Z F Steering Gear (India) Ltd
Directors Reports
To the Members,
The Board of Directors is delighted to present the 43rd Annual Report
on the business and operations of ZF Steering Gear (India) Limited (the Company) along
with the summary of Standalone and Consolidated financial statements for the financial
year (FY) ended March 31, 2023.
I) Performance Review and state of the Company's affairs
(Rs. in crore)
| Particulars |
FY 2022-23 |
FY 2022-22 |
FY 2022-23 |
|
Standalone |
Consolidated |
| Revenue from Operations and other Income |
464.41 |
333.78 |
463.71 |
| Profit before Depreciation and Tax |
70.10 |
61.60 |
69.20 |
| Depreciation and Amortization Expenses |
32.18 |
31.39 |
32.18 |
| Profit before Tax (PBT) |
37.20 |
29.90 |
36.30 |
| Tax Expense |
11.76 |
11.63 |
11.76 |
| Profit for the year |
25.44 |
18.27 |
24.54 |
| Other comprehensive Income |
-0.97 |
0.20 |
-0.97 |
| Total Comprehensive Income for the year |
24.47 |
18.47 |
23.57 |
| Balance of Profit Brought Forward from previous year |
148.37 |
129.90 |
148.37 |
| Transfer to General Reserve |
Nil |
Nil |
Nil |
| Closing balance as per the Profit and Loss Statement c/f |
172.84 |
148.37 |
171.94 |
| Earnings Per Share Basic and Diluted (Rs.) |
28.04 |
20.14 |
27.05 |
*Note: As of March 31, 2022, the Company did not have any
Subsidiary or Joint-Venture or Associate Company, and hence, the Consolidated Financial
Summary for previous financial year 2021-22 is not applicable/ not required to be
disclosed.
II) Dividend
The Board is pleased to recommend a Dividend of Rs. 5 per equity share,
having face value of Rs. 10 each, for the Financial Year ended on March 31, 2023, subject
to the approval of the Members at the 43rd Annual General Meeting.
III) Share Capital, Memorandum and Articles of Association
As on March 31, 2023, the paid-up share capital of the Company stood at
Rs. 9,07,73,000, comprising 90,73,300 equity shares of face value of Rs. 10 fully paid-up.
Out of the above, the Promoters held 61,07,376 equity shares comprising 67.3% of the
equity share capital of the Company. The Board of Directors of the Company, at its meeting
held in October 2022, decided to explore various avenues for fund-raising including by way
of increase in share capital of the Company.
The Board, at the same meeting, also approved the proposal to
increasing the Authorised Share Capital from Rs. 10 crore comprising 1 crore equity shares
of Rs. 10 each to Rs. 20 crore comprising 2 crore equity shares of Rs. 10 each, subject to
the approval of Members of the Company. Increasing the Authorised Share Capital of the
Company would entail alteration of the Memorandum of Association and Articles of
Association (Articles) of the Company.
The existing Articles of the Company are in line with the provisions
under the erstwhile Companies Act, 1956. It is proposed to substitute the existing
Articles to align with the provisions under the Companies Act, 2013.
The above proposals with regard to increase of Share Capital and
alteration of Memorandum of Association and Articles of Association form part of the
Notice for 43rd Annual General Meeting. The Board recommends these Resolutions for kind
approval of Members.
During FY 2022-23, there was an inter-se transfer of shares between the
Promoters of the Company viz. Mr. Dinesh Munot, Mr. Utkarsh Munot and Robert Bosch
Automotive Steering, GmbH (RBAS), wherein 23,40,155 equity shares of the Company
held by RBAS were acquired by Mr. Dinesh Munot and Mr. Utkarsh Munot. The detailed
shareholding pattern after this change is available on the website of the Company at
www.zfindia.com as well as on BSE Limited.
IV) Consolidated Financial Statements
Subsidiaries, Associates and Joint Ventures
The Company has prepared Consolidated Financial Statements for the
Financial Year ended on March 31, 2023, in addition to Standalone Financial Statements, as
there were two Wholly-Owned Subsidiaries of the Company as of March 31, 2023, which were
incorporated during FY 2022-23. NAmes of those companies are
i. Drivesys Systems Private Limited and
ii. Nexsteer Systems Private Limited
The Company did not have any Joint Venture or Associate Company as of
March 31, 2023.
For detailed report on the Company's Subsidiaries Form AOC-1 is
attached to the Financial Statements for the Financial Year ended on March 31, 2023,
forming part of this Annual Report.
The Company entered into a Shareholder's Agreement with Supreme Iron
(India) Private Limited and made investment in a company NAmed as METACAST AUTO Private
Limited, which company became a subsidiary company after the Financial Year ended on March
31, 2023.
V) Management discussion and Analysis
1. Indian Economy
For the Indian economy, which is the world's fifth- largest economy by
nomiNAl Gross Domestic Product (GDP), year 2023 was a year of resilience and of
successfully NAvigating a challenging exterNAl environment. The stability and growth
momentum continued despite multiple global headwinds including the Omicron wave, the
Ukraine-Russia offensive with subsequent elevated crude prices and persistent global
supply chain disruptions. The global inflation in advanced economies was accompanied by
tightening monetary policy stance, which in turn created a ripple effect in global
markets. Despite inflatioNAry pressures and global macro uncertainties, the Indian economy
grew by 7.2 per cent in FY 2022-23 spurred on by strong private consumption and
investment. Thereby, India remains one of the fastest growing economies in the world.
Reserve Bank of India, on its part, undertook monetary and liquidity measures to rein in
inflation while continuing to support economic growth. Some other measures included
cutting down excise duty on fuel and supply-side measures to ease food inflation. The
government's focus on bolstering capital expenditure also supported domestic demand. The
Economic Survey 2022-23 highlighted that India's economic recovery from the pandemic is
complete and the economy is expected to grow in the range of 6% to 6.8% in the current
financial year 2023-24.
2. Industry Overview
Number of Commercial Vehicles (CV) Sold
Your Company caters to requirements of steering gear systems for a
range of Commercial Vehicles (including buses) and Tractors. The Company's Power Steering
Systems are fitted on Commercial Vehicles as well as some models of Tractors. Mechanical
Steering Gears are fitted mainly on Tractors.
Commercial Vehicles saw a buoyant growth in FY 2022-23. This was on
back of the massive government and private spending and a push for mining and
infrastructure development, leading to increased demand, especially for heavy commercial
vehicles. The explosion of e-commerce companies led to a rise in sales of light commercial
vehicles.
The overall Commercial Vehicle sales increased to 10.41 lakh units in
FY 2022-23, as compared to 8.09 lakh units in FY 2021-22, registering annualised growth of
29%. Sales of Medium and Heavy Commercial Vehicles increased from 2.72 lakh to 3.81 Lakh
units (40% increase) and Light Commercial Vehicles increased from 5.36 lakh to 6.60 lakh
units (23% increase) in FY-2022-23, compared to the previous year.
(Source: SIAM)
3. Company Overview Company Sales: (Numbers)
| Type |
FY 2022-23 |
FY 2021-22 |
Growth |
| Power Steering |
2,43,858 |
1,59,408 |
53.0% |
| Mechanical Steering |
43,520 |
64,126 |
-32.1% |
It may be noted that the Company had introduced new "Hydraulic
Power Assisted Steering Gears" (HPAS) for Tractors, which replaced Mechanical
Steering Gears in some models of Tractors. The decline in number of Mechanical Steering
Gears is attributable to this reason and to that extent Power Steering numbers are higher.
4. Renewable Energy Solar Energy
The Company's 5 MW Solar Power Project at Gujarat Solar Park, Charnka
Village, District Patan (Kutch), Gujarat, generated 0.80 crore Units of Electricity with
sales-revenue of Rs. 8.90 crore in the FY 2022-2023.
The entire electricity is purchased by Gujarat Urja Vikas Nigam Limited
(GUVNL), a Government of Gujarat Company, in terms of the multi-year Power Purchase
Agreement.
The Company's rooftop solar project, situated at its Vadu Budruk plant,
generated around 0.09 crore units of electricity in FY 2022-2023, which was captively
consumed in the said plant.
Wind Energy
Wind Turbine Machines, owned and operated by the Company, located in
districts of Satara, AhmedNAgar & SambhajiNAgar, having aggregate capacity of over
8.10 MW generated a total of 1.22 crore units in FY 2022-2023. Out of this, 0.64 crore
units were used as captive consumption, which accounted for approximately 41.38% of the
energy-consumption of the Company's factory at Village Vadu Budruk, and remaining 0.58
crore units were sold to Maharashtra State Electricity Board.
5. Financials of the Company Revenue from Operations
During the year, revenue from sales of autocomponents, that is Steering
Gear Systems and its components, spiraled up by 54.6%, as explained above. Consequently,
the Revenue from Operations went up by 44%.
Finance Cost
Finance cost was Rs. 0.72 crore for FY 2022-23 compared to Rs. 0.31
crore in FY 2021-22. The major reason for rise in fiNAnce-cost was more number of
leasehold properties occupied by the Company during the year and (notioNAl) interest being
accounted in the books, pursuant to the provisions of the Indian Accounting Standards, as
applicable. This amount was Rs. 0.47 crore vis-a vis Rs. 0.18 crore in FY 2021-22.
