Mahindra CIE Automotive Ltd
Directors Reports
Dear Shareholders
Your Directors present their Report together with the Audited Financial
Statements of your Company for the Financial Year (FY) ended 31st December,
2022.
A. FINANCIAL SUMMARY AND HIGHLIGHTS
(Rs in Million)
| PARTICULARS (STANDALONE) |
FY ended 31st December, 2022 |
FY ended 31st December, 2021 |
| Total Income |
45,184 |
33,081 |
| Profit before Interest, Depreciation, Exceptional Items and
Tax |
7,422 |
4,461 |
| Less: Depreciation |
1,332 |
1,193 |
| Profit before Interest, Exceptional Items and Tax |
6,090 |
3,268 |
| Less: Interest and Finance cost |
135 |
122 |
| Profit before Exceptional Items and Tax |
5,955 |
3,146 |
| Less: Exceptional items |
379 |
(128) |
| Profit before tax |
6,334 |
3,018 |
| Profit after tax |
5,120 |
1,103 |
During the Financial Year under review total standalone revenue of the
Company increased to ` 45,184 Million from ` 33,081 Million for the previous year. Profit
before Interest, Depreciation, Exceptional Items and Tax increased to ` 7,422
Million as against ` 4,461 Million for the previous year. The profit before exceptional
items & tax for the Financial Year increased to ` 5,955 Million in the Financial Year
2022 from ` 3,146 Million in the Financial Year 2021. There have been no material changes
and commitments, affecting the financial position of the Company which have occurred
between the end of the financial year of the Company to which the financial statements
relate and the date of this Report.
Dividend
As per the Dividend Distribution Policy of the Company, dividend
pay-out will be determined based on available financial resources, business environment,
funds required for organic as well as inorganic growth and other factors which will ensure
optimal shareholder return. Within these parameters the Company would endeavor to maintain
a total dividend pay-out ratio of upto 25% of the Annual Consolidated Profits After Tax
(Consolidated PAT) of the Company for the corresponding year.
Considering strong cash flows and operational performance, the internal
and external factors as provided in the Dividend Distribution Policy, even though the
Annual Consolidated Profits after Tax of the Company for the Financial Year is negatively
affected by classification of the German Forgings Operations as held for sale (one-time
non-cash impact), the Board proposes to keep the same dividend payout as of previous year.
Accordingly, the Board of Directors is pleased to recommend dividend of ` 2.50/- (Two
rupees and fifty paise only) per equity share of face value of ` 10/- for the financial
year ended 31st December, 2022 out of the standalone profit after tax of the
Company for the Financial Year ended 31st December, 2022. The equity dividend
outgo for the Financial Year 2022 would absorb a sum of ` 948 Million.
Dividend will be payable subject to approval of members at the ensuing
Annual General Meeting and deduction of tax at source, as may be applicable, to those
members whose names appear in the Register of Members on record date as may be decided by
the Board.
Transfer to Reserves
The Board of your Company decided not to transfer any amount to the
General Reserve for the year under review.
B. OPERATIONAL PERFORMANCE – THE COMPANY AND SUBSIDIARIES INDIA
Demand in the Indian automotive market in FY22 continued the growth
trajectory from the previous year. The light vehicles segment recorded highest production
levels since 2018 with many successful new model launches. The two wheelers and tractors
segments were sluggish as rural incomes have not fully recovered post pandemic. On the raw
material side, prices remained elevated during the year.
The order book situation was such that the company's Indian
operations required capital expenditure for increasing capacity. The key focus remains on
how to balance order book requirements and investments in capacity such that both growth
and profitability objectives are met. Process reengineering, automation and digitization
with a view to improve operations went on as planned.
EUROPE
Light vehicles production in Europe fell for the third straight year as
the semiconductor shortage extended to FY22 and the market was negatively affected by the
war in Ukraine. Battery electric vehicles (EVs) remained buoyant, and their market
penetration crossed 10%.
Electricity prices in Europe rose to unprecedented levels largely due
to the war situation, putting lot of strain on profitability. The Company's European
operations concentrated on improving productivity, pruning other costs and in some cases
passing on part of the energy price rise to customers, so that the impact of market
factors on profitability was minimized. At the same time, the focus was on generating more
EV related orders and on developing aluminum forgings to be used in EVs. The German truck
forgings operations is now held for sale to focus on other businesses in Europe viz.
forgings for the light vehicle market and gears.
C. INVESTOR RELATIONS (IR)
The Company strives for excellence in its investor relations
("IR") engagement with international and domestic investors. There is a
structured conference call every quarter to discuss published results. The management has
periodic interactions with the financial community including investors and analysts,
happen through individual meetings and investor conferences. The Company participated in
several investors meets, conferences and roadshows organized by reputed global and
domestic broking houses, during the year. It is ensured that critical information related
to the company is uploaded on the company's website and made available to the stock
exchanges so that they can be accessed easily and equally by all.
D. CONSOLIDATED FINANCIAL STATEMENTS
The Consolidated Total Income of the Company (from continued operation)
for the financial year under review stood at ` 88,113 Million as against ` 68,119 Million
in the previous year*. Profit before Interest, Depreciation, Exceptional Items and Tax
stood at (from continued operation) ` 12,302 Million as against ` 9,885 Million for the
previous year*. The profit before exceptional items & tax for the Financial Year (from
continued operation) stood at ` 9,113 Million in Financial Year 2022 as against `
6,805 Million in Financial Year 2021*.
The subsidiary companies continue to contribute to the overall growth
of the Company.
CIE Galfor S.A. registered consolidated revenue from continued
operations of` 31,220 Million during the financial year ended 31st December,
2022 as compared to ` 24,375 million in the previous year*. The consolidated net profit
after tax from continued operations for the financial year under review was ` 2,316
Million as compared to ` 2,365 Million in the previous year*.
