Varroc Engineering Ltd
Directors Reports
Dear Shareholders,
The Directors of your Company take pleasure in presenting the 35th
Annual Report on the business and operations of the Company together with financial
statements for the financial year ended March 31, 2023.
FINANCIAL RESULTS & APPROPRIATION
As reported last year and pursuant to the Securities Purchase Agreement
["SPA"], your Company has divested its 4-wheeler lighting system operations in
Americas & Europe and identified R&D business in India to Compagnie Plastic Omnium
SE of France and its Affiliate/Associate Companies, and Subsidiaries by signing Business
Transfer Agreement and other related agreements/documents with the subsidiaries and other
parties involved.
The deal size of €600 million was adjusted downward by €80
million due to higher raw material inflation, lower demand caused by the Ukraine war, and
other geopolitical issues.
The said divestment was concluded on October 06, 2022. Your Company
continues its lighting operations in Asia and continues to operate its joint venture in
China, other international two-wheeler business in Italy and Vietnam, and global
electronics business in Poland and Romania.
The said transaction enabled the Company to focus on emerging areas
such as electric vehicle components, electronics, and connectivity in the Indian market
and the global two-wheeler lighting business.
The equity value agreed under the SPA was €69.5 Million (subject
to closing adjustments as provided under SPA). In our standalone financials, the Company
has recognised loss on equity investments and loans given to Varroc lighting systems
operations ("VLS Business") of Rs. 13,240 million during the quarter
ended September 30, 2022, as an exceptional item. Further loss of Rs. 81.90 million
recognised during the quarter March 31, 2023, pertains to expenses related to sale of
investment in VLS business. Pursuant to amendment to SPA on May 12, 2023, a mutual
settlement is being attempted for the disagreements between the parties in accordance with
the provisions of SPA.
The summarized Financial Results for the year ended March 31, 2023, and
for previous year ended March 31, 2022 are as follows:
FINANCIAL RESULTS & APPROPRIATION
The summarized Financial Results for the year ended March 31, 2023, and
for previous year ended March 31, 2022 are as follows:
|
|
|
|
(Rs in Million) |
|
STANDALONE |
CONSOLIDATED |
| Particulars |
Financial Year 2022-23 |
Financial Year 2021-22 |
Financial Year 2022-23 |
Financial Year 2021-22 |
| Continuing Operations |
|
|
|
|
| Revenue from operations |
39,178.90 |
32,918.07 |
68,630.66 |
58,442.01 |
| Other Income |
530.03 |
646.14 |
578.81 |
339.33 |
| Earnings before interest, tax,
depreciation and |
3,189.97 |
3,060.34 |
6,045.68 |
3,932.72 |
| amortisation |
|
|
|
|
| Less: Finance cost |
1,700.98 |
909.76 |
1,902.95 |
1,183.52 |
| Less: Depreciation and
amortization |
1,944.49 |
1,703.49 |
3,367.41 |
3,045.47 |
| Add/(Loss): Share of Net
Profit/(Loss) of |
- |
- |
53.28 |
(4.33) |
| Investment
accounted for using the equity Method |
|
|
|
|
| Less: Exceptional item |
13,321.90 |
- |
- |
- |
| Profit/(loss)
before tax from continuing operations |
(13,777.40) |
447.09 |
828.60 |
(300.60) |
| Less: Current tax expense |
137.66 |
79.92 |
660.95 |
347.97 |
| Less: Short/(excess) provision
for tax in respect |
(110.90) |
(0.11) |
(105.78) |
2.23 |
| of previous years |
|
|
|
|
| Less: Deferred tax |
63.78 |
107.43 |
(114.46) |
132.05 |
| Net
profit/(loss) for the year from continuing operations |
(13,867.94) |
259.85 |
387.89 |
(782.85) |
|
|
|
|
(Rs in Million) |
|
STANDALONE |
CONSOLIDATED |
| Particulars |
Financial Year 2022-23 |
Financial Year 2021-22 |
Financial Year 2022-23 |
Financial Year 2021-22 |
| Discontinued Operations |
|
|
|
|
| Total Income |
- |
- |
38,659.62 |
69,095.14 |
| Profit/(Loss)
before tax from discontinued operations |
- |
- |
(8,557.23) |
(10,348.85) |
| Tax expense |
- |
- |
1.91 |
(64.43) |
| Profit/(loss)
for the year from the discontinued operations |
- |
- |
(8,559.14) |
(10,284.42) |
| Other
comprehensive income from continuing operations |
1.83 |
(19.63) |
417.40 |
(211.34) |
| Other
comprehensive income from discontinued operations |
- |
- |
(2,344.95) |
916.82 |
| Total Other
comprehensive income/(loss), net of tax from continuing and discontinued operations |
1.83 |
(19.63) |
(1,927.55) |
705.48 |
| Total comprehensive
income/(Loss) for the year attributable to: |
(13,866.11) |
240.22 |
(10,098.80) |
(10,361.79) |
| The Shareholders of the Company |
- |
|
(10,125.22) |
(10,391.93) |
| Non-controlling interest |
- |
|
26.42 |
30.14 |
| Profit for the year
attributable to owners of the Company |
(13,867.94) |
259.85 |
(8,198.35) |
(11,098.79) |
| Add : Profit/(Loss) brought
forward from previous periods |
4,273.23 |
4,033.00 |
(5,340.83) |
5,797.10 |
| Add/(Less): Other comprehensive
income |
1.83 |
(19.63) |
(54.91) |
(39.14) |
| Balance carried forward in
Balance Sheet |
(9,592.88) |
4,273.22 |
(13,594.09) |
(5,340.83) |
DIVIDEND AND TRANSFER TO RESERVE
In view of the losses sustained during the year, and with a view to
conserve resources for expansion of business, your Directors have thought it prudent not
to recommend any dividend for the financial year under review. Further, no transfer to the
General Reserve before declaration of Dividend has been considered.
