Dear Members,
Your directors are pleased to present the 40th (Fortieth) Annual Report on the business
operations together with the annual audited financial statements for the financial year
(FY) ended March 31, 2023. This report states compliance as per the requirements of the
Companies' Act, 2013 ("the Act"), the Securities and Exchange Board of
India (Listing Obligations and Disclosure Requirements) Regulations, 2015 ("Listing
Regulations") and other rules and regulations as applicable to the Company.
FINANCIAL PERFORMANCE
The Company's financial performance (standalone and consolidated) for the financial
year ended March 31, 2023 is summarised below:
(Rs. in Lakhs Except for EPS)
Particulars |
Standalone |
Consolidated |
|
2022-23 |
2021-22 |
2022-23 |
2021-22 |
Revenue from Operation & Other Income |
288.48 |
16,194.11 |
55,006.01 |
44,489.97 |
Gross Profit before Finance Cost & Depreciation |
150.92 |
(636.00) |
4,476.70 |
(595.57) |
Less: Finance Cost |
5.26 |
2,516.03 |
15,473.75 |
10,832.24 |
Less: Depreciation |
- |
977.60 |
3,844.65 |
3,744.67 |
Profit/(Loss) before Tax |
145.66 |
(4,130.00) |
(16,114.51) |
(25,412.10) |
Less: Provisions for Tax Expenses |
1027.41 |
(78.52) |
3,111.14 |
335.95 |
Profit/ (Loss) from continuing operations |
(881.75) |
(8,949.06) |
(19,225.65) |
(25,748.05) |
Other Comprehensive Income |
- |
(153.50) |
188.14 |
(183.44) |
Profit/(Loss) after Taxes including other Comprehensive Income |
(881.75) |
(17,481.53) |
(19,037.51) |
(25,931.49) |
Less: Non-Controlling Interest |
- |
- |
(4,005.82) |
(3,323.57) |
Profit/(Loss) for the Year attributable to Equity Holders of the parent |
(881.75) |
(17,481.53) |
(15,031.69) |
(22,607.92) |
Earning Per Shares (Rs.) |
(0.66) |
(12.95) |
(11.40) |
(16.77) |
BUSINESS OPERATIONS
During the year under review, your Company has recorded consolidated revenue from
operations of Rs. 54,557 Lakhs as against revenue from operations of Rs. 43,500 Lakhs in
the previous year. EBITDA of the Company is Rs. 4,028 Lakhs i.e. 7.4% as against EBITDA
loss of Rs. (1,585) Lakhs, thereby improving EBITDA margins by 1100 bps, main reasons for
improvement in EBITDA is on account of reduction in variable cost and tight control over
fixed cost along with increased in sales of ~25%. Higher interest costs and depreciation
led to net loss for the year.
A detailed discussion on the business performance and future outlook is included in
Management Discussion & Analysis which forms part of the Directors' Report.
SHARE CAPITAL
There was no change in the Share Capital of the Company during the financial year. As
on March 31, 2023, the issued and paid-up capital of the Company was Rs. 26,75,34,550/-
divided into 13,37,67,275 equity shares of face value of Rs. 2/- each. Your Company has
not issued shares with differential voting rights, nor granted employee stock options,
sweat equity or bonus shares. The Company does not have any Preference Shares as on March
31, 2023.
The equity shares of the Company continue to be listed on BSE Limited ("BSE")
and National Stock Exchange of India Limited ("NSE"). The stipulated listing
fees for FY2023-24 have been paid to both stock exchanges.
REGISTRAR AND SHARE TRANSFER AGENT
Link Intime India Private Limited is the Registrar and Share Transfer Agent of the
Company.
DIVIDEND
Since there were no profits during the year, the Board of Directors has not recommended
any dividend, for the financial year ended on March 31,2023.
TRANSFER TO RESERVES
The Board of Directors has decided not to transfer any amount to the reserve during FY
2022-2023 in view of loss during the financial year.
FIXED DEPOSITS
The Company has not accepted any Deposit covered under Section 73 of the Companies Act,
2013 and The Companies (Acceptance of Deposit) Rules, 2014 during the year under review.
Hence, the requirement for furnishing of details relating to deposits covered under
Chapter V of the Act or the details of deposits which are not in compliance with the
Chapter V of the Act is not applicable.
PARTICULARS OF LOANS, GUARANTEES, INVESTMENTS OR SECURITY
Details of loans granted, guarantees provided and investments made by the Company under
the provisions of Section 186 of the Act read with the Companies (Meeting of Board and its
Powers) Rules, 2014, are provided in the Notes to Financial Statements of the Company,
forming part of this Annual Report. The Company has not provided any security in terms of
Section 186 of the Act.
MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis as stipulated under the Listing Regulations is
presented in a separate section forming part of this Annual Report. It provides details
about the overall industry structure, global and domestic economic scenarios, developments
in business operations / performance of the Company's, internal controls and their
adequacy, risk management systems and other material developments during the financial
year 2022-23.
CHANGE IN NATURE OF BUSINESS
There is no change in the nature of business of the Company during FY 2022- 23.
MATERIAL CHANGES AND COMMITMENT AFFECTING FINANCIAL POSITION OF THE COMPANY OCCURRED
BETWEEN END OF THE FINANCIAL YEAR TO WHICH THE FINANCIAL STATEMENTS RELATE AND THE DATE OF
THIS REPPORT
There have been no material changes and commitments affecting the financial position of
the Company between the end of the financial year and the date of this report.
SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES:
As on 31st March 2023, your Company has in total six subsidiaries across the globe
which includes Setco Auto Systems Private Limited (CIN: U35100GJ2010PTC062770), Lava Cast
Private Ltd. (LCPL) (CIN: U27205GJ2011PTC100777), Setco Automotive (UK) Ltd (SAUL), Setco
Automotive (NA) Inc. (SANAI), Setco MEA DMCC, Dubai and WEW Holdings Ltd (Mauritius).
Performance of subsidiary Companies is elaborated in detail under 'Management
Discussion & Analysis'.
The Policy for determining material subsidiaries as approved may be accessed on the
Company's website at the link https://setcoauto.com/policies-code-of-conduct/.
BOARD OF DIRECTORS, COMMITTEES AND MANAGEMENT COMPOSITION
The composition of the Board of Directors and its Committees, viz., Audit Committee,
Nomination and Remuneