies witnessing double digit inflation
figures for the first time in many decades.
The surge in inflation witnessed across commodities in the aftermath of the conflict ,
added to the already elevated inflationary concerns across economies grappling with the
fractured supply chain networks resulting from the COVID fallout. This led to
unprecedented, synchronized, increases in policy rates across all major economies which
not just resulted in monetary policy tightening across the emerging economies but also led
to significant forex reserve challenges in many economies, ultimately impacting business
conditions across many markets.
With global growth decelerating as the effects of monetary tightening and Russia's war
in Ukraine continue to weigh on activity, the year 2023, equally looks to be a challenging
year for the global economy. Persistent inflationary pressures, and recent financial
sector problems in the United States and Europe, are injecting additional uncertainty into
an already complex economic landscape.
Global growth at 3.4% in 2022 will bottom out at 2.8% in 2023, before rising modestly
to
3.0% in 2024. Global headline inflation is set to fall from 8.7% in 2022 to 7.0% in
2023 on the back of lower commodity prices, but underlying (core) inflation is likely to
decline more slowly. Inflation's return to target is unlikely before 2025 in most cases.
Once inflation rates are back to targets, deeper structural drivers will likely reduce
interest rates toward their pre-pandemic levels.
The anaemic outlook reflectsthe tight policy stances needed to bring down inflation,the
fallout from the recent deterioration in financial conditions, the ongoing war in Ukraine,
and growing geo-economics Businesses, across geographies, would need to be vigilant and
exhibit flexibility, working with dynamic operating models to adapt to the evolving
conditions while simultaneously building resiliency in their business models to ensure
sustained performance.
Economic Overview – India
India's growth continues to be resilient and set to be the second-fastest growing
economy in the G20 in F23, despite some signs of moderation in growth, decelerating global
demand and the tightening of monetary policy to manage inflationary pressures. ?
The growth was underpinned by strong investment activity bolstered by the government's
capex push and buoyant private consumption, particularly among higher income earners.
Inflation remained high, averaging around 6.7% in F23 but the current-account deficit
narrowed in Q3F23 on the back of strong exports and easing global commodity prices.
India's economic growth rate is stronger than in many peer economies and reflects
relatively strong domestic consumption and lesser dependence on global demand. India's
Gross Domestic Product (GDP) grew by 7.2% in F23 against 9.1% expansion in previous
fiscal.
Due to headwinds from the impact of rapid monetary policy tightening in the advanced
economies, heightened global uncertainty and the lagged impact of domestic policy
tightening, India's GDP is expected to slow down to 6% in F24 and is projected to rise to
6.9% in F25 and F26 and 7.1% in F27.
The automotive industry will remain vulnerable to global headwinds in 2023 including
the energy crisis, spike in fuel price due to the conflict,slower global demand and
continued supply-chain problems. Steel prices has reduced globally in F23, while in India,
it continues to be stable, after plotting a volatile season since F21.
Based on the current market scenario, domestic equity markets could experience some
volatility in the short term. However, in the long run, Indian equity markets are likely
to remain attractive for investors due to the country's strong economic fundamentals and
growth prospects.
India's automotive industry is poised to become the world's third-largest market by
2030, showcasing its dominance in the international heavy vehicles arena. As the industry
contributes significantly to India's GDP and manufacturing sector, the nation is also
emerging as a leader in Electric Vehicle (EV) adoption. Climate action has become more
important globally, and enterprises focusing on sustainability, renewable energy and EV
sectors will receive attention from investors. The EV market is expected to grow at a CAGR
of 49% between 2023-2030, with annual sales reaching 10 million units by 2030.
Market segments outlook:
Key segment analysis: Commercial Vehicles (CV)
The Indian domestic market is exuberant and continues to register its growth, be it the
Passenger Vehicle (PV) or Commercial Vehicle (CV) segment, with the latter particularly
witnessing good growth in the Medium &? Heavy Commercial Vehicles (MHCV) category
owing to the government push on infrastructure development. MHCV Industry is the backbone
of Indian Economy and is undergoing technological upgradation through the implementation
of Real-Time Driving Emission (RDE) Norms in F24.