Pursuant to Regulation 43A of the Securities and Exchange Board of
India (Listing Obligations and Disclosure Requirements) Regulations, 2015 [SEBI Listing
Regulations], the Board of Directors of the Company had formulated a Dividend Distribution
Policy (‘the Policy'). The Policy is available on the Company's website
URL: https://varroc. com/investors/corporate-governance
CHANGE IN THE NATURE OF BUSINESS
The Company is engaged in the business of manufacturing automotive
components. There has been no change in the business of the Company during the financial
year ended March 31, 2023.
CAPITAL & DEBT STRUCTURE
There has been no change in the authorised and paid-up share capital of
the Company during the financial year ended March 31, 2023. The paid-up Equity Share
capital of the Company as on March 31, 2023 is Rs. 15,27,86,400/- comprising of
15,27,86,400 Equity Shares of Re. 1/- each.
The Company has not issued shares with differential voting rights. The
Company has neither issued employee stock options nor sweat Equity Shares and does not
have any scheme to fund its employees to purchase the shares of the Company.
Further, the Company has not issued any debt instruments during the
year under review.
In the month of April 2023, the Company has acquired additional Equity
Shares in its subsidiary Company, CarIQ Technologies Pvt. Ltd. increasing the stake to 95%
from its original promoters. Necessary formalities, including intimation, have been
completed under Regulation 30 of the Listing regulations to the Stock Exchanges.
The Company is compliant with the minimum public shareholding
requirements. The breakup of Promoter and Public Shareholding of the Company post
aforesaid sale of shares is provided below:
| Category |
No. of Equity
Shares |
% of total
paid-up share capital |
| Promoter and Promoter Group |
11,45,89,800 |
75.00 |
| Public |
3,81,96,600 |
25.00 |
| Non-Promoter - Non- Public |
- |
- |
| Total |
15,27,86,400 |
100.00 |
MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
The Industry outlook and the operational performance of the Company
have been comprehensively covered in the Management Discussion and Analysis section of the
Report (MD&A). A separate section on MD&A is included in the Annual Report as
required under Regulation 34(2) (e) of the Securities and Exchange Board of India (Listing
Obligations and Disclosure Requirements) Regulations, 2015 (the "Listing
Regulations").
BUSINESS RESPONSIBILITY AND SUSTAINABILITY REPORT
Pursuant to Regulation 34(2)(f) of the SEBI Listing Regulations, the
initiatives taken by the Company from an environmental, social, and governance perspective
are provided in the Business Responsibility and Sustainability Report [BRSR] which is
included as a separate section in the Annual Report.
CORPORATE GOVERNANCE
The Board of Directors affirm their continued commitment to good
corporate governance practices. During the year under review, the Company complied with
the provisions relating to corporate governance as provided under the Listing Regulations.
The Corporate Governance Report, together with the requisite certificate from Uma Lodha
& Co., practicing Company Secretaries, confirming the compliance,
is provided in the Report on Corporate Governance, which forms part of the Annual Report.
CREDIT RATING
The Credit rating of the Company is managed by ICRA Limited. During the
Financial Year under review, your Company's long rating, including NCD was at
‘[ICRA]A
(stable)'. The rating on the Company's short-term bank
facilities and commercial paper programme has been reaffirmed at ‘[ICRA]A2+'.
In addition to this, India Rating has assigned ‘IND A1'
commercial paper programme in February 2023. The Company has also been assigned credit
rating of IND A+(Stable)/IND A1 by India Rating for long term/ short term facilities in
April 2023.
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,
through individual meetings and investor conferences.
The Company participated in investor meetings and conferences organized
by reputed 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 it can be accessed easily and equally by all.
DEPOSITS FROM PUBLIC
During the year under review, the Company has not accepted any deposits
from the public. As on March 31, 2023, there were no deposits that were unclaimed and due
for repayment.
NUMBER OF MEETINGS OF THE BOARD
The Board of Directors met 9 (Nine) times during the Financial Year
2022-23 and the particulars of the meetings held and attended by each Director are given
in the Corporate Governance Report which forms part of this Annual Report. The intervening
gap between consecutive meetings was not more than one hundred and twenty (120) days as
prescribed by the Companies Act, 2013 ("the Act"), and the Listing Regulations.
The details of the Board and various Committee meetings are given in the Corporate
Governance Report.