Other Income
During the year under review, Other Income was Rs. 13.98 crore as
against Rs. 20.98 crore in the Financial Year 2021-22. Other Income (mainly) is aggregate
of the realised gains during the financial year, on sale of financial investments and the
unrealised gains, based on market values as of March 31, 2023, from the financial
investments held as of that date. For details of Other Income, kindly refer to Note No. 16
to the Financial Statements.
Financial Investments
As of March 31, 2023, Financial Investments of the Company stood at Rs.
155.46 crore as against Rs. 118.60 crore in FY 2021-22. Both the amounts reflect the fair/
market value of the financial investments held by the Company, at end of the respective
financial years apart from bonds, which are valued at cost. For list of Investments held
by the Company at year-end, kindly refer to Note No. 5[a] of the Financial Statements.
Profitability
Thanks to the significant improvement in revenue from operations,
mainly from Auto Components Segment, Profit before Tax spiraled up to Rs. 37.20 crore for
FY 2022-23 in comparison to Rs. 29.90 crore for FY 2021-22. Profit after tax is Rs. 25.44
crore and total comprehensive income was Rs. 24.47 crore. Earnings per share was Rs.
28.04.
6. Credit Rating
In the Month of March, 2023, ICRA - the Credit Rating Agency, retained
the Credit Rating A+ for Long Term Fund based and Non-Fund based Credit Facilities and A1+
for Short Term Non-Fund Based Credit Facilities. Further, the outlook on ratings of the
Long Term Credit facilities was also retained as ‘Stable'.
7. Key Financial Ratios
In accordance with the relevant provisions of the Securities and
Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations,
2015 (the Listing Regulations), the key financial ratios are as under:
| Particulars |
FY 2022-23 |
FY 2021-22 |
| Debt Equity Ratio |
0.10 |
0.09 |
| Inventory Turnover Ratio (in times) |
7.54 |
6.30 |
| Interest Coverage Ratio (in times) |
111.27 |
97.45 |
| Debtors Turnover Ratio (in times) |
4.57 |
3.71 |
| Current Ratio (in times) |
2.04 |
2.38 |
| Operating Profit Margin (%) |
15.38 |
13.68 |
| Net Profit Margin (%) |
5.6 |
5.8 |
8. Segment wise Profitability
Auto-Components Segment reported Profit before Tax (pbt) of Rs.
20.95 crore. Renewable Energy Segment reported PBT of Rs. 9.75 crore and Profit Before Tax
from other (Un-allocable) segment/ Other Income was Rs. 6.50 crore.
9. Outlook, Opportunities and Threats
Indian economy, Including Automotive Industry, Is expected to do well
due to changing global dynamics, government's focus on developing robust infrastructure,
demographics, domestic demand and digital infrastructure.
Rating agency ICRA expects the Indian Commercial Vehicle (CV) industry
volumes to grow by 7%-10% in FY 2024, supported by replacement demand, pick-up in mining,
infrastructure, and construction activities, and overall healthy fleet utilisation levels.
The scrappage policy, which was announced in March 2021, has been implemented from April
1,2023, and is likely to contribute to the growth of new CV sales. It is being implemented
in phases, primarily with a view to reducing the carbon footprint.
Your Company has prepared itself to capitalise on these opportunities
by way of adequate capacity built-up and also by undertaking projects of backward
integration through subsidiaries and joint-venture companies, separately discussed in this
Report.
The downside risks to the Indian economy can be volatility in oil
prices, bad monsoon and uncertain global sceanario. India is still projected to be the
world's fastest growing economy this financial year.
VI) Communication received from ZF Friedrichshafen AG
As reported earlier, the Company had received a communication dated
October 19, 2022, from ZF Friedrichshafen AG (ZF AG), regarding alleged
infringement and passing off of the trademark/ mark "ZF" and/ or "ZF
India" and amongst other alleged demands, ZF Friedrichshafen AG, has claimed a sum of
Rs. 100 crore in damages from the Company. The Company continues to be of the opinion
that, it has not committed any act of infringement and/or passing off, in any manner
whatsoever. The Company vide communication dated April 12, 2023, has sent a detailed reply
to the said communication of ZF Friedrichshafen AG. The allegations of ZF Friedrichshafen
AG and/ or ZF India Private Limited are neither accepted nor acceptable to the Company.
The Company has also sent a letter to certain affiliates of ZF Friedrichshafen AG, to
cease and desist the use of the NAme "ZF" and/ or "ZF India", in
relation to certain products, as per the existing arrangements and/ or rights of the
Company.
The Company has also initiated the following legal proceedings before
the Courts at Pune:
1. Suit No. 1: Seeking for permanent injunction under Section 142
of the Trade Marks Act, 1999 and for damages and other reliefs against ZF AG, Mr. Suresh
KV (agent of ZF AG) and Ms. Abha Jaiswal (agent of ZF AG) and the Company along with other
reliefs have claimed damages of Rs. 200,00,00,000 from them.
2. Suit No. 2: Suit for passing off, seeking permanent injunction
and damages under Section 134 and other applicable provisions of the Trade Marks Act, 1999
and other applicable laws against ZF AG, ZF India Private Limited, ZF Rane Automotive
India Private Limited and ZF Commercial Vehicle Control Systems India Limited and the
Company along with other reliefs have claimed damages of Rs. 200,00,00,000 from them.
VII) Strategic Initiatives, Expansion and Capital Expenditure
1. Investment in Wholly-Owned Subsidiaries
As informed earlier, the Company incorporated, in April 2022, two
Wholly-Owned Subsidiaries, as a step towards expansion by way of backward integration for
production of some of the key components, required for the Company's end product i.e.
Steering Gear Systems.
NAmes of the Wholly-Owned Subsidiaries (WOS) are:
(i) DriveSys Systems Private Limited (DriveSys)
(ii) NexSteer Systems Private Limited (NexSteer)
The Company has so far invested Rs. 8 crore in DriveSys and Rs. 8 lakh
in NexSteer by way of subscription to the equity share capital of these companies. The
Company also infuses funds by way of loans and has extended support by providing security
for credit facilities availed by DriveSys from bank. Total capital outlay to be made on
the above projects will be in vicinity of Rs. 100 crore.
Both these companies have acquired and taken possession of industrial
land at Maharashtra Industrial Development Corporation (MIDC) Supa Parner
Industrial Park, AhemdNAgar, Maharashtra. The construction activities for the factory shed
of both the companies situated at the above locations are in progress. DriveSys has
ordered major machinery for its business operations. These companies are expected commence
operations by last quarter of the current Financial Year.
2. Joint-Venture
In the current financial year, your Company has entered into a Joint
Venture Agreement with Supreme Iron (India) Private Limited, for manufacturing of
castings, an important raw material component for your Company. A Joint Venture Company,
in NAme of METACAST AUTO Private Limited, has been formed, which is a subsidiary of your
Company. Your Company has so far invested Rs. 2,55,500 by way of 51% equity participation
to the equity share capital in the Joint-venture company. Land for the project is being
acquired at MIDC Kagal near Kolhapur, Maharashtra. The project-cost is expected to be in
the range of Rs. 40-50 crore, which is being funded through equity capital and loans. The
Project is expected to be completed by end of the current financial year.
3. Capital-Expenditure
The Company is working on projects of backward integration as mentioned
in above paragraphs of this Report and evaluating various sources of funds including
infusion of equity capital.
Vlll)lnterNAl Control System and its Adequacy
Your Company has aligned its current systems of interNAl financial
control with the requirement of the Companies Act, 2013 (the Act). The InterNAl
Control framework is intended to increase transparency and accountability in the Company's
process of designing and implementing systems of interNAl control. The framework requires
a company to identify and aNAlyse risks and maNAge appropriate responses.
The Company has successfully laid down the framework and ensured its
effectiveness.
The Company has an effective InterNAl Control System commensurate with
the size, scale and complexity of its operations. The scope of the InterNAl Audit is
decided by the Audit Committee and the Board. The InterNAl Audit Department of the Company
checks all the vouchers, financial reports, registers etc. To maintain its objectivity and
independence, the Board has also appointed an exterNAl Chartered Accountant firm, M/s.
Kirtane & Pandit LLP, Chartered Accountants, as InterNAl Auditors, which report to the
Audit Committee of the Board.
The InterNAl Auditors monitor and evaluate the efficacy and adequacy of
interNAl control systems in the Company, its compliance with operating systems, accounting
procedures and policies for various functions in the organisation of the Company. The
Audit Committee, Statutory Auditors and the process owners are periodically apprised of
the interNAl audit findings and important interNAl audit observations are also placed
before the Board at its Meetings. Based on the report of InterNAl Auditor, process owners
undertake corrective action, wherever required, in their respective areas and thereby
strengthen the controls further. Audit observations and actions taken thereof are
presented to the Audit Committee.
The Company's Audit Committee regularly reviews the financial
management reports and data and interacts with the ExterNAl and InterNAl Auditors for
ascertaining the adequacy of interNAl controls.
Based on its evaluation, the Company's Audit Committee has concluded
that, as of March 31, 2023, the Company's interNAl financial controls were adequate and
operating effectively.
IX) CautioNAry Statement
The above 'Management Discussion and ANAlysis Report' is a forward
looking Statement based on the Company's projections, estimates and perceptions. These
statements reflect the Company's current views with respect to the future events and are
subject to risks and uncertainties. Actual results may vary materially from those
projected here.
X) Conservation of Energy, Research and Development, Technology
Absorption and Innovation, Foreign Exchange Earnings and Outgo:
The details as required under the Companies (Accounts) Rules, 2014, are
given in Annexure-I to this Report.
XI) Board of Directors and Key Managerial Personnel
1. At the year ended on March 31, 2023, the Board of Directors
comprised three Non- Independent Directors (including two executive Directors) and Five
Independent Directors. Mr. Sandeep Nelamangala (DIN: 08264554), Non-Executive,
Non-Independent Director, ceased to be a Director of the Company, following his
resigNAtion, with effect from April 6, 2023. The Board places on record the appreciation
for the valuable contribution, support and guidance rendered by Mr. Nelamangala during his
tenure as Director of the Company.
2. Further, pursuant to the requirements under Section 152 of the Act
and the Articles of Association of the Company, Mr. Dinesh Munot offers himself for
reappointment at the ensuing 43rd Annual General Meeting of the Company.
The Resolution for the reappointment of Mr. Dinesh Munot with his brief
profile, forms a part of the Notice of the 43rd Annual General Meeting of the Company.
There was no change in the Key Managerial Personnel during the year.
3. Board Diversity
The Company recognizes and embraces the importance of a diverse board
in its success. The Company believes that a truly diverse board will leverage differences
in thought, perception, knowledge, skill, regioNAl and industry experience, cultural and
geographical background, age, ethnicity, race and gender, which will help the Company to
retain its competitive advantage.
4. Independent Directors
Pursuant to the provisions of Section 149 of the Act and Regulation 25
of Securities and Exchange Board of India (Listing Obligations and Disclosure Regulations)
Regulations, 2015 (the Listing Regulations}, the Independent Directors of the
Company have submitted declarations that each of them meets the criteria of independence
as provided in Section 149(6) of the Act along with Rules framed there under and
Regulation 16(1 )(b) of the Listing Regulations. In terms of Regulation 25(8) of the
Listing Regulations, the Independent Directors have confirmed that they are not aware of
any circumstance or situation which exists or may be reasonably anticipated that could
impair or impact their ability to discharge their duties with an objective independent
Judgment and without any exterNAl influence.
Further, declaration on compliance with Rule 6(3) of the Companies
(Appointment and Qualification of Directors) Rules, 2014, as amended by Ministry of
Corporate Affairs ("MCA") Notification dated October 22, 2019, regarding the
requirement relating to enrolment in the Data Bank created by MCA for Independent
Directors, has been received from all Independent Directors of the Company. Further, all
the Independent Directors have either qualified or are exempted from the self-assessment
conducted by the Independent Directors' Databank.
Familiarisation Programmes for independent Directors
Independent Directors play a pivotal role in upholding Corporate
Governance norms and ensuring fairness in decision-making. Being experts in various
fields, they also bring independent judgement on matters of strategy, risk management,
controls and business performance.
At the time of appointing a new Independent Director, a formal letter
of appointment is issued to the Director, inter alia, explaining the role, duties and
responsibilities of the Director. The Director is also explained in detail the compliances
required from him/ her under the Act, SEBI Regulations and other relevant regulations.
5. Performance Evaluation
The Board of Directors has carried out an annual evaluation of its own
performance, Board Committees, and individual Directors pursuant to the provisions of the
Act and the Listing Regulations.
Your Board has constituted the Nomination and Remuneration Committee
(hereinafter referred to as "the Committee"), in order to oversee, inter-alia,
matters relating to:
(i) Identify persons who are qualified to become directors and persons
who can be appointed in senior management in accordance with the criteria laid down,
recommend to the Board their appointment and removal;
(ii) Formulate the criteria for determining qualifications, positive
attributes and independence of a director;
(iii) Recommend to the Board a policy relating to the remuneration for
the directors, key Managerial personnel and other employees;
(iv) Carry out evaluation of every director's performance including
that of Independent Directors; and
(v) Devise a policy to be followed for identification, appointment,
remuneration and evaluation of performance of directors including Company's Board
diversity etc., as approved by the Board.