*Previous year numbers have been restated due to classification of
German Forging Operations as held for sale in accordance with applicable accounting
standards. Please see note no.23 of the notes to consolidated financial statements for
more details.
Aurangabad Electricals Limited registered a revenue from operations of
` 10,060 Million during the year as compared to ` 9,645 Million in the previous year and
the net profit after tax for the year stood at ` 730 Million as compared to ` 685 Million
in the previous year.
CIE Hosur Limited, which was incorporated in the financial year 2021,
commenced its operations during the year. It registered a revenue from operations of ` 74
Million during the year and the net loss after tax for the year stood at ` 132 Million.
The Company's consolidated revenue from the continuing operations
was ` 87,530 Million in the financial year ended 31st December, 2022, of which
about 49.5% was derived from the subsidiaries whereas about 50.5% was derived from
operations of the Company.
The Consolidated Financial Statements of the Company and its subsidiary
companies, prepared in accordance with the Companies Act, 2013 (the Act) and applicable
Accounting Standards along with all relevant documents and the Auditors' Report forms
a part of the Annual Report of 2022.
In accordance with section 136 of the Act, separate accounts in respect
of each of the Subsidiaries are uploadedonthewebsiteoftheCompanyandisaccessible at the
web-link: http://www.mahindracie.com/investors/
investor-relations/annual-reporthtml#subsidiaries-annual-report and soft copies of the
same shall be provided to shareholders of the Company on request for such copies.
Subsidiary Companies
As on 31st December 2022, the Company has 14 subsidiaries
namely Stokes Group Limited (U.K.), CIE Galfor S.A.U. (Spain), CIE Legazpi S.A. (Spain),
UAB CIE LT Forge (Lithuania), CIE Forging Germany GmbH (Germany), Jeco Jellinghaus GmbH
(Germany), Gesenkschmiede Schneider GmbH (Germany), Falkenroth Unformtechnik GmbH
(Germany), Schoneweiss & Co. GmbH (Germany), Metalcastello S.p.A. (Italy), BF
Precision Private Limited (India), Bill Forge de Mexico S. A. de. CV (Mexico), Aurangabad
Electricals Limited (India) and CIE Hosur Limited (India).
CIE Forging Germany GmbH and its subsidiaries (German Forging
Operations)
CIEForgingGermanyGmbH(CFG)anditsfoursubsidiaries namely Jeco
Jellinghaus GmbH (operationally closed), Gesenkschmiede Schneider GmbH, Falkenroth
Unformtechnik GmbH and Schoneweiss & Co. GmbH (together referred to as German Forging
Operations) supply forging parts primarily for the European truck industry. CIE Galfor
S.A., a first level wholly owned subsidiary of the Company and immediate holding company
of CFG, also supplies forging parts to the light vehicles industry from its own plant and
other subsidiaries in Europe. The light vehicles industry in Europe is seeing a rapid
transition to Electric Vehicles (EVs) and the Company is focused on managing this
transition. In view of the above the Board of Directors of CIE Galfor S.A. at its meeting
held on 14th December, 2022 approved the proposal to launch an active program
to locate a buyer for the German Forging Operations comprising of CFG and its subsidiaries
as mentioned above. In accordance with the applicable accounting standards all the German
Forging Operation's "assets and liabilities" are categorized as
"assets and liabilities held for sale".
Stokes Group Limited
In 2018, the Board of Directors of the Company, after reviewing the
business situation, had agreed with the proposed closure of Stokes Group Limited (Stokes)
and its business was classified as dis-continued operations. Stokes has completely stopped
its production in FY2019. On 17th June, 2022, the Company being the sole member
of Stokes Group Limited approved voluntary winding up and liquidation of Stokes and
appointed liquidator. The liquidation of Stokes is expected to be completed in accordance
with the applicable laws, by first half of FY-2023.
All other subsidiaries are operational.
Associate Companies
The Company had Six Associates as on 31st December, 2022
namely Clean Max Deneb Power LLP (Deneb), Sunbarn Renewables Private Limited (Sunbarn),
Renew Surya Alok Private Limited (Renew), Gescrap India Private Limited (Gescrap),
Strongsun Solar Private Limited (Strongsun) and Galfor Eolica SL. The Company does not
have any joint-venture.
The Company has been taking various steps to optimize its power cost
and to increase the proportion of green energy in the total energy consumption of the
Company. The investments in Deneb, Sunbarn, Strongsun and Renew are in furtherance of this
objective. All these entities are major contributors for use of renewable source of energy
in operation of the Company and will also results in savings in energy cost.
Gescrap is engaged in metal recycling and total waste management in
India. The investment is made with the objective of preventing disruption in supply/demand
of scrap for the business divisions of the Company and to enhance transparency and add
best practices to scrap management in the group.
Galfor Eolica SL is an associate Company of CIE Galfor S.A.
A Report on the performance and financial position of each of the
subsidiaries and associate companies included in the Consolidated Financial Statement and
their contribution to the overall performance of the Company, is provided in Note No. 39
of the Consolidated Financial Statements of the Company and in Form AOC-1 attached to the
Financial Statements.
The Company has formulated a Policy for determining Material
Subsidiaries and Governance Requirements in respect of Subsidiaries and the same has been
uploaded on the website of the Company and is accessible at the web-link:
http://www.mahindracie.com/investors/
investor-relations/governance.html#policies-and-code-of-conduct
Credit Rating
ICRA Limited, the Credit Rating Agency, have reaffirmed / assigned
rating(s) to the Commercial Paper and Line of Credit of the Company, details of the same
is provided in the Corporate Governance Report.
The Company has not been identified as a "Large Corporate" as
per the criteria under SEBI Circular No. SEBI/ HO/DDHS/CIR/P/2018/144 dated 26th
November, 2018.
E. INTERNAL FINANCIAL CONTROLS
Your Company has put in place adequate internal financial controls
commensurate with the size and complexity of its operations. The internal controls ensure
the reliability of data and financial information to maintain accountability of assets.