COMPOSITION OF AUDIT COMMITTEE
The Board has constituted the Audit Committee, which has Mr. Gautam
Khandelwal as Chairman, Mrs. Vijaya Sampath and Mr. Vinish Kathuria Independent Directors
as Members and Mr. Tarang Jain, Chairman & Managing Director as Member. More details
on the committee are given in the Corporate Governance Report forming part of this annual
report. During the year under review, the recommendations made by the Audit Committee were
duly accepted by the Board.
DIRECTORS & KEY MANAGERIAL PERSONNEL
At the Thirty Fourth Annual General Meeting (AGM) of the Company held
on September 29, 2022, the shareholders approved the following appointment/
re-appointment:
? Re-appointment of Mr. Rohit Prakash (DIN: 02425849) as Director of
the Company, liable to retire by rotation.
? Re-appointment of Mr. Tarang Jain (DIN 00027505) with the designation
of Chairman & Managing Director of the Company, being liable to retire by rotation,
for a further period of three (3) consecutive years from February 6, 2023 to February 5,
2026.
? Re-appointment of Mr. Arjun Jain (DIN 07228175) with the designation
of whole-time Director of the Company, being liable to retire by rotation, for a further
period of three (3) consecutive years from August 7, 2023, to August 6, 2026.
? Re-appointment of Mr. Vinish Kathuria (DIN 01951771) as an
Independent Director of the Company, not being liable to retire by rotation, for his
second term from February 6, 2023 upto February 5, 2028.
? Appointment of Mr. Dhruv Jain (DIN 09710448) with the designation of
Non-executive Non-independent Director of the Company, being liable to retire by rotation.
? In accordance with the provisions of the Act and in terms of the
Articles of Association of the Company, Mr. Tarang Jain (DIN 00027505) is liable to retire
by rotation at the ensuing AGM and is eligible for re-appointment. A Resolution seeking
the Shareholders' approval for his re-appointment along with other required details
forms part of the Notice.
In terms of Section 149 of the Act and the Listing Regulations, Mr.
Gautam Khandelwal, Mrs. Vijaya Sampath, Mr. Marc Szulewicz and Mr. Vinish Kathuria are the
Independent Directors of the Company as of the date of this report. All the Independent
Directors have submitted declarations that each of them meets the criteria of independence
as laid down under Section 149(6) of the Act and Regulation 16(1)(b) of the Listing
Regulations, and there has been no change in the circumstances that may affect their
status as independent Directors during the year. The profile of the Independent Directors
forms part of the Corporate Governance Report.
During the year, the Independent Directors of the Company had no
pecuniary relationship or transactions with the Company, other than sitting fees,
commission and reimbursement of expenses incurred by them for the purpose of attending
meetings of the Board of Directors and Committee(s) of the Company. The details of
remuneration of the Independent Directors are mentioned in the Corporate Governance
Report.
In the opinion of the Board, the Independent Directors possess the
requisite expertise and experience and are persons of high integrity and repute. They
fulfil the conditions specified in the Act as well as the Rules made thereunder and are
independent of the management.
KEY MANAGERIAL PERSONNEL
Based on the recommendation of the Nomination and Remuneration
Committee and the Audit Committee, the Board of Directors of the Company had approved the
appointment of:
? Mr. T.R.Srinivasan resigned as Group Chief Financial
Officer of the Company w.e.f. close of working hours on August 31,
2022. The Board of Directors places on record its appreciation for the services rendered
by him over the years.
? Mr. K. Mahendra Kumar appointed as Group Chief Financial
Officer of the Company w.e.f. September 28, 2022.
In terms of the provisions of Section 203 of the Act, as on March 31,
2023, the Company has the following Key Managerial Personnel:
(a) Mr. Tarang Jain, Chairman & Managing Director (b) Mr. Arjun
Jain, Whole-time Director (c) Mr. Rohit Prakash, Whole-time Director (d) Mr. K. Mahendra
Kumar, Group Chief Financial Officer
(e) Mr. Ajay Sharma, Group General Counsel and Company Secretary
FORMAL ANNUAL EVALUATION OF THE PERFORMANCE OF THE BOARD, ITS
COMMITTEES AND DIRECTORS
The Board, the Committees of the Board and independent Directors
continuously endeavour for the efficient functioning of the Board and its Committees and
better corporate governance practices. A formal performance evaluation was carried out at
the meeting of the Board of Directors held on May 23, 2023, where the Board made an annual
evaluation of its own performance, the performance of Directors individually, as well as
the evaluation of the working of its various Committees for the Financial Year 2022-23 on
the basis of a structured questionnaire on performance criteria. The Board expressed its
satisfaction with the evaluation process.
The evaluation process endorsed showiness amongst Directors, the
openness of the management in sharing the information with the Board (including committees
thereof) and placing various proposals for the Board's (including committees thereof)
consideration and approval.
The Independent Directors met on May 23, 2023, without the presence of
other Directors or Members of management. All the Independent Directors were present at
the meeting. In the meeting, the Independent Directors reviewed the performance of
Non–Independent Directors, the Board as a whole, and the Chairman. They assessed the
quality, quantity, and timeliness of the flow of information between the management of the
Company and the Board. Post the review by the Independent Directors, the results were
shared with the entire Board and its respective committees. The Independent Directors
expressed satisfaction over the performance and effectiveness of the Board, individual
non-Independent Directors, and the Chairman. They also expressed satisfaction with regard
to the flow of information between the management of the Company and the Board.