In the Indian markets, CV sales increased from 7,17,000 to 9,63,000 Vehicles and total
PV Sales increased from 30,70,000 to 38,91,000 vehicles during the year 2022-23 as
compared to the previous year. Sales of MHCV increased from 2,41,000 to 3,59,000 Vehicles.
Globally, container availability has improved but with headwinds of inflation and the
Ukraine war, growth in export markets is expected to be a challenge. The fall in
exports to a few countries has been mainly due to unfavourable forex situation. However,
an improvement is expected in the coming months.
The CV Segment plays a significant role of MMF in F23 with overall sales of 80%.
Passenger car segment constitutes 11% and others 9%. Further, with increase in share of
business in Europe and a positive outlook for class 8 trucks in North America from Q3F23,
the market conditions have turned significantly positive and the segment is expected to do
well in North America and Europe in F24. The Class 8 truck sales reported at 3,09,615
units in the CY 2022.
Overall Outlook:
Inflation, global trade tensions and economic uncertainties is expected to be crucial
in F24.
Overall, the outlook is positive with significant growth in domestic sales. Export
market looks to be challenging.
Currency movement: [USD vs INR]
The continued impact of Russia-Ukraine conflict, macroeconomic uncertainties and
increase in interest rates by US Federal Reserve from time to time to combat the higher
inflation rates had significantly weakened the
INR value, to end the year on 31st March, 2023 above C82 levels. The Indian
Rupee is expected to be under pressure in FY 2023-24 also.
M M FORGINGS – Achievements in F23
The following were achieved during F23, despite global trade tensions and economic
uncertainties.
| Domestic sales: |
Rs 906 crore |
| Export sales: |
Rs 490 crore |
| Total sales: |
Rs 1,395 crore |
| Overall sales: |
Rs 1,425 crore |
| Production tonnage: |
Rs 76,245 Tons |
Changes in steel prices which are in line with international markets are generally
being passed on to customers as is the industry practice.
We are focusing on launching new products to take advantage of the forging capacities
created in the last 4 years. We are also de-bottlenecking to take advantage of the
growth in established products.
| Key Financial Ratios: |
|
| Return on Capital Employed: |
18.04% |
| Return on Networth: |
17.76% |
| Ratio on total outside liabilities: 1.37 |
| Debtors Turnover: |
107 days |
| Inventory Turnover: |
4.68 |
| Interest Coverage Ratio: |
8.75 |
| Current Ratio: |
1.66 |
| Debt Equity Ratio: |
0.63 |
| Operating Profit Margin (%): |
12.27 % |
| Net Profit Margin (%): |
8.81 %. |
Human Resources and Industrial Relations
1. Our Company continues to focus on the development of its human resources to improve
its performance. As on 31 March 2023, the Company had 3722 employees. It is their
invaluable contribution that has primarily resulted in our Company's position of strength
in the industry.
2. Focus on a safe working atmosphere, constantly evolving systems for recognition and
reward, consistent communication and imparting skills and training – all these
focused on meeting customer needs, characterize the HR development of Hunan Resources of
the Company.
Every year, each plant of the Company celebrates Founder's Day in a family atmosphere
with all employees and their households. This practice has been hampered on account of
COVID-19 for the past two years. During F23, the Company continued Founder's Day
celebration and it was celebrated in a grand manner.
Health, Safety and Environment ?
1. The Company follows a policy of zero tolerance towards accidents. Wherever possible,
visible controls and fail-safe systems are provided to ensure prevention of accidents.
Regular communication, periodic reviews of practices and training, play a vital role in
maintaining safety standards.
2. The Company ensures compliance with all pollution control regulations. Adequate
pollution control equipment has been installed to treat effluents and to control air
pollution.
Risk Management
1. The Company is a leading manufacturer of automotive components. Automotive industry
is subjected to cyclical variations in performance and is very sensitive to policy
changes. The market is very competitive. Prices of raw materials change based on supply
and demand. Margins remain under constant pressure.
Any steep reduction in off-take exposes the Company to high fixed costs.
2. A considerable portion of the customers of the Company are situated outside of
India. Hence, demand for the Company's product is subject to the health of the global
economy.
3. The war in eastern Europe poses significant risk in global geopolitical .
4. Further, the consequent inflation in commodity prices, hike in interest rates and
prospect of significant demand reduction are risks to be considered in the coming months.
5. The Company has spread its risks by increasing the geographic spread of its customer
base. The Company proposes to improve capacity utilization in its existing facilities.
Working capital management will receive high priority.
6. Risk Management Committee (RMC) has been formed effective 21 June 2021.
7. RMC shall meet minimum of twice a year.
8. The responsibilities of RMC include formulating risk management policy,
implementation of the policy, monitor, evaluate risks, device appropriate methodology,
processes and systems.
M M FORGINGS – forging ahead with Manufacturing Excellence
Our goals in the coming months:
1. Focus on improving sales in keeping with market conditions.
2. Utilizing the production capacity of 1,20,000 Tons.
3. Actively seeking new products and new customers and taking appropriate measures for
cost control, particularly on reducing energy consumption and improving productivity.
4. Enhance IT systems with the continued development of the ERP system in place.
5. Continue the evolution into green sources of energy in the coming months.
6. Reduce the impact on the environment.
Sources:
• IMF World Economic Output
• The Economist
• SIAM data
• Act Research
• The World Bank ?
8. TRANSFER TO RESERVE:
A sum of C111.10 Crores has been transferred to General Reserve.
9. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS:
The Company has made advance to its wholly-owned Subsidiary Companies viz., DVS
Industries Private Limited (outstanding as on 31st March 2023 - C82.68 Crores)
and Suvarchas Vidyut Private Limited (outstanding as on 31st March 2023 - C8.22
Crores), repayable at prevailing rates. The details of the investments made by the Company
are given in the notes to the financial statements.
10. DIRECTORS & KEY MANAGERIAL PERSONNEL:
10.1. Special Recognition for Shri. Vidyashankar Krishnan:
During the year under review, Shri. Vidyashankar Krishnan, Vice Chairman and Managing
Director, was conferred as "India's Top Minds 2022" and has been recognised as
one of the "Top Business Leaders of the Nation". The above prestigious award was
issued in the "Indian Brand and Leadership Conclave
2022" held on 30 April 2022 at ITC Sheraton, New Delhi organized by The Brand
Story Presided by Sri Faggan Singh Kulaste, Minister of State, Ministry of Steel
and Special Rural Development, Government of India.
10.2. Directors' Appointment / Re-appointment / Cessation:
The Board of Directors at its meeting held on 17 May 2023 has approved the
re-appointment of Shri. Vidyashankar Krishnan, Vice-Chairman and Managing Director
and Shri. K. Venkatramanan, Joint
Managing Director, for a further period of five years accordance with the Companies
Act, 2013 and the Listing Regulations on such terms and conditions of his re-appointment
including remuneration, as recommended by the Nomination and Remuneration Committee of
directors at their meeting held on 17 May 2023. The shareholders' approval is being sought
and the resolution forms part of Notice of this AGM.
10.3. Retirement by Rotation:
Smt. Sumita Vidyashankar, holding DIN 00059062, will retire by rotation and being
eligible has offered herself for re-appointment.
10.4. Independent Directors:
In the AGM held on 11 July 2018, Shri. N. Srinivasan, Shri. V. Vaidyanathan and Shri.
A. Gopalakrishnan, were appointed as Independent Directors, for the second term of five
years, and shall hold office till 31st March 2024. Smt. Kavitha Vijay,
Independent Director, was appointed for the second term of five years in the AGM held on
29 September 2020, and shall hold office as Independent Director till
31st March 2025.
All Independent Directors hold office for a fixed
Shri. N. Srinivasan and Shri. V. Vaidyanathan are exempted from undergoing
self-assessment test. Shri A. Gopalakrishnan and Smt. Kavitha Vijay have passed the
self-assessment test conducted by the Ministry of Corporate Affairs.
As required under sub section (7) of Section 149 of the Companies Act, 2013, all the
Independent Directors have declared that they meet the criteria of independence as
provided under Section 149(6) of the Companies Act, 2013 and Regulation 25 of the Listing
Regulations of the Listing Regulations. ? During FY 2022-23, a separate meeting of
Independent Directors was held on 14 November 2022, without the participation of
non-Independent Director for evaluating the performance of non-Independent Director, the
Chairman of the Board and the Board as a whole. Independent Directors had expressed their
satisfaction on the evaluation process and the results thereof.
10.5. Change in Key Managerial Personnel (KMP):
The Board of Directors at their meeting held on 13 February 2023, has noted the
retirement pursuant to superannuation of Smt. J. Sumathi, Company Secretary of the Company
effective 31 March 2023. As recommended by Nomination and Remuneration Committee, Shri.
Chandrasekar. S, holding ACS Membership number A34736, was appointed as Company Secretary
of the Company, effective 1 April 2023.
11. NOMINATION AND REMUNERATION POLICY:
In terms of provision of section 178 of the Companies Act, 2013 read with Rules
prescribed, a policy for the Directors, KMP and other employees has been adopted by the
Board of Directors of the Company, which analyses the criteria for determining
qualifications, positive attributes and independence of a
Director.
The said policy is provided in Company's website as below:
https://www.mmforgings.com/uploads/policies/Nomination_and_Remuneration_Policy_(_amended).pdf
12. BOARD AND COMMITTEE MEETING DATES:
During the Financial Year 2022-23, the Board met five times. The details of the
meetings of Board and Committee Meetings are provided as part of Corporate Governance
Report prepared in terms of Listing
Regulation in Annexure III of this Report.
13. DETAILS OF RECOMMENDATIONS OF AUDIT COMMITTEE WHICH WERE NOT ACCEPTED BY THE BOARD
ALONG WITH REASONS:
None
14. RISK MANAGEMENT:
Company's risk management framework is well embedded and continually reviewed by the
Risk Management Committee, consist of majority of Board Members. It enables the Board, to
identify, evaluate and monitor principal risks and where possible, actively mitigate the
risks that could affect the achievement of the Company's target.
The Company's Risk Management Committee is overseeing all the risks that the
organization faces such as strategic, financial,market, IT, legal, regulatory,
reputational and other risks and recommends suitable action. The Board is satisfied that
there are adequate systems and procedures in place to identify, assess, monitor and manage
risks. The Audit Committee is informed on the risk assessment and minimizations mechanism
adopted by the Company.
15. RELATED PARTY TRANSACTION:
The Company has formulated a policy on related party transactions and the same is
uploaded on the Company's website:
https://www.mmforgings.com/uploads/policies/Policy_on_Related_Party_Transactions.pdf?
There are no ‘Material' contracts or arrangement or transactions at arm's length
basis.
There are no materially significant Related Party transactions made by the Company with
Promoters, Directors and Key Managerial Personnel which may have a potential conflict with
the interest of the Company at large.
For related party transactions as per Accounting Standards, refer Notes on Accounts.
16. CORPORATE SOCIAL RESPONSIBILITY:
A Board Level Committee of Corporate Social Responsibility (CSR) has been constituted
and the Board has adopted a CSR Policy as recommended by the CSR Committee. The thrust
areas of CSR Policy are Eradicating Hunger and Poverty, Education, Combating Diseases and
Social Business Projects.
| Amount to be spent under CSR for F23 |
- C162.83 lakhs |
| Excess Spent in F22 |
- C 26.68 lakhs |
| Amount spent in F23 |
- C189.98 lakhs |
| Excess spent in F23 |
- C 27.15 lakhs |
Annual report on CSR has been provided as a part of Corporate Governance Report in
Clause 6 in Annexure III of this Report.
17. PARTICULARS OF EMPLOYEES
The information required under the rules prescribed, has been given in the annexure
appended hereto and forms part of this report.