Further, the Company has devised a Policy, for performance evaluation
of Independent Directors, Board as a whole, Committees of the Board and other individual
Executive/ Non-Executive Directors. The Policy includes criteria for performance
evaluation. The criteria are based upon age, experience, quality of participation in
Board/ Committee proceedings, attendance at meetings, contribution by strategic inputs and
others. The criteria along with additional requirements prescribed by Section 149 of the
Act are used for selection of Independent Directors.
The Board evaluated its performance after seeking inputs from all the
Directors based on criteria such as the Board composition and structure, effectiveness of
board processes, information and functioning, etc. The performance of the Committees was
evaluated by the Board after seeking inputs from the Committee members based on criteria
such as the composition of committees, effectiveness of committee meetings, etc. The above
criteria are broadly based on the Guidance Note on Board Evaluation issued by the
Securities and Exchange Board of India.
In a separate meeting of Independent Directors, performance of the
Non-Independent Directors and the Board as a whole and the Chairman of the Company was
evaluated taking into account the views of Executive Directors and Non-Executive
Directors. The above evaluations were then discussed at the Board meeting that followed
the meeting of the Independent Directors and the NomiNAtion and Remuneration Committee, at
which the performance of the Board, its Committees, and individual Directors was also
discussed. Performance evaluation of Independent Directors was done by the entire Board,
excluding the Independent Director being evaluated.
The Company carried out the performance evaluation during the year
under report. The Board of Directors expressed satisfaction with the evaluation process.
XII) Directors' Responsibility Statement
1. In the preparation of the annual financial statement for the
financial year ended on March 31, 2023, the applicable Accounting Standards read with
requirements set out under Schedule III to the Companies Act, 2013, have been followed and
there are no material departures from the same.
2. the Directors have selected such Accounting Policies and applied
them consistently and made Judgments and estimates that are reasonable and prudent so as
to give a true and fair view of the state of affairs of the Company as at March 31, 2023,
and of the profit of the Company for the financial year ended on that date.
3. the Directors have taken proper and sufficient care for the
maintenance of adequate accounting records in accordance with the provisions of the Act,
for safeguarding the assets of the Company and for preventing and detecting fraud and
other irregularities.
4. the Directors have prepared the annual financial statement on a
'going concern' basis.
5. the Directors have laid down internal financial controls to be
followed by the Company and that such interNAl financial controls, in their opinion, are
adequate and are operating effectively and
6. the Directors have organised/ devised proper systems to ensure
compliance with the provisions of all applicable laws and that such systems are adequate
and operating effectively.
XIII) Corporate Governance
Pursuant to Regulation 34(3) read with Schedule V of the Listing
Regulations, a detailed report on Corporate Governance is given in Annexure - II along
with the Auditors' Certificate on its compliance, which forms part of this report.
XIV) Business Responsibility and Sustainability Report
The Business Responsibility and SustaiNAbility Report, for the year
ended on March 31, 2023, as stipulated under Regulation 34 of the Listing Regulations,
forms part of this Annual Report. The Business Responsibility and SustaiNAbility Report is
also available on the Company's website at www.zfindia.com.
XV) Other Aspects
1. Particulars of Loans given, Investments made, Guarantees given and
Securities provided
During the year under review, the Company provided Security in form of
Mutual Fund units in connection with the credit facilities of Rs. 37 crore, sanctioned by
the Bank, to the Wholly-Owned Subsidiary of the Company, DriveSys Systems Private Limited.
Details of Loans and Investments are disclosed in the Notes to the
Financial Statements forming part of this Annual Report.
2. Contracts and Arrangements with Related Parties
All contracts/ arrangements/ transactions entered into by the Company
during FY 2022-23 with related parties were on an arm's length basis and in the ordinary
course of business.
Prior approval of the members of the Audit Committee who are
Independent Directors, is obtained for all related party transactions.
There were no material Related Party Transactions (RPTs) undertaken
by the Company during the year that require Shareholders' approval under Regulation 23(4)
of the Listing Regulations or Section 188 of the Act. The approval of the Independent
Directors of the Audit Committee was sought for all RPTs. Certain transactions which were
repetitive in NAture were approved through omnibus route. The Audit Committee reviews, on
a quarterly basis, the details of the Related Party Transactions entered pursuant to the
omnibus approval.
All the transactions were in compliance with the applicable provisions
of the Act and the Listing Regulations. The details of RPTs during FY 2022-23, are
provided in the Note 36 accompanying the financial statements. Given that the Company does
not have any RPTs to report pursuant to Section 134(3)(h) of the Act read with Rule 8(2)
of the Companies (Accounts) Rules, 2014.
During FY 2022-23, the Non-Executive Directors of the Company had no
pecuniary relationship or transactions with the Company other than sitting fees and
reimbursement of expenses, as applicable.
The Company formulated a policy on RPTs in accordance with the Act and
the Listing Regulations including any amendments thereto for identifying, reviewing,
approving and monitoring of RPTs. The said policy has been revised in line with the
amendment in the Listing Regulations and the same is available on the Company's website:
http://www.zfindia.com/policies-codes.php.
3. Corporate Social Responsibility (CSR)
Pursuant to Section 135 of the Act and as per the Companies (Corporate
Social Responsibility} Rules, 2014, read with various amendments and clarifications issued
by the Ministry of Corporate Affairs, the Company has its CSR Policy, which is available
on the Company's website www.zfindia.com. The Annual Report on CSR activities is annexed
herewith marked as Annexure III.
4. Risk Management
The Company follows a specific, well-defined risk management framework
which is integrated with its operations.
The Company's Risk Management approach has been developed after taking
cognizance of the relevant statutory guidelines, stakeholders' feedback, forecast and
expert Judgment.
Your Company is not required to constitute a separate Risk-Management
Committee.
The Audit Committee of the Board of Directors is entrusted to identify/
anticipate the possible risk and certify the Risk Mitigation Plan. Further, the Company's
Senior Management Team also addresses functional, operational, and strategic risk in their
corresponding area of responsibility covering overall risks in the area of commercial,
technical, information technology and statutory compliance.
The Company's Risk Management Framework inter- alia provides for the
following:
i. pro-active processes within the Risk Management Manual for
reporting, evaluating, and resolving risks;
ii. Identifying and assessing risks associated with various business
decisions before they materialize.
iii. Take informed decisions at all levels of the organization in line
with the Company's risk appetite.
iv. Ensuring protection of shareholders' stake by establishing an
integrated Risk Management Framework for identifying, assessing, mitigating, monitoring,
evaluating and reporting all risks;
v. Adoption and implementation of risk mitigation measures at every
level in order to achieve longterm goals effectively and sustainably;
vi. Regularly review Risk Tolerance levels of the Company
The Company manages, monitors and reports on the major risks and
uncertainties, which can impact its ability to achieve its Strategic objectives. The
Company has introduced several improvements in internal control management to drive a
common integrated view of risks, optimal risk mitigation, responses and efficient
management of internal control and assurance activities.
5. Auditors and Auditors' Report Statutory Auditors
The Company in its 39th Annual General Meeting held on September 20,
2019 had appointed M/s. Joshi Apte & Company, Chartered Accountants (Firm Registration
No. 104370W), as Statutory Auditors of the Company, for a period of five consecutive years
from the conclusion of 39th Annual General Meeting until the conclusion of 44th Annual
General Meeting.
There are no qualifications, reservations or adverse remarks in the
Statutory Auditors' Report for the Financial Year 2022-2023. The Statutory Auditors'
Report is enclosed with the financial statements in the Annual Report.
Secretarial Auditor
The Board had appointed M/s. SIUT & Co., LLP, Company Secretaries,
to conduct Secretarial Audit for the financial year 2022-2023. The Secretarial Audit
Report for the same is annexed herewith as Annexure IV.
6. Disclosures Meetings of the Board
Seven Meetings of the Board of Directors were held during the financial
year 2022-23. Detailed information is given in the Report on Corporate Governance, forming
part of this Annual Report.
7. Committees of the Board Audit Committee
The Company has an Audit Committee pursuant to the requirements of the
Act read with the rules framed there under and the Listing Regulations. The details
relating to the same are given, in the Corporate Governance Report, forming part of this
Report. All the recommendations made by the Audit Committee were accepted by the Board.
The Audit Committee performs its functions as set out under Part C of
Schedule II to the Listing Regulations and terms of reference defined in accordance with
the provisions of Section 177 of the Act.
The detailed terms of reference of the Audit Committee are set out in
the Corporate Governance Report.
Nomination and Remuneration Committee
The Company has Nomination and remuneration Committee (the
Committee) pursuant to Section 178 of the Act read with rules made there under and
Regulation 19 of the Listing Regulations, The brief details pertaining to the same are
given in Corporate Governance Report, forming part of this Report, All the recommendations
made by the Committee were accepted by the Board,
The Nomination and Remuneration Committee performs its functions as set
out under Part D Para A of Schedule II to the Listing Regulations,
The detailed terms of reference and functions are set out in Corporate
Governance Report,
Remuneration Policy
The Board has, on the recommendation of the Nomination &
Remuneration Committee, approved a policy for selection, appointment and remuneration of
Directors and senior management, The detailed Remuneration Policy is placed on the
Company's website www.zfindia.com.
Stakeholders' Relationship Committee
The Board has constituted Stakeholders' Relationship Committee in
accordance with the provisions of Section 178 of the Act read with rules made thereunder
and Regulation 20 of the Listing Regulations,
The Stakeholders' Relationship Committee performs its functions as set
out under Part D Para B of Schedule II to the Listing Regulations,
The detailed terms of reference and functions are set out in Corporate
Governance Report,
Corporate Social Responsibility Committee
The Company has constituted Corporate Social Responsibility Committee
pursuant to the Section 135 of the Act and Rules made thereunder, The detailed functions
and constitution thereof of the Corporate Social Responsibility Committee are set out in
Corporate Governance Report,
8. Vigil Mechanism/ Whistle Blower Policy
The Vigil Mechanism of the Company also incorporates a whistle blower
policy, in terms of Regulation 22 of the Listing Regulations, Protected disclosures can be
made by a whistle blower through an e-mail/ telephone/ letter to the Chairman of the Audit
Committee, The Policy on Vigil Mechanism and Whistle Blower may be accessed on the website
of the Company at www.zfindia.com.
9. Annual Return
The Annual return is placed on the Company's website www.zfindia.com.
10. Industrial Relations
By and large, Industrial Relations at all locations of the Company were
amicable, The Company has been constantly endeavouring to improve quality, reduce cost,
ensure safety and improve productivity at all levels, Emphasis was also laid towards
raising awareness on health and wellness of employees,
For details on some of the pending litigations, which are not material
financially, please refer to Note No. 32 under Notes to Accounts,
11. Particulars of Employees and related disclosures
Considering the provisions of Section 197 of the Act, read with the
relevant rules and having referred to provisions of Section 136(1) of the Act, the Board's
Report is being sent to the Members of the Company, excluding details of particulars of
employees and related disclosures, The said information/ details are available for
inspection at the Registered Office of the Company during working hours, on any working
day, Any Member interested in obtaining this information may write to the Company
Secretary and this information would be provided on request,
12. Disclosure - Policy on Prevention of Sexual Harassment at Workplace
The Company has in place, a policy on Prevention of Sexual Harassment
at Workplace in line with the requirements of 'The Sexual Harassment of Women at Workplace
(Prevention, Prohibition & Redressal) Act, 2013' and the Rules framed there under, An
Internal Complaints Committee (ICC) has been set up to redress complaints received
regarding sexual harassment, All employees (permanent, temporary, trainee etc,) are
covered under this Policy, During the year, no complaint with allegation of sexual
harassment was received by the Company,
13. General
(i) The Company held no deposits at the beginning of the year, nor
accepted any deposits during the year under report.
(ii) All equity shares issued by the Company rank pari-passu in respect
of right to receive dividend, voting rights or otherwise.
(iii) During the year under review, no shares were issued as sweat
equity to any of the employees or others.
(iv) The Company had two Wholly-Owned Subsidiaries during the Financial
Year 2022-23. However, no remuneration was received by any Wholetime Director of the
Company, from any of the subsidiaries.
(v) During the year under report, no strictures or material orders were
passed by any Regulator or a Court or a Tribunal, which may impact on the going concern
status of the Company or its operations in future.
(vi) There has been no instance of fraud reported by the Auditors under
Section 143(12) of the Act and Rules framed there under either to the Company or to the
Central Government.
(vii) The Central Government, under Section 148(1) of the Act, has not
prescribed maintenance of cost records in respect of the activities carried out by the
Company.
(viii) During FY 2022-2023, the Company has complied with all
applicable Secretarial Standards issued by the Institute of Company Secretaries of India.
(ix) Apart from entering into a Joint Venture Agreement, as mentioned
earlier in this Report, under the heading 'Joint-Venture', there have been no material
changes or commitments affecting the financial position of the Company which have occurred
between the end of the Financial Year to which the Financial Statements relate and the
date of this report.
(x) The Company has not filed any application or no proceeding is
pending against the Company under the Insolvency and Bankruptcy Code, 2016, during FY
2022-23.
(xi) The Company has not made any one-time settlement application
during the year and thus disclosure for difference between amount of the valuation done at
the time of one-time settlement and the valuation done while taking loan from the banks or
financial institutions, is not applicable to the Company.
XVI) Acknowledgement
Your Directors would like to express their sincere appreciation for the
assistance and co-operation received from the Banks, Government Authorities, Customers,
Vendors and Members during the year under review. Your Directors also wish to place on
record their deep sense of appreciation for the committed services by the Company's
executives, staff and workers.
| Pune |
Dinesh Munot |
| July 22, 2023 |
Chairman |
|
(DIN: 00049801) |
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