The Members of the Audit Committee without the presence of Members of
management also had a separate meeting with credit rating agencies.
POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
In adherence to the provisions of Section 134(3)(e) and 178(1) &
(3) of the Act, the Board of Directors upon recommendation of the Nomination and
Remuneration Committee, has approved a policy on Director's appointment and
remuneration, including criteria for determining qualifications, positive attributes,
independence of a Director and other matters. The said Policy is uploaded on the
Company's website at https://varroc.com/ investors/corporate-governance/.
The main objective of the said Policy is to ensure that the level and
composition of remuneration are reasonable and sufficient to attract, retain, and motivate
the Directors, Key Managerial Personnel (KMP) and senior management employees. The
remuneration involves a balance between fixed and incentive pay, reflecting short and
long-term performance objectives appropriate to the workings of the Company and its goals.
The extract of the said Policy is also covered in the Corporate Governance Report which
forms part of this Report.
POLICIES AND CODE ADOPTED BY THE COMPANY
The Board of Directors has, from time to time, framed and approved
policies/codes as required by the Listing Regulations as well as under the Act. These
policies/codes will be reviewed by the Board at periodic intervals. The Company has
adopted the following policies/codes:
(i) Policy for Board Diversity-Appointment-Remuneration-Training and
Evaluation of Directors and Employees (ii) Material Subsidiary Policy (iii) Policy for
determination of materiality threshold for Disclosure of Events (iv) Code for Disclosure
of Unpublished Price Sensitive Information (v) Code of Conduct for Insider Trading (vi)
Policy on Preservation of Information and Archival of documents (vii) Policy on Related
Party Transactions (viii) Code of Conduct for Directors and Senior Management Personnel
(ix) Enterprise Risk Management Policy (x) Whistle Blower Policy (xi) Dividend
Distribution Policy (xii) Environment, Social & Governance [ESG] policy (xiii)
Corporate Social Responsibility [CSR] policy (xiv) Policy on prevention of sexual
harassment.
The above policies are available on the Company's website on the
link https://varroc.com/investors/ corporate-governance/
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to Section 134(5) of the Act, the Board of Directors, based on
the representation received from the Management to the best of their knowledge and
ability, confirm that:
(a) in the preparation of the annual accounts for the year ended March
31, 2023, the applicable accounting standards have been followed along with proper
explanation relating to material departures;
(b) they have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and prudent so as to
give a true and fair view of the state of affairs of the Company as at March 31, 2023 and
of the loss of the Company for the year ended on that date; (c) they have 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) they have prepared the annual accounts on a
going concern basis; (e) they have laid down internal financial controls to be followed by
the Company and such internal financial controls are adequate and operating effectively;
and (f) they have devised proper systems to ensure compliance with the provisions of all
applicable laws and that such systems are adequate and operating effectively.
AUDITORS & AUDITORS REPORT a. STATUTORY AUDITOR
M/s SRBC & Co. LLP, Chartered Accountants (ICAI Firm Registration
No. 324982E/E300003), were appointed as Statutory Auditors of the Company for a term of 5
(five) years at the 30th AGM held on September 05, 2018, to hold office from the
conclusion of the said meeting till the conclusion of the 35th AGM to be held in the year
2023. The term of office of M/s SRBC & Co. LLP, Chartered Accountants, as Statutory
Auditors of the Company will conclude with the close of the forthcoming AGM of the
Company.
The Board of Directors at their meeting held on May 23, 2023,
re-appointed M/s S R B C & Co. LLP, Chartered Accountants, as the Statutory Auditors
of the Company to hold office from the conclusion of the 35th AGM till the conclusion of
the 40th AGM to be held in the year 2028, based on the recommendation of the Audit
Committee and subject to the approval of the shareholders at the ensuing 30th AGM. The
Statutory Auditors have confirmed their independent status and eligibility for the said
re-appointment. The Audit report on theConsolidated financial statements of the
Company contains the following qualifications:
? As disclosed in Note no. 50 to the consolidated financial statements
for the year ended March 31, 2023, the Financial Results and other financial information
for the year ended March 31, 2023, in respect of Varroc TYC Corporation BVI ("China
JV"), a joint venture accounted for under the equity method, considered for the
purpose of preparation of the consolidated financial statements, are unaudited. Hence, we
are unable to determine the possible impact of Group's share of profit/loss from
China JV on the consolidated profit/loss before tax, profit/loss after tax, total
comprehensive income, and earnings per share for the year ended March 31, 2023 and
Group's share of net assets of China JV on the investment in China JV as at March 31,
2023.
Management Response:
The Group's investment in Varroc TYC Corporation BVI
(‘VTYC' or ‘China JV'), a joint venture accounted for under the equity
method, which is carried at Rs. 3,751.57 million as at March 31, 2023, and the
Group's share of VTYC's net profit of Rs. 15.58 million, which is included in
the Group's income for the year then ended, are based on management certified
accounts and were not subjected to audit. The Group is currently undertaking negotiations
with the JV partner for resolution of certain matters regarding the operation of the JV,
pending which the Group is unable to obtain audited financials and other information from
the China JV.
? As provided in Note no. 51 to the Consolidated
Financial Statements for the year ended March 31, 2023, regarding the
sale of Varroc Lighting Systems Business, there is disagreement between the parties on the
final adjustments against the agreed consideration, and both parties have agreed to
negotiate to reach an agreement. Pending the conclusion of these negotiations, we are
unable to comment on the impact of the same on the consolidated loss and financial
position as of and for the year ended March 31, 2023.
Management Response:
As per the terms of the Securities Purchase Agreement ("SPA")
entered into among Varroc Engineering Limited ("VEL") and VarrocCorp Holding BV,
Netherlands ("VCHBV", wholly owned subsidiary of VEL) (together referred to as
"Sellers") and Compagnie Plastic Omnium SE, France ("Buyer"), a
specific ‘Adjustment Escrow' has been provided for the Final Closing Statement
and the Final Closing Adjustment Statement to be prepared as of the Closure Date, i.e.,
October 6, 2022. The Buyer had a period of 90 working days to come up with the same, duly
supported by the requisite information/ documentation.
The Buyer submitted the final adjustments during the current quarter
but failed to provide the necessary supporting details to enable the Sellers to understand
these adjustments. Hence, Sellers sent a Dispute Notice in accordance with the SPA
disputing the proposed adjustments. Pursuant to the amendment to the SPA dated May 12,
2023, both parties have mutually agreed to attempt the Resolution of their disagreements
in accordance with the provisions of the SPA. Considering the disagreement between the
parties and the fact that the negotiations with the Buyer are in progress, the effect of
the proposed adjustments cannot be ascertained for recognition in the consolidated
Financial Results as of March 31, 2023.
The Audit report on theStandalone financial statements of the
Company contains the following qualifications:
? As provided in Note no. 52 to the standalone financial statements
regarding the sale of Varroc Lighting Systems Business, there is disagreement between the
parties on the final adjustments against the agreed consideration, and both parties have
agreed to negotiate to reach an agreement. Pending the conclusion of these negotiations,
we are unable to comment on the impact of the same on the net loss and financial position
as of and for the year ended March 31, 2023.
Management Response:
As per the terms of the Securities Purchase Agreement ("SPA")
entered into among Varroc Engineering Limited ("VEL") and VarrocCorp Holding BV,
Netherlands ("VCHBV", wholly owned subsidiary of VEL) (together referred to as
"Sellers") and Compagnie Plastic Omnium SE, France ("Buyer"), a
specific ‘Adjustment Escrow' has been provided for the Final Closing Statement
and the Final Closing Adjustment Statement to be prepared as of the Closure Date i.e.,
October 6, 2022. The Buyer had a period of 90 working days to come up with the same, duly
supported by the requisite information/documentation.
The Buyer submitted the final adjustments during the current quarter
but failed to provide the necessary supporting details to enable the Sellers to understand
these adjustments. Hence, Sellers sent a Dispute Notice in accordance with the SPA
disputing the proposed adjustments. Pursuant to the amendment to SPA dated May 12, 2023,
both parties have mutually agreed to attempt the Resolution of their disagreements in
accordance with the provisions of the SPA. Considering the disagreement between the
parties and the fact that negotiations with the Buyer are in progress, the effect of the
proposed adjustments cannot be ascertained for recognition in the standalone Financial
Results as of March 31, 2023.
Apart from the above, there are no further qualifications,
reservations, or adverse remarks on the financial statements for the year ended March 31,
2023. The notes on the financial statement referred to in the Auditors' Report are
self-explanatory and do not call for any further comments. The Auditor's Report is
enclosed with the financial statements.
The total fees for all the services paid by the Company and its
subsidiaries, on a consolidated basis, to the statutory auditor, and all entities in the
network firm/network entity of which the statutory auditor is a part, is given below:
Audit Spending (including pertaining to discountinued operations)
|
(Rs in Million) |
| Particular |
For the year
ended March 31, 2023 |
| Statutory Audit fees (Including
limited reviews) |
48.95 |
| Tax Audit Fees |
- |
| Others (including certifications) |
36.40 |
| Re-imbursement of Expenses |
0.99 |
| Total |
86.34 |
b. COST AUDITOR
The cost accounts and records are required to be maintained under
Section 148(1) of the Act. They are duly made and maintained by the Company. In terms of
the provisions of Section 148 of the Act read with the Companies (Cost Records and Audit)
Rules, 2014, the Board of Directors of the Company has, on the recommendation of the Audit
Committee, appointed M/s S. R. Bhargave & Co., (Partnership Firm based in Pune
Registration No. M – 000218), Cost Accountants, as Cost Auditor of the Company to
conduct the cost audit of the Company for the financial year ending
March 31, 2024, at a remuneration as mentioned in the Notice convening
the 35th AGM.
As required under the Act read with the Companies (Cost Records and
Audit) Rules, 2014, the remuneration payable to Cost Auditors must be placed before the
Members at a general meeting for ratification. Hence, a Resolution for the same forms part
of the notice of the ensuing AGM.