Your Company uses ERP System as a business enabler and to maintain its
books of accounts. The transactional controls built in ERP System provide segregation of
duties, appropriate level of approval mechanism and maintenance of supporting records. It
is further supplemented by documented policies, guidelines and procedures. These are
reviewed by the management regularly and strengthened wherever required. These systems and
controls are subject to audit program arrived at basis risk review and approved by the
Audit Committee. Action plan is prepared by the management for all the audit findings and
the same is reviewed by the Audit Committee on quarterly basis.
The controls have been assessed during the year under review, basis
guidance-note issued by the Institute of Chartered Accountants of India on Audit of
Internal Financial Controls over Financial Reporting. Based on the results of such
assessments carried out by the management, no reportable or significant deficiencies, no
material weakness in the design or operation of any control was observed. Nonetheless,
your Company recognizes that any internal control framework, no matter how well designed,
has inherent limitations and accordingly regular audits and review processes have been put
in place.
F. MANAGEMENT DISCUSSION AND ANALYSIS
Management discussion and analysis of financial condition and results
of operations of the Company along-with the performance and financial position of each of
the subsidiaries is provided in the Management Discussion and Analysis Report which forms
part of this Annual Report.
G. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All transactions entered into with Related Parties of the Company,
during the year under review, were in Ordinary Course of Business and were transacted at
arm's length basis.
ThedetailsofthetransactionsoftheCompanyasrequired to be disclosed
pursuant to Para A of Schedule V of the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015, are disclosed at Note. No. 31 of the Notes to the
Standalone Financial Statements.
Further, the Company had entered into Material Related Party
Transactions i.e., transactions exceeding 10% percent of the annual consolidated turnover
as per the last audited financial statements of the Company with Mahindra & Mahindra
Limited (M&M). These transactions were in Ordinary Course of Business of the Company
and were at arm's length basis. The details of these transactions, as required to be
provided under section 134(3)(h) of the Companies Act, 2013 are disclosed in Form AOC-2 as
Annexure I and forms part of this Report. The Policy on materiality of and dealing
with Related Party Transactions as approved by the Board is uploaded on the website of the
Company and is accessible at the web-link:
https://www.mahindracie.com/investors/investor-relations/governance.html#policies-and-code-of-conduct.
H. AUDITORS Statutory Auditors
The members of the Company at the 23rd Annual General
Meeting (AGM) had appointed M/s. B S R & Co. LLP, Chartered Accountants (B S R LLP)
(ICAI Firm No. 101248W/W – 100022) as the Statutory Auditors of the Company to hold
office from the conclusion of 23rd AGM for a term of consecutive five years
till the conclusion of 28th AGM of the Company to be held in the year 2027.
Auditor's report
The Auditors' Report on the Financial Statement for the year ended
31st December, 2022, is unmodified i.e., it does not contain any qualification,
reservation or adverse remark or disclaimer and notes thereto are self-explanatory and do
not require any explanations.
Secretarial Auditor and Secretarial Audit
Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the
Company had appointed Mr. Sachin Bhagwat, Practicing Company Secretary (Certificate of
Practice No. 6029), Secretarial Auditor to undertake the Secretarial Audit of the Company
for the Financial Year ended 31st December, 2022. The Secretarial Audit Report
for the Financial Year ended 31st December, 2022 is appended to this Report as Annexure
II. The report does not contain any qualification, reservation, or adverse remark or
disclaimer.
Secretarial Audit of Material Unlisted Indian Subsidiary
Aurangabad Electricals Limited (AEL), is a material subsidiary of the
Company. The Secretarial Audit of AEL for the financial year ended 31st
December, 2022 was carried out pursuant to Section 204 of the Companies Act, 2013 and
Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 by Mr. Sachin Bhagwat, Practicing Company Secretary (Certificate of Practice No.
6029). The Secretarial Auditor's Report of AEL, does not contain any qualification,
reservation or adverse remark and the same is enclosed herewith as
Annexure III.
Annual Secretarial Compliance Report
The Company has undertaken an audit for the Financial Year ended 31st
December, 2022 for all applicable compliances as per Securities and Exchange Board of
India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial
Compliance Report duly signed by Mr. Sachin Bhagwat, Practicing Company Secretary
(Certificate of Practice No. 6029) has been submitted to the Stock Exchanges within the
prescribed timelines.
Cost Records
Your Company maintained cost accounts and records as required under
Section 148 of the Companies Act, 2013, read with the Companies (Cost Records and Audit)
Rules, 2014.
Cost Auditors
The Board had appointed Messrs. Dhananjay V. Joshi & Associates,
Cost Accountants, Pune, (Firm Registration Number 000030) as Cost Auditor for conducting
the audit of Cost Records of the Company for Financial year ended 31st
December, 2022.
In accordance with Section 148 of the Companies Act, 2013, the Board of
Directors of the Company, on recommendation of the Audit Committee, reappointed Messrs.
Dhananjay V. Joshi & Associates, Cost Accountants, Pune (Firm Registration Number
000030) as the Cost Auditors of the Company to conduct the Audit of the Cost Accounting
Records maintained by the Company for the Financial Year ending 31st December,
2023. Messrs. Dhananjay V. Joshi & Associates have confirmed that their appointment is
within the limits of Section 141(3)(g) of the Companies Act, 2013 and have also certified
that they are free from any disqualifications specified under section 141(3) read with
Section 148(5) of the Companies Act, 2013.
As per the provisions of the Companies Act, 2013, the remuneration
payable to the Cost Auditor is required to be placed before the Members in a General
Meeting for their ratification. Accordingly, a resolution seeking Members'
ratification for the remuneration payable to Messrs. Dhananjay V. Joshi & Associates,
Cost Auditors is included in the Notice convening the 24th Annual General
Meeting.
Reporting of Frauds by Auditors
During the year under review, the Statutory Auditors, Cost Auditors and
the Secretarial Auditor have not reported any instance of fraud committed in the Company
by its Officers or Employees to the Audit Committee under section 143(12) of the Companies
Act, 2013, details of which needs to be mentioned in this Report.
I. PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS AND SECURITIES
Particulars of investments made by the Company, as required under
Section 186 of the Companies Act, 2013, are provided in the Note No. 8 of the Notes to the
Standalone Financial Statements.
Further, disclosure required pursuant to Regulation 34(3) read with
Part A of Schedule V of the Listing Regulations in respect of loans or advances in the
nature of loan given by the Company to its Subsidiaries is provided at the end of this
report.
During the year under review the Company has not provided any guarantee
or security in connection with the loan to any other person or body corporate. Apart from
the loans or advances in the nature of loans given to the subsidiaries of the Company, the
Company has not provided any loans or advances in the nature of loans to any other person
or body corporate including to any firms/body corporates in which directors of the Company
are interested. The particulars of loans given by the Company, as required under Section
186 of the Companies Act, 2013, are provided in Note No. 8B of the Notes to the Standalone
Financial Statements.
J. PUBLIC DEPOSITS
Your Company has not accepted any deposits during the year under
review.
K. TRANSFER OF AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND
During the year under review, pursuant to provisions of Section 124 of
the Companies Act, 2013 and rules made thereunder, an amount of ` 5,10,073/- pertaining to
sale proceeds of fractional shares arising out of consolidation of fractional entitlements
in accordance with the Integrated Scheme and Composites Scheme of Amalgamation was
transferred by the Company to Investors Education and Protection Fund (IEPF) on expiry of
seven years.
Further, pursuant to the Integrated scheme and the Composites scheme of
Amalgamation Mahindra Ugine Steel Company Limited (MUSCO) and Mahindra Composites Limited
(MCL) merged with the Company, both MUSCO and MCL had unclaimed dividends which were
transferred to IEPF by the Company in accordance with provisions of Section 124 of the
Act. Details of all the unclaimed amounts transferred by the Company to IEPF in earlier
years is uploaded on the website of the Company and is accessible at the web-link:
http://www.mahindracie.com/investors/downloads/ documents.html#unclaimed-amounts and also
on the website of IEPF viz. www.iepf.gov.in.
No claim lies against the Company in respect of these
Dividends/fractional entitlements.
For any claims that are lodged with IEPF for unclaimed amounts, the
Company has nominated Mr. Pankaj Goyal, the Company Secretary of the Company as Nodal
officer for the purposes of verification of claims and coordination with Investor
Education and Protection Fund Authority as required under Investor Education and
Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 as amended
from time to time, the Contact details of the nodal officer are available on the website
of the Company.
Annual Report 2022
L. EMPLOYEES
Key Managerial Personnel (KMP)
The following officers of the Company have been designated as the
Whole-time Key Managerial Personnel in accordance with Section 203 of the Companies Act,
2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules,
2014:
1. Mr. Ander Arenaza – Executive Director
2. Mr. Manoj Menon – Executive Director and Chief Executive
Officer – Stampings, Composites, Foundry, Magnetics and Gears Divisions
3. Mr. Anil Haridass – Executive Director and Chief Executive
Officer – Forgings and Bill forge divisions (upto 22nd February, 2022)
4. Mr. Hari Krishnan – Chief Executive Officer – Forgings and
Bill Forge Divisions (w.e.f. 22nd February, 2022)
5. Mr. K. Jayaprakash – Chief Financial Officer
6. Mr. Pankaj Goyal – Company Secretary and Compliance Officer
During the year under review, Mr. Anil Haridass demitted his executive responsibilities
and stepped down as Whole-time Director and Chief Executive Officer – Forgings and
Bill Forge Divisions of the Company with effect from 22nd February, 2022. He
therefore ceased to be a KMP of the Company and re-designated as Non-executive Director of
the Company with effect from 22nd February, 2022. After Mr. Anil Haridass
demitted his executive responsibilities, the Board of Directors of the Company, on
recommendation of the Nomination and Remuneration Committee, have appointed Mr. Hari
Krishnan (then advisor) as Chief Executive Officer – Forgings and Bill Forge
Divisions of the Company with effect from 22nd February, 2022.
Employees' Stock Option Scheme
The Company has in force the following Employees Stock Options Schemes
: a) Mahindra CIE Automotive Limited - Employees' Stock Option Scheme (ESOS-2007) b)
Mahindra CIE Automotive Limited - Employees' Stock Options Scheme 2015 (ESOS-2015)
Voting rights on the shares issued to employees under above ESOS are either exercised by
the employees directly or through their appointed proxies.
During the year, there have been no material changes to these schemes
and no stock options were granted to the employees under the said schemes.
Both the schemes are in compliance with the SEBI (Share Based Employee
Benefits) Regulations, 2021 ("SBEB Regulations"). The Certificate issued by the
Secretarial Auditor of the Company to the effect that the Schemes have been implemented in
accordance with the said Regulations and the resolution passed by the members will be
placed before the members at the ensuing Annual General Meeting.
The information as required to be disclosed, in relation to ESOS under
the Companies Act, 2013, and the details of the ESOS being implemented, as specified by
SEBI under the SBEB Regulations is uploaded on the website of the Company and is
accessible at the web-link: http://www.mahindracie.com/investors/downloads/
documents.html#other-documents-and-disclosures The said information is also provided in
the Note No. 36 of the Notes to Standalone Financial Statements.
Particulars of Employees and related disclosures
Disclosures with respect to the remuneration of Directors, KMPs and
employees 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 given in Annexure IV to this Report.
Further, as required under provisions of Section 197(12) of the
Companies Act, 2013 read with Rule 5(2) & 5(3) of Companies (Appointment and
Remuneration of Managerial Personnel) Rules, 2014, as amended, a statement including the
names and other details of the top ten employees in terms of remuneration drawn and the
name of every employee, who were in receipt of remuneration not less than ` 10,200,000/-
per annum during the year ended 31st December, 2022 or employees who were
employed for a part of the Financial Year and were in receipt of remuneration of not less
than ` 8,50,000/- per month during any part of the said year is annexed as
Annexure V to this report.