18. PARTICULARS PURSUANT TO SECTION 197(12) AND THE RELEVANT RULES:
18.1. The ratio of remuneration of each Director to the median remuneration of the
employees:
| . Name of the Director |
Ratio |
| 1 Shri. N. Srinivasan |
0.00:1 |
| 2 Shri. V. Vaidyanathan |
1.87:1 |
| 3 Shri. A. Gopalakrishnan |
1.87:1 |
| 4 Smt. Kavitha Vijay |
1.87:1 |
| 5 Smt. Sumita Vidyashankar |
1.87:1 |
| 6 Shri. Vidyashankar Krishnan |
318.90:1 |
| 7 Shri. K. Venkatramanan |
317.66:1 |
18.2. % increase in remuneration of each Director, KMP, in the financial year:
| Name of the Director |
% increase / (decrease) in the Remuneration |
| 1 Shri. N. Srinivasan |
(77.78) |
| 2 Shri. V. Vaidyanathan |
13.43 |
| 3 Shri. A. Gopalakrishnan |
15.69 |
| 4 Smt. Kavitha Vijay |
34.09 |
| 5 Smt. Sumita Vidyashankar |
35.23 |
| 6 Shri. Vidyashankar Krishnan |
22.33 |
| 7 Shri. K. Venkatramanan |
21.86 |
| 8 Smt. J. Sumathi |
4.10 |
| 9 Shri. R. Venkatakrishnan |
10.80 |
18.3. % increase in median remuneration of employees in the FY 2022-23 14.60%.
18.4. The number of permanent employees on the rolls of Company: 1941.
18.5. Comparison of remuneration of each KMP against performance of Company
| Name |
Designation |
CTC (Rs in lakhs) |
% of increase |
PAT (Rs in lakhs) |
% increase in PAT |
| Shri. Vidyashankar Krishnan |
Vice Chairman and Managing Director (CEO) |
850.53 |
22.33 |
12558.22 |
36.85 |
| Smt. J. Sumathi |
Company Secretary |
11.32 |
4.10 |
|
|
| Shri. R.Venkatakrishnan |
CFO |
17.14 |
10.80 |
|
|
18.6. Average Increase in Remuneration for employees other than Directors and KMP is
10.10% and average Increase in Remuneration for KMP and Senior Management is
21.90%.
The increase in remuneration is not solely based on company performance but also
includes various other factors like individual performance, experience, skill sets,
academic background, industry trends, economic situation and future growth prospects etc.,
besides Company performance. There are no exceptional circumstances for increase in the
managerial remuneration.
18.7. Key parameters for any variable remuneration of Directors:
Directors are being paid Commission. However, the overall managerial remuneration
payable is subject to the provisions of the Companies Act, 2013.
18.8. Variation in market cap/ net worth of Company:
| Date |
Paid-up Capital (Shares) |
Closing market price per share |
EPS |
PE Ratio |
Market Capitalisation (C in Cr.) |
| 31 March 2023 |
24140800 |
833.00 |
52.02 |
16.01 |
2,010.93 |
| 31 March 2022 |
24140800 |
846.75 |
38.01 |
22.28 |
2,044.12 |
18.9. Ratio of remuneration of highest paid Director to other employees who get
remuneration more than highest paid Director NOT APPLICABLE.
18.10. Affirmation that the remuneration is as per the remuneration policy of the
It is hereby affirmed that the Remuneration paid is as per the remuneration policy of
the Company.
19. SIGNIFICANT MATERIAL ORDERS PASSED BY THE REGULATIONS OR COURTS OR TRIBUNALS
IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE:
There are no significant and material orders passed by the Regulators or Courts would
impact the going concern status of the Company and its future operations.