M/s S. R. Bhargave & Co., has confirmed the cost records for the
financial year ended March 31, 2023, are free from any disqualifications as specified
under Section 141 (3) and the proviso to Section 148(3) read with Section 141(4) of the
Act. They have further confirmed their independent status. The Cost Audit Report for the
Financial Year 2022-23 will be filed within the stipulated period. c. SECRETARIAL
AUDITOR
In terms of the provisions of Section 204 of the Act read with the
Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Board
has appointed Uma Lodha & Co. (C.P. No.2593), Company Secretary in Practice, Mumbai,
as the Secretarial Auditor for conducting the Secretarial Audit of the Company for the
Financial Year ended March 31, 2023.
The Secretarial Audit Report of the Company and Varroc Polymers Ltd.
("VPL"), a material subsidiary of the Company, for the Financial Year 2022-23 is
annexed herewith and forms an integral part of this report. The Secretarial Audit Report
does not contain any qualification, reservation, or adverse remark. The Company is in
compliance with the Secretarial Standards, specified by the Institute of Company
Secretaries of India (‘ICSI').
ANNUAL SECRETARIAL COMPLIANCE REPORT
As per Regulation 24A of the Listing Regulations, the Company has
undertaken an audit for the Financial Year 2022-23 for all applicable compliances as per
SEBI Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial
Compliance Report has been submitted to the Stock Exchanges.
The annual secretarial compliance report contains the following
qualifications:
• Non-disclosure of the extent and nature of security created and
maintained with respect to secured listed NCDs in the financial statements
Management response: "This was an inadvertent error and going
forward, due care will be taken in this regard.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE
EARNINGS
AND OUTGO
The information pertaining to conservation of energy, technology
absorption, foreign exchange earnings, and outgo as required under Section 134 (3)(m) of
the Act, read with Rule 8(3) of the Companies (Accounts) Rules, 2014 is provided in
Annexure – I to this report.
PARTICULARS OF LOANS, GUARANTEES AND
INVESTMENT
The particulars of loans given, investments made, guarantees given, and
securities provided as per Section 186 of the Act by the Company are disclosed in the
standalone financial statements.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
Disclosures required under the provisions of Section 197(12) of the Act
read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial
Personnel) Rules, 2014, as amended, containing, inter-alia, the ratio of remuneration of
Directors to median remuneration of employees, percentage increase in the median
remuneration, are annexed to this Report as Annexure-II.
A statement containing the particulars of the top ten employees and the
employees drawing remuneration in excess of limits prescribed under Section 197(12) of the
Act, read with Rules 5(2) and (3) of the Companies (Appointment and Remuneration of
Managerial Personnel) Rules, 2014, is an annexure forming part of this Report. In terms of
the proviso to Section 136(1) of the Act, the Report and Accounts are being sent to the
Members excluding the aforesaid annexure. The said statement is kept open for inspection
during working hours at the Registered Office of the Company. Any member who is interested
in obtaining these, may write to the Group General Counsel & Company Secretary at the
Registered Office of the Company.
The said statement is also available on your Company's website,
the weblink to which is https://varroc.com/ investors/corporate-governance/.
PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All related party transactions that were entered into during the
financial year were in the ordinary course of business and on an arm's length basis.
In accordance with Section 188 of the Act read with the Companies (Meetings of Board and
its Powers) Rules, 2014, there were no materially significant related party transactions
made by the Company with Promoters, Directors, Key Managerial Personnel or others, that
may have a potential conflict with the interests of the Company at large or that warrant
the approval of the shareholders. No material contracts or arrangements with related
parties were entered into during the year.
The Company has nothing to report in Form AOC-2, hence, the same is not
annexed.
The related party transactions are placed before the Audit Committee
for prior approval, as required under applicable law. Only independent Directors who are
Members of the Audit Committee approve the same. Prior omnibus approval of the Audit
Committee is also obtained for transactions that are repetitive in nature and entered in
the ordinary course of business on an arm's length basis. A statement of all related
party transactions is placed before the Audit Committee for review on a quarterly basis,
specifying the nature and value of the transactions.
In line with the requirements of the Companies Act, 2013 and Listing
Regulations, the Company has formulated a Policy on Related Party Transactions (RPTs),
including any amendments thereto for identifying, reviewing approving and monitoring of
RPTs. The said policy has been revised in line with the amendment in Listing Regulations
and the same is available on the Company's website https://varroc.com/wp-content/uploads/bsk-pdf-anager/
2022 /2/ Policy on Related Party Transactions.pdf
The details of RPTs during FY 2022-23, including transaction(s) with
persons or entities belonging to the promoter/ promoter group that hold 10% or more
shareholding in the Company are provided in the accompanying financial statements.
WHISTLE BLOWER POLICY/VIGIL MECHANISM
On recommendations of the Audit Committee, the Board of Directors has
approved and adopted a Whistle Blower Policy that provides a formal mechanism for the
Directors, employees, and other stakeholders of the Company to report their concerns about
unethical behaviour, actual or suspected fraud, or violations of the Company's Code
of
Conduct or Ethics Policy. The Policy provides for adequate safeguards
against victimisation of employees who avail themselves of the mechanism. The Audit
Committee oversees the functioning of this policy. The Whistle Blower Policy has been
uploaded on the website of the Company at www.varroc.com.