The Company had no employee who was employed throughout the Financial
Year or part thereof and was in receipt of remuneration, which in the aggregate, or as the
case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing
director or whole-time director or manager and holds by himself or along with his spouse
and dependent children, not less than 2% of the equity shares of the Company.
Industrial Relations
The relationship between the Management and Worker's Union
continued to remain cordial.
The Management Discussion and Analysis gives an overview of the
developments in Human Resources/ Industrial Relations during the year.
M. BOARD AND COMMITTEES Retirement by rotation
Mr. Jesus Maria Herrera Barandiaran (DIN: 06705854) and Mr. Manoj
Mullassery Menon (DIN: 07642469) are liable to retire by rotation and being eligible, have
offered themselves for re-appointment at the 24th Annual General Meeting of the
Company.
As required under Regulation 36 (3) of the SEBI (Listing Obligations
and Disclosure Requirements) Regulations, 2015 and Secretarial Standard 2, particulars of
Directors seeking re-appointment at ensuing Annual General Meeting shall be provided in
the Notice of 24th Annual General Meeting (AGM).
Changes in Board
During the year under review, the Board at its meeting held on 22nd
February, 2022, on recommendation of the Nomination and Remuneration Committee, appointed
Mr. Puneet Renjhen (DIN:09498488) as Additional Director of the Company. At 23rd
AGM of the Company, the Members approved his appointment as a Director, liable to retire
by rotation.
Further, Mr. Zhooben Bhiwandiwala (DIN: 00110373) and Mr. Puneet
Renjhen (DIN: 09498488) resigned as Director(s) of the Company with effect from 22nd
February, 2022 and 19th December, 2022 respectively. The Board of Directors of
the Company places on record its appreciation of Mr. Bhiwandiwala's and Mr.
Renjhen's contribution as Director during their association with the Company.
Further, Mr. Anil Haridass (DIN: 00266080) resigned as Whole-time Director and was
re-designated as Non-Executive Director w.e.f. 22nd February, 2022.
Declaration of the Independent Directors
All the Independent Directors have confirmed that they meet the
criteria as mentioned in Regulation 16(1)(b) of the SEBI (Listing Obligations and
Disclosure Requirements) Regulations, 2015 and Section 149(6) of the Companies Act, 2013.
The Independent Directors have also confirmed that they are not aware of any circumstance
or situation, which exist or may be reasonably anticipated, that could impair or impact
their ability to discharge their duties with an objective independent judgement and
without any external influence. Further, the Board after taking these
declaration/disclosures on record and acknowledging the veracity of the same, opined that
the Independent Directors are persons of integrity and possess the relevant expertise and
experience, fulfils the conditions specified in the Listing Regulations and the Act for
appointment of Independent Directors and are Independent of the Management.
Directors' Responsibility Statement
Pursuant to Section 134(5) of the Companies Act, 2013, the Board of
Directors, based on the representation received from the Operating Management and after
due enquiry, confirm that:
a) in the preparation of the annual accounts for the financial year
ended 31st December, 2022, the applicable accounting standards had been
followed along with proper explanation relating to material departures;
b) the directors had selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company at the end of the
financial year ended on 31st December, 2022 and of the profit and loss of the
Company for that financial year ended on that date.;
c) the directors had taken proper and sufficient care 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 fraud and
other irregularities;
d) the directors had prepared the annual accounts on a going concern
basis;
e) 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 during the financial year ended 31st December, 2022;
f) 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 during the financial year ended 31st December, 2022.
Board, Committee and Annual General Meeting
A calendar of Meetings is prepared and circulated in advance to the
Directors.
The Board of Directors of the Company met five times during the
Financial Year ended 31st December, 2022 i.e., on 22nd February,
2022, 25th April, 2022, 22nd July, 2022, 18th October,
2022 and 14th December, 2022. The 23rd Annual General Meeting of the
Company was held on 25th April, 2022 through Video Conferencing.
Details of attendance of meetings of the Board, its Committees and the
AGM are included in the Report on Corporate Governance, which forms part of this Annual
Report.
Meeting of Independent Directors
The Independent Directors of the Company met on 21st
February, 2022 and 13th December, 2022 without the presence of the Chairman,
Executive Directors, other Non-Independent Director(s) and any other Managerial Personnel.
Performance Evaluation
During the year under review, the Nomination and Remuneration Committee
and Independent Directors have ascertained and reconfirmed that the deployment of
"questionnaire" as a methodology, is effective for evaluation of performance of
Board, its Committees and Individual Directors including non-independent Directors and the
Chairman.
Accordingly, feedback was sought on the structured questionnaire from
all the Directors of the Company, through electronic platform provided by an Independent
Agency, covering various aspects, on performance evaluation of the Board, Committees of
Board,
Independent Directors, Non-Independent Directors, and the Chairman. A
report aggregating the responses of all the directors of the Company was generated by the
system.
Performance Evaluation of Individual Directors
The reports of the performance evaluation of Individual Directors were
shared with respective Directors and Chairman of the Nomination and Remuneration Committee
(NRC). Based on the same the NRC evaluated the performance of all individual directors.
The Independent Directors at their meeting separately evaluated the
performance of non-independent Directors and the Chairman.
Performance Evaluation of the Board and Committees of Board The report
of the feedback received from all the Directors on performance evaluation of Board and
Committees of Board was shared with the Chairman of the Board and the Chairman of the
respective Committees. The Board reviewed the reports and evaluated its own performance
and performance of the Committees of the Board. The Independent Directors at their meeting
separately evaluated the performance of the Board. For details, please refer to the Report
on Corporate Governance, which forms part of this Annual Report.
Familiarisation Programme for Independent Directors
The details of programmes for familiarization of Independent Directors
with the Company, their roles, rights, responsibilities in the Company, nature of the
industry in which the Company operates, and related matters are given in the Report on
Corporate Governance. The familiarisation programme and other disclosures as specified
under Regulation 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations,
2015 is available on the website of the Company at the link:
http://www.mahindracie.com/investors/downloads/
documents.html#other-documents-and-disclosures.
Policy on Appointment and Remuneration
In line with the principles of transparency and consistency, the
Company has adopted the following Policies which, inter-alia includes criteria for
determining qualifications, positive attributes and independence of a Director. i) Policy
on appointment of Directors, Key Managerial Personnel and Senior Management Employees and
succession planning; ii) Policy on the remuneration of Directors, Key Managerial Personnel
and other employees of the Company.
Salient features of these policies are enumerated in the Corporate
Governance Report which forms part of the Annual Report.
During the year under review, there was no change in the Policy on the
remuneration of Directors, Key Managerial
Personnel and other employees of the Company and Policy on Appointment
of Directors, Key Managerial Personnel and Senior Management Employees and succession
planning.
The Policies mentioned above are also uploaded on the website of the
Company and is accessible at the web-link:
http://www.mahindracie.com/investors/investor-relations/governance.html#policies-and-code-of-conduct.
Committees of the Board
Your Company has duly constituted the Committees required under the
Companies Act, 2013 read with applicable Rules made thereunder and the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015.
Audit Committee
The Committee comprises of four independent directors viz:
1) Mr. Dhananjay Narendra Mungale - Chairman,
2) Mr. Manojkumar Madangopal Maheshwari
3) Mrs. Roxana Meda Inoriza
4) Mr. Alan Savio D'Silva Picardo
All the Members of the Committee are Independent Directors and possess
strong accounting and financial management knowledge.
TheCompanySecretaryistheSecretarytotheCommittee. All the
recommendations of the Audit Committee were accepted by the Board during the financial
year under review.
N. GOVERNANCE
Corporate Governance
Your Company believes in attainment of highest levels of transparency
in all facets of its operations and maintains an unwavering focus on imbibing good
Corporate Governance practices. Your Company continues to strengthen its governance
principles to generate long-term value for its various stakeholders on a sustainable basis
thus ensuring ethical and responsible leadership both at the Board and at the Management
levels. A Report on Corporate Governance along with a Certificate from the Mr. Sachin
Bhagwat, Practicing Company Secretary (ACS Number - 10189, CP Number - 6029) and
Secretarial Auditor of the Company regarding the compliance with the conditions of
Corporate Governance as stipulated in the SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015 forms part of the Annual Report.
Vigil Mechanism
The Vigil Mechanism as envisaged in the Companies Act, 2013, the Rules
prescribed thereunder and the SEBI (Listing Obligations and Disclosure Requirements)
Regulations,
2015 is implemented through the Company's Whistle Blower Policy to
enable the directors, employees and all stakeholders of the Company to report their
genuine concerns, to provide for adequate safeguards against victimisation of persons who
use such mechanism and make provision for direct access to the Chairman of the Audit
Committee. The detail of the Policy is explained in the Corporate Governance Report and
has been uploaded on the website of the Company and is accessible at the web-link:
http://www.mahindracie.com/investors/ investor-relations/governance.html#whistle-blower.
The Sexual Harassment of Women at Workplace (Prevention, Prohibition
and Redressal) Act, 2013
The Company has in place an Anti-Sexual Harassment Policy in line with
the requirements of the Sexual Harassment of Women at Workplace (Prevention,
Prohibitionand Redressal)Act,2013(POSHAct)and Internal Complaints Committee (ICC) has been
set up to redress complaints received regarding sexual harassment at all workplaces of the
Company in compliance with the provisions of the POSH Act. All employees (permanent,
contractual, temporary, trainees) are covered under this Policy. The framework ensures
complete anonymity and confidentiality.
During the year under review, one complaint of sexual harassment was
received by ICC of a business division and the same was pending at the end of the year.
Risk Management
The Board has constituted a Risk Management Committee which comprises
of three members as at the end of the financial year namely, Mr. Manoj Mullassery Menon -
Executive Director (Chairman of the Committee), Mr. Ander Arenaza Alvarez – Executive
Director and Mr. Alan Savio D Silva Picardo – Independent Director. The
Committee also has invitees from Senior Management team. The other details and terms of
reference of the Committee are covered under the Corporate Governance report which forms
part of this Annual Report.
In accordance with the requirement of the Act and Listing Regulations
the Company has developed and implemented a Risk Control and Management Policy which
establishes general framework for action, as well as the procedures and responsibilities
to control and manage the risks which the Company must face efficiently and effectively.
The risk management system of the Company ("RMS") allows it to reasonably ensure
that all significant risks, both financial and non-financial, including those which in the
opinion of the Board may threaten the existence of the Company, are prevented, identified,
assessed, subjected to ongoing control and reduced to the defined levels of risk appetite
and tolerance and are approved by the Risk Management Committee and ultimately by the
Board.
The Risk Management Committee, Audit Committee as well as the Board
reviews the risks and RMS periodically. The Company has established procedures to
periodically place before the Board, the risk assessment and minimisation procedures being
followed by the Company and steps taken by it to mitigate the Risks.
Important element of risk is provided in the Management Discussion and
Analysis.
O. SUSTAINABILITY AND CORPORATE SOCIAL RESPONSIBILITY
Sustainability Objectives
To ensure that the actions of the Company are governed by the
principles as laid down in National Guidelines on Responsible Business Conduct (NGRBCs),
to the extent applicable to our business and operations, which are more particularly
provided in the ESG Policy of the Company.
Safety and Health
The Company is committed to provide a safe and healthy work environment
across all manufacturing plants, and offices of the Company.