20. MATERIAL CHANGES AND COMMITMENTS, IF ANY, AFFECTING THE FINANCIAL POSITION OF THE
COMPANY WHICH HAS OCCURRED SINCE 31ST MARCH, 2023 TILL
THE DATE OF THE REPORT:
NIL
21. DIRECTORS RESPONSIBILITY STATEMENT:
In accordance with the provisions of Section 134(5) of the Companies Act, 2013 with
respect to Directors' Responsibility Statement, it is hereby stated that:
21.1. In the preparation of the annual accounts, the applicable accounting standards
have been followed, along with proper explanation relating to material departures;
21.2. The Directors have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company as at 31st
March 2023 and of the profit or loss of the Company for that period ended on that date;
21.3. The Directors have taken proper and sufficientcare for the maintenance of
adequate accounting records in accordance with the provisions of the Companies Act for
safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities;
21.4. The Directors had prepared the annual accounts on a going concern basis;
21.5. The Directors had laid down internal financial controls to be followed by the
Company and that such internal financial controls are adequate and were operating
effectively;
21.6. The Directors had devised proper systems to ensure compliance with the provisions
of all applicable laws and that such systems were adequate and operating effectively.
22. ESTABLISHMENT OF VIGIL MECHANISM:
The Company has in place a vigil mechanism pursuant to which a Whistle Blower Policy
has been in vogue. The Whistle Blower Policy cov ering all employees and Directors is
hosted on the Company's website at: ?
https://www.mmforgings.com/uploads/policies/Whistle_Blower_Policy2.pdf.
A high level Committee has been constituted to look into the complaints. The Committee
reports to the Audit Committee and the Board.
23. ADEQUACY OF INTERNAL FINANCIAL CONTROL:
The Company had laid down Internal Financial Controls and such internal financial
controls are adequate with reference to the Financial Statements and were operating
effectively. The Board is accountable for evaluating and approving the effectiveness of
the internal controls, including financial, operational and compliance controls.
It also ensures the orderly efficient conduct of its business, including adherence to
Company's policies, the safe guarding of its assets, the prevention and detention of
frauds and errors, the accuracy and completeness of the accounting records and the timely
preparation of reliable financial information during the year, such controls were tested
and no material weakness in the operations were observed. Further, the internal audit plan
is also aligned to the business objectives of the Company which is reviewed, monitored and
approved by the Audit Committee.
24. CORPORATE GOVERNANCE REPORT
The guidelines evolved by SEBI were applicable to the Company. The Company is committed
to ethical management and excellence in performance. Details are provided in Annexure III.
25. BUSINESS RESPONSIBILITY & SUSTAINABILITY REPORT (BRSR)
In accordance with Regulation 34(2)(f) of the Listing Regulations, with effect from
F23, top 1000 companies based on Market Capitalisation as per NSE / BSE as on 31st
March of every Financial Year, are required to disclose BRSR as part of their Directors'
Report. BRSR, covering disclosures on the Company's performance on Environment, Social and
Governance parameters for F23, is provided as Annexure V to this Report. BRSR includes
reporting on the nine principles of the National Voluntary Guidelines on social,
environmental and economic responsibilities of business as framed by the MCA.
26. ANNUAL RETURN
In terms of the requirement of Section 92(3) read with Section 134(3) of the Companies
Act, 2013, the Annual Return of the Company for the year ended 31st March 2022
and the draft Annual Return of the Company for the year ended 31st March 2023
is available in the Company's website in the following link.
https://www.mmforgings.com/Investors/annual_return
27. A STATEMENT INDICATING THE MANNER IN WHICH FORMAL ANNUAL EVALUATION HAS BEEN MADE
BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEES AND INDIVIDUAL DIRECTORS:
27.1. Nomination and Remuneration Committee had laid down the criteria and prescribed a
peer evaluation methodology by way of set of questionnaire to evaluate the performance of
individual Director, Committee(s) of the Board, Chairman of the Board and the Board as a
whole. The Board subsequently carried out the performance evaluation as per the
methodology.
1. The Performance evaluation of the Board as whole was assessed based on the criteria
viz., adequacy of the composition of the Board and its Committees, Board culture,
execution, mix of skills and? experience, its meeting sequence, decision making, quality
of information, performance of specific duties, obligation and governance.
2. The performance evaluation of individual Director including Chairman of the Board,
was carried out based on his/her commitment to roles and responsibility, level of
engagement and contribution, independence of judgement, strategic and lateral thinking,
safeguarding the interest of the Company and its minority shareholders etc.,
3. The performance evaluation of Senior Managerial Personnel was determined based on
their performance and achievement of business plans as approved by the Board and
management, their commitment towards roles and responsibility, leadership quality,
productivity, team management etc.,
27.2. Further, Independent Directors, in their meeting held on 14 November 2022
(without the participation of non-Independent Director and personnel from management), had
considered and evaluated the Board's performance on the whole, the performance of the
Chairman and other non-independent Directors.
27.3. There are no observations or pending actions on the Board evaluation. The Board
expressed its satisfaction with the evaluation process and results thereof.
28. FAMILIARISATION OF PROGRAMME ARRANGED FOR INDEPENDENT DIRECTORS
28.1. M M Forgings Limited has put in place a system to familiarise independent
Directors about the Company, its products, business and the on-going events relating to
the Company.
28.2. Independent Directors of the Company are made aware of their role,
responsibilities and liabilities at the time of their appointment / re-appointment,
through a formal letter of appointment, which also stipulates various terms and conditions
of their engagement.
28.3. They are also made aware of Company's Board and Board Committee framework,
policies and procedures.
28.4. As a part of Board's discussions, presentations on business of the Company are
made to the Directors from time to time.
28.5. Important announcements and press releases for various news related to the
Company are forwarded to the Directors from time to time.
28.6. Each member of the Board, including the independent Directors, have been given
complete access to any information relating to the Company. 28.7. The details of
familiarisation programme are available on the Company's website in the link given below:
https://www.mmforgings.com/uploads/Familiarisation_programme/Familirisation_Programme.pdf
29. AUDITORS: 29.1. Statutory Auditors:
The Company at its 76th Annual General Meeting (AGM) held on 4 July 2022 has
appointed M/s. G Ramesh Kumar & Co., Chartered Accountants, as Statutory
Auditors of the Company to hold office for the first term of 5 years from the conclusion
of 76th AGM till the conclusion of 81st AGM, at such remuneration in
addition to applicable taxes, out of pocket expenses, travelling and other expenses? as
may be mutually agreed between the Board of Directors of the Company and the Auditors.
The Statutory Auditors will continue to hold office for the second year in their first
term of five consecutive years, from the conclusion of this AGM.
The Auditors' Report for the financial year 2022-23 does not contain any qualification,
reservation or adverse remark and the same is attached with the annual financial
statements.
29.2. Secretarial Auditor:
Pursuant to Section 204 of the Companies Act, 2013 and Rules made thereunder, the
Company has re-appointed Shri. V. Shankar, Practicing Company Secretary (C.P. No.
12974) as the Secretarial Auditor for the Financial Year 2023-24.
The Secretarial Audit Report for the Financial Year 2022-23 given by Shri. V. Shankar
is attached to this Report. The Secretarial Audit Report does not contain any
qualification, reservations or adverse remarks.
29.3. Cost Auditor:
Pursuant to the provisions contained in Rule 14 of the Companies (Audit and Auditors)
Rules, 2014,
Shri. S. Hariharan (CP No. 20864) has been appointed as Cost Auditor for the financial
year 2023-24.
30. EXPLANATION TO AUDITOR'S REMARK
There are no qualifications,reservations or adverse remarks or disclaimers made by the
Statutory
Auditors and Company Secretary in practice in their reports respectively. The Statutory
Auditors have not reported any incident of fraud to the Audit Committee of the Company in
the year under review.
31. SAFETY
Employees have been encouraged to adhere to safety in all their activities in and out
of the Company premises. Safety training at all levels have been provided by the Company.
32. PERFORMANCE OF SUBSIDIARIES:
32.1. D V S Industries Private Limited:
The Company has fully acquired D V S Industries Private Limited (D V S) in the year
2018. D V S becomes a wholly-owned subsidiary of the Company. It has its factory located
in Pantnagar, Uttarakhand. D V S Industries is well equipped with precision equipment,
in-house tool room inspection facilities, well trained personnel, etc.,
During the Financial year under review, D V S has achieved a turnover of C95.54 Crores
as against C66.51 Crores in F22. The EBITDA stood at C16.41 crores as against loss of
C5.25 Crores in F22.
32.2. Cafoma Autoparts Private Limited:
The Company has acquired Cafoma Autoparts Private Limited (Cafoma) for C33 Crores,
including subordinated debt of C5 Crore on 15 October 2021. It is the wholly-owned
subsidiary of MM Forgings
Limited and is engaged in manufacturing and machining of crankshaft.
Cafoma achieved a turnover of C10.76 Crores in F23 as against C10.09 Crores achieved in
F22. The EBITDA in F23 stands at C2.97 Crores as against C3.17 Crores in F22. ? In order
to have integration of business operations and consolidation of the activities leading to
operational synergies and to reduce multiplicity of legal and regulatory compliance, the
Board of Directors, in their meeting held on 13 February 2023, have approved the scheme of
amalgamation of Cafoma with the Company effective 01 April 2023. The Company is in the
process of filing necessary applications with National Company Law Tribunal and procedural
activities are being undertaken for the aforesaid amalgamation process.
32.3. Suvarchas Vidyut Private Limited:
Suvarchas Vidyut Private Limited (SVPL) was incorporated as a wholly owned subsidiary
of the Company on 31 March 2022. SVPL is engaged in manufacturing of electrical and
electronic components and subassemblies for industrial, consumer, and automotive
applications. During the year under review, SVPL have registered sales of C7.53 Crores
with EBITDA reported with a loss of C1.82 Crores.
32.4. Abhinava Rizel Private Limited:
Abhinava Rizel Private Limited (ARPL) was incorporated on 11 May 2022.
As a part of transformation strategy, with an intention to develop and to become a
leading player in the growing electric vehicle (EV) segment, M M Forgings Limited (MMF)
had acquired 88% stake in ARPL on 01 September 2022 by investing C15.84 Crores in equity,
thereby becomes a holding Company of
ARPL.
APRL is engaged in business of design, manufacturing of parts / components for
EVelectric power train, electric motors and electric controllers' / drives gearbox and
ADAS systems, etc., used in automotive, industrial, marine, aerospace etc., The samples
and testing of motors in two and three wheelers are in the initial stage. The production
is expected to commence from Q3F24.
33. DEPOSITS:
The Company does not have any deposits nor accepts any fresh deposits.
34. ENERGY, TECHNOLOGY & FOREIGN EXCHANGE:
Disclosures as per requirements of Section 134 (3) of the Companies Act, 2013, read
with the Companies (Accounts) Rules, 2014 with respect to Energy Conservation, Technology
Absorption, Research & Development and Foreign Exchange Earnings / Outgo are given in
Annexure I.
35. PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WOMEN AT WORK PLACE
During the year under review, pursuant to the new legislation, "Prevention,
Prohibition and Redressal of Sexual Harassment of Women at Workplace Act, 2013"
introduced by the Government of India, which came into effect from 09 December 2013, the
Company has framed a Policy on Prevention of Sexual Harassment at workplace. There were no
cases reported during the year under review under the said Policy.
Disclosures in relation to the Sexual Harassment of Women in work place: ?
No. of complaints filed during the year 0
No of complaints disposed of during the year – 0
No of complaints pending as on the end of the financial year 0
36. ACKNOWLEDGEMENT:
Your directors would like to express their gratitude for the cooperation and continued
assistance received from DBS Bank, State Bank of India, HDFC Bank, Federal Bank, ICICI
Bank, RBL Bank Limited and
Standard Chartered Bank.
Your directors wish to record their appreciation for the exemplary services rendered by
the employees of the Company. The results achieved would not have been possible but for
their outstanding effort and divine grace.
Above all the Directors thank the shareholders for their continued confidence in the
management.
|
For and On behalf of the Board |
|
VIDYASHANKAR KRISHNAN |
| Place: Chennai |
Chairman of the Meeting |
| Date: 17 May 2023 |
(DIN 00081441) |
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