RISK MANAGEMENT
Your Company has a defined risk control and management policy in place
that is consistent with the provisions of the Act and the SEBI Listing Regulations. The
Company has established procedures to periodically place before the Board/Audit Committee,
the risk assessment and minimisation procedures being followed by the Company and the
steps taken by it to mitigate the Risks. The Board of Directors of the Company have
constituted a Risk Management Committee consisting of Board Members and Senior Management
Personnel and has delegated the function of formulating, implementing, monitoring, and
reviewing the risk management policy to the Committee. Further details in respect of the
Committee are covered under the heading "Risk Management Committee" in the
Corporate Governance Report.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUECY
The Company has a defined organisational structure, documented policy
guidelines, and a defined authority matrix that ensures efficiency of operations,
compliance with internal policies and applicable laws and regulations, as well as
protection of resources. The Company believes that a strong internal control system and
processes play a critical role in the day-to-day operations of the Company.
To this end, the Company has put in place an effective internal control
system to synchronise its business processes, operations, financial reporting, fraud
control, and compliance with extant regulatory guidelines and compliance parameters. The
Company ensures that a standard and effective internal control framework operates
throughout the organisation, providing assurance about the safekeeping of the assets and
the execution of transactions as per the authorisation in compliance with the internal
control policies of the Company.
The internal control system is supplemented by extensive internal
audits, regular reviews by the management, and guidelines that ensure the reliability of
financial and all other records. The management periodically reviews the framework,
efficacy, and operating effectiveness of the Internal Financial Controls of the Company.
The Internal Audit reports are periodically reviewed by the Audit
Committee. The Company has, in material respects, adequate internal financial control over
financial reporting, and such controls are operating effectively. Internal Audits are
carried out to review the adequacy of the internal control systems and compliance with
policies and procedures. Internal Audit areas are planned based on inherent risk
assessment, risk score, and other factors such as probability, impact, significance, and
strength of the control environment. Its adequacy was assessed, and the operating
effectiveness was also tested.
SUBSIDIARIES, JOINT VENTURE AND ASSOCIATE
COMPANIES
Pursuant to a fresh certificate of incorporation issued by the
Registrar of Companies, Maharashtra, Mumbai, on September 13, 2022, the status of Varroc
Polymers Pvt. Ltd. was changed to Varroc Polymers Ltd.
The Company has 14 subsidiaries, including step-down subsidiaries, and
3 joint venture Companies as on March 31, 2023. During the year, the Board of
Directors has reviewed the affairs of its material subsidiaries.
As stipulated by Regulation 33 of the Listing Regulations, the
Consolidated Financial Statements have been prepared by the Company in accordance with the
applicable Accounting Standards. The audited Consolidated Financial Statements, together
with Auditors' Report, form part of the Annual Report.
Pursuant to Section 129(3) of the Companies Act, 2013, the report on
the performance and financial position of each of the subsidiary and joint venture
companies and the salient features of their financial statements is provided in the
prescribed Form AOC- 1 and forms part of the Financial Statements of the Company. Details
of subsidiaries of the Company and their performance are covered in the Management
Discussion and Analysis section of the Annual Report.
Further, pursuant to the provisions of Section 136 of the Act, the
standalone and consolidated financial statements of the Company and separate audited
financial statements in respect of subsidiaries are available on the website of the
Company https://varroc.com/investors/financial-results/.
The details of changes in Company's subsidiaries, joint venture or
associate companies, for the FY 2022-23, are as following:
Companies which have become subsidiaries:
? Varroc Germany GmBH
? Varroc Poland S.p.z.oo
? VL Lighting Solutions Private Limited
Companies which have ceased to be subsidiaries of the Company:
? Varroc Lighting Systems SRO, Czech Republic
? Varroc Lighting Systems S.de.R.L.De.C.V., Mexico
? Varroc Lighting Systems Inc. USA
? Varroc Lighting Systems GmBH, Germany
? Varroc Lighting Systems Morocco SA
? Varroc Lighting Systems s.p.z.oo, Poland
? Varroc Lighting Systems Turkey Endustriyel Urunler malat ve Ticaret
Anonim irketi
? Varroc Do Brasil Industria E Comercia LTDA
? VL Lighting Solutions Private Limited
Companies which have become a Joint Venture of the Company: Nil Companies
which have ceased to be a Joint Venture of the Company: Nil Entities which have
ceased to be an Associate of the Company: Nil Entities which have become an
Associate of the Company: Nil
CORPORATE SOCIAL RESPONSIBILITY (CSR)
Corporate Social Responsibility (CSR) is an integral part of Varroc
culture. The Company is committed to undertaking various need-based activities in
compliance with Section 135 of the Act read with Schedule VII to the Act and the
Company's Corporate Social Responsibility ("CSR") Policy. The Company
continued its efforts on promoting and nurturing young and emerging sports talents by
providing financial assistance, which helps them get the best training and makes them
competent to participate in national and international sporting events. Further, the
Company has also undertaken rejuvenating the Kham River to build a sustainable environment
in Aurangabad, Maharashtra.
The CSR Policy is uploaded on the Company's website
www.varroc.com. The CSR Report for the Financial Year 2022-23 is annexed to this report as
Annexure-III. In terms of Section 135 of the Act read with Rule 4(5) of the
Companies (Corporate Social Responsibility Policy) Rules, 2015, the Director and Group
Chief Financial Officer of the Company have provided the requisite certificate that the
funds disbursed by the Company to Varroc Foundation and for other CSR activities during
the financial year 2022-23 have been utilised for the respective purposes and in the
manner as approved by the Board.
During the year under review, the Company was required to spend Rs.
15.00 million on CSR activities, against which it has spent Rs. 19.42 million.
CERTIFICATES/CONFIRMATIONS/DECLARATIONS/
AFFIRMATIONS DURING THE YEAR UNDER REVIEW
? There were no material changes and commitments affecting the
financial position of the Company, that occurred between the end of the financial year of
the Company to which the financial statements relate, viz., March 31, 2023, and the date
of this Report.
? There were no significant material orders passed by the regulators or
courts or tribunals impacting the Company's going concern status and its operations
in the future.
? The Company has complied with the Secretarial
Standards issued by the Institute of Company Secretaries of India on
Board Meetings and Annual General Meetings.
? There was no fraud reported by the Statutory Auditors and the
Secretarial Auditors of the Company under Section 143(12) of the Act to the Audit
Committee.
? The Certificate duly signed by the Chairman &
Managing Director and Chief Financial Officer on the Financial
Statements of the Company for the year ended March 31, 2023, as submitted to the Board of
Directors at its meeting held on May 23, 2023, is annexed to this report.
? The declaration by the Chairman & Managing Director regarding
compliance by the Board Members and senior management personnel with the Company's
Code of Conduct is annexed to this report.
? The details of an application made or any proceeding pending under
the Insolvency and Bankruptcy Code, 2016 during the year – Nil.
? The details of the difference between the amount of the valuation
done at the time of one-time settlement and the valuation done while taking a loan from
the Banks or Financial Institutions along with the reasons thereof: Nil
? During FY 2022-23, Mr. Tarang Jain, Chairman &
Managing Director, and Mr. Arjun Jain, Whole-Time Director, received
remuneration of Rs. 32.31 million and Rs. 1.11 million, respectively, from material
subsidiary Varroc Polymers Ltd.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND a) TRANSFER OF
UNCLAIMED DIVIDEND / DEBENTURE
REDEMPTION / DEBENTURE INTEREST TO IEPF:
As required under Section 124 of the Act, no Unclaimed Dividend/
Debenture redemption/ Debenture Interest has been lying with the Company for a period of
seven years. Accordingly, no amounts have been transferred to the Investor Education and
Protection Fund established by the Central Government. b) TRANSFER OF SHARES TO IEPF
As required under Section 124 of the Act, no Equity Shares, in respect
of which dividends have not been claimed by the Members for seven consecutive years or
more, have been transferred by the Company to the Investor Education and Protection Fund
Authority (IEPF) during the Financial Year 2022-23.
ANNUAL RETURN
As required under Sections 92(3) and 134(3)(a) of the Act and Rule
12(1) of the Companies (Management and Administration) Rules, 2014 (as amended), Annual
Return in Form MGT - 7 is available on Company's website at the link
https://varroc.com/investors/corporate-governance/.
DISCLOSURE AS REQUIRED UNDER SEXUAL HARASSMENT OF WOMEN AT WORKPLACE
(PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
The Company has a Sexual Harassment Policy in place in line with the
requirements of the Sexual Harassment of Women at Workplace (Prevention, Prohibition, and
Redressal) Act, 2013. The Internal Complaints Committee (ICC) has been set up to redress
complaints received regarding sexual harassment. All employees (permanent, contract,
temporary, and trainees) are covered under this Policy.
During the year under review, the Company had arranged an online
orientation programme under the POSH Act at the PAN India level in order to make the
employees and the committee Members proficient to discharge their duties. The training was
attended by all the Internal Committee Members & employees at PAN India. The Company
has in place a module on "PREVENTION OF SEXUAL HARASSMENT IN THE WORKPLACE (POSH) at
its internal platform, for sensitising the employees with the provisions under POSH.
The Policy is gender neutral. During FY 2022-23, the Committee received
2 (Two) complaints pertaining to sexual harassment. Both complaints were resolved with
appropriate action. No cases of child labour, forced labour, involuntary labour, and
discriminatory employment were reported during the period.
GREEN INITIATIVES
In commitment to keeping in line with the Green Initiative and going
beyond it to create new green initiations, an electronic copy of the Notice of the 35th
Annual General Meeting of the Company shall be sent to all Members whose email addresses
are registered with the Company/ Depository Participant(s).
ACKNOWLEDGEMENTS
Your Directors place on record their acknowledgement for the
co-operation received from the Customers, Vendors, Bankers, Associates, Collaborators and
the Employees of the Company, without which it would not have been possible for the
Company to achieve its performance and growth.
The Directors also thank the Government of India, the Government of
various states in India, the Government of various countries, and the concerned government
departments and agencies for their co-operation.
| For and on behalf of the Board of Directors |
| Varroc Engineering Limited |
| Tarang Jain |
| Chairman and Managing Director |
| (DIN 00027505) |
| Date: May 23, 2023 |
| Place: Pune |