Developing and sustaining safety culture is a journey and the
management continues to monitor adherence by all employee of the processes and procedures
including the Safety Standards established across all manufacturing plants. The focus of
FY22 was on improving our 5 key safety lead indicators which demonstrates commitment and
accountability of our line managers in safety and health management at our manufacturing
facilities. Our continuous efforts in safety of people have resulted in significant
improvement in the overall safety and health performance in FY-22. During the year,
Surveillance and Certificate Audit was carried out at 20 (out of 25) plants of the Company
by a third party and have reassured compliance by the Company of the ISO-45001 standard at
these facilities. The Five facilities which have yet not achieved the ISO-45001
certification have Safety Management Systems in place in line with requirements of
ISO-45001 and are expected to complete their assessment and achieve the certification in
FY-23. To ensure wellbeing of all employees, the management continued conducting
occupational health examination, periodic health checks up and workplace monitoring and
ensures that there is no adverse impact on health of our employees.
Environment
The Company is an auto-component supplier to OEMs and their Tier-1
suppliers. Most of our products are as per the specifications provided by the Customers.
Thus, we are more a Process Company than a Product Company. Our endeavor is to ensure that
resource-efficient and low carbon processes and technologies are deployed for
manufacturing of the products. The management is focused on making available goods and
services to our customers in a manner that minimizes any environmental and social impacts
of our operations.
To ensure that all environmental risks and opportunities related to our
activities are taken care of, the Company has in place the Environment Management System
which adheres to the specifications of the ISO-14001 standard. While most of our
operations (20 out of 25) have been certified under ISO-14001 standards, the remaining
plants have Environment Management System in place in line with requirements of ISO-45001
and are expected to complete their assessment and achieve the certification in FY-23.
On its pathway towards a circularity model, the Company emphasized on
better managing natural resources, monitoring its consumption and waste generation to
minimize impacts arising from our activities on environment.
The emphasis continued on increasing the share of green energy in total
energy consumption. During FY 2022 the captive solar power plants set up in Maharashtra
with capacity of 52.5 MW commissioned supply with the entire capacity. The proportion of
the renewable energy consumption to the total energy consumption was about 51% in FY-2022.
During the year, the Company has signed firm agreements to source additional 16 MW power
from captive solar power plants to be set-up in Maharashtra, which are expected to
commission in FY-2023.
Business Responsibility and Sustainability Report
In accordance with the nine business responsibility principles provided
under National Guidelines on Responsible Business Conduct (NGRBCs) and Business
Responsibility and Sustainability Reporting framework prescribed by Securities and
Exchanges Board of India, the Board of Directors of the Company at its meeting held on 14th
December, 2022 adopted Environmental, Social and Governance Policy (ESG Policy) replacing
the existing Business Responsibility Policy of the Company. Pursuant to Regulation
34(2)(f) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015,
the Company has voluntarily opted to submit the Business Responsibility and Sustainability
Report for the Financial Year ended on 31st December, 2022, which forms part of
this Annual Report.
Conservation of Energy, Technology Absorption and Foreign Exchange
Earnings and Outgo
The information pertaining to energy conservation, technology
absorption and foreign exchange earnings and outgo, as required under section 134(3)(m) of
the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 are
provided in Annexure VI to this Report.
Corporate Social Responsibility (CSR)
The Company has constituted Corporate Social Responsibility (CSR)
Committee in accordance with Section 135 of the Companies Act, 2013. The CSR Committee
comprises of Mr. Kadambi Narhari (Chairman), Mr. Dhananjay Mungale, Mr. Manoj Menon and
Mr. Anil Haridass.
The Board of Directors have approved and adopted Corporate Social
Responsibility Policy (CSR Policy) as formulated and recommended to the Board by CSR
Committee. The CSR Policy including a brief overview of the projects or programs
undertaken by the Company in pursuance of its CSR Policy are hosted on the Company's
website and is accessible at the web-link: https://www.
mahindracie.com/investors/investor-relations/csr.html During the year under review the
Company was required to spent ` 46.01 million in accordance with Section 135(1) of the
Companies Act, 2013, as its CSR obligation. Out of the CSR Obligation of FY-2022, the
Company has spent
` 35.17 million in accordance with the Annual Action Plan approved by
the Board. The unspent amount of_` 10.84 million is allocated to the two Ongoing CSR
projects, implementation of which shall be continued by the Company in FY-2023.
Further, during the previous financial year, the Company had
transferred_` 37.51 million to unspent CSR account of the Company in accordance with
Section 135(6) of the Act. The Company had spent_this entire unspent CSR amount i.e., `
37.51 Million on the CSR Projects implemented by the Company during the year under review,
in accordance with the Annual Action Plan.
The CSR Committee affirmed that the implementation and monitoring of
the CSR projects during the year was in compliance with the CSR objectives and CSR policy
of the Company.
A brief overview of the projects or programs undertaken by the Company
is accessible at the web-link: https://
www.mahindracie.com/investors/investor-relations/csr. html In accordance with the
Companies (Corporate Social Responsibility Policy) Rules, 2014 the Annual Report on CSR
Activities inter-alia providing brief outline of the CSR Policy, CSR activities undertaken
by the Company during the year and the reason for not spending the entire CSR amount is
annexed herewith as Annexure VII.
P. SECRETARIAL
Change in Name of the Company
The Company is a subsidiary of CIE Automotive S.A., Spain having India
as its major area of operations. Your Company therefore draws from the experience of CIE
group to serve the evolving Indian automotive industry. India is projected to be one of
the fastest growing large economies in the world and CIE Automotive S.A.'s global
strategy continues to focus on India as a key market. To reflect the above strategy, the
Board of Directors of the Company at their meeting held on 14th December, 2022
have considered and approved the proposal to change the name of the Company from
"Mahindra CIE Automotive Limited" to "CIE Automotive India Limited".
Consequently, alteration in the ‘Clause I' i.e. ‘Name Clause' of the
Memorandum of Association of the Company by substituting the existing ‘Clause I'
by new name of the Company was also approved by the Board.
The Company had sought approval of the members of the Company in this
regard by way of postal ballot. Subject to approval of the members and in accordance with
Section 13(2) of the Act, the proposed change in the name of the Company shall be
effective, only with the approval the Central Government in writing (the powers of Central
Government are delegated to RoC) and upon issuance of a fresh certificate of incorporation
in the new name of the Company as per Section 13(3) of the Act. The change in the name
shall be complete and effective from the date of issuance of such fresh certificate of
incorporation.
Change in shareholding of Promoters of the Company
During the year under review, Participaciones Internacionales Autometal
Dos (PIA2), one of the Promoters of the Company, purchased 1,89,56,240 Equity Shares
representing 4.99% of the paid-up share capital of the Company from open market,
increasing its shareholding to 65.70% of the paid-up share capital of the Company as at
the end of the Financial Year. Further, Mahindra & Mahindra Limited (M&M), other
Promoter of the Company, sold 8,242,444 Equity Shares representing 2.17% of the paid-up
share capital of the Company thereby reducing its shareholding to 9.25% of the paid-up
share capital of the Company as at the end of the Financial Year.
Pursuant to the SEBI (Substantial Acquisition of shares and Takeover)
Regulations, 2011 and SEBI (Prohibition of Insider Trading) Regulations, 2015 necessary
disclosure were submitted to stock exchanges. The Promoter and Promoter Group shareholding
in the Company post the above transaction stands at 74.95% of the paid-up equity capital
of the Company as on 31st December, 2022.
Issue of Shares
During the year under review, the Company has issued and allotted
2,66,424 equity shares of face value of ` 10/- each, pursuant to exercise of options by
the employees under the Company's Employee Stock Option Scheme - 2015.
Compliance with the provisions of Secretarial Standard 1 and
Secretarial Standard 2
The Company have devised proper systems to ensure compliance with the
provisions of all applicable Secretarial Standards issued by the Institute of Company
Secretaries of India and that such systems are adequate and operating effectively. During
the year under review the Company was in compliance with the Secretarial Standards, i.e.,
SS-1 and SS- 2, relating to "Meetings of the Board of Directors" and
"General Meetings" respectively.
Compliance with Downstream Investment conditionalities
The Company is a Foreign Owned and Controlled Company within the
meaning of Foreign Exchange Management (Transfer or Issue of Security by a Person Resident
outside India) Regulations, 2017 ("FDI
Regulations"). All the Downstream Investments made by the Company
are in compliance with the conditionalities of Downstream Investment stipulated in the FDI
Regulations.
The Company has obtained a certificate from the Statutory Auditors of
the Company for compliance with the FDI Regulations in respect of the downstream
investment made by the Company during financial year 2021. The Auditors have affirmed
compliance with downstream investment conditionalities by the Company and have issued an
unqualified report.
Annual Return
Pursuant to Section 92(3) read with section 134(3)(a) of the Companies
Act, 2013, copies of the Annual Returns of the Company prepared in accordance with Section
92(1) of the Act read with Rule 11 of the Companies (Management and Administration) Rules,
2014 are placed on the website of the Company and is accessible at the web-link:
http://www.mahindracie.com/investors/ downloads/documents.html.
Other Policies under SEBI (Listing Obligations and Disclosure
Requirements) Regulations, 2015
In accordance with the provisions of Regulation 30 of the SEBI (Listing
Obligations and Disclosure Requirements) Regulations, 2015, the Company has framed a
Policy for determination of Materiality for disclosure of events or information. The same
has been hosted on the website of the Company and is accessible at the web-link: http://
www.mahindracie.com/investors/investor-relations/
governance.html#policies-and-code-of-conduct.
Dividend Distribution Policy
Pursuant to regulation 43A of Securities and Exchange Board of India
(Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has
formulated a dividend distribution policy which became effective from 1st
January, 2017 stipulating factors to be considered in case of Dividend declaration. The
said policy was amended in financial year 2021 inter-alia to amend the Financial
Parameters that shall be considered while declaring dividend. There was no change in the
Policy during the Financial Year under review.
The Dividend Distribution Policy forms part of this report as Annexure
VIII.
The same has also been hosted on the website of the Company and is
accessible at the web-link: http:// www.mahindracie.com/investors/investor-relations/
governance.html#policies-and-code-of-conduct.
Q. GENERAL
None of the Executive Directors (Whole-time Director or Managing
Director) were in receipt of any commission from the Company hence the disclosure under
Section 197(14) of the Act is not applicable.
Your directors state that no disclosure or reporting is required in
respect of the following items as there were no transactions/ events relating to these
items during the year under review:
1. Issue of equity shares with differential rights as to dividend,
voting or otherwise.
2. Issue of Shares (including sweat Equity shares) to employees of the
Company under any Scheme save and except ESOS referred to in this Report.
3. Significant or material orders passed by the Regulators or Courts or
Tribunals which impact the going concern status and the Company's operation in
future.
4. No application was made, or any proceedings is pending under the
Insolvency and Bankruptcy Code, 2016 during the year in respect of the Company.
5. There has been no change in the nature of business of your Company.
6. There was no one-time settlement of loan obtained from Banks or
Financial Institutions.
7. Voting rights which are not directly exercised by the employees in
respect of shares for the subscription/ purchase of which loan was given by the Company
(as there is no scheme pursuant to which such persons can beneficially hold shares as
envisaged under section 67(3) (c) of the Companies Act, 2013).
Acknowledgement
Your Directors wish to place on record their sincere appreciation to
the Company's Customers, Investors, Vendors and to the Bankers for their continued
support during the year.
The Directors also wish to place on record their appreciation for the
dedication and contribution of all employees at all levels and look forward to their
support in future as well.
For and on behalf of the Board of Directors
Mahindra CIE Automotive Limited
|
Shriprakash Shukla |
|
Chairman |
|
DIN: 00007418 |
| Date: 22nd February, 2023 |
|
| Place: Pune |
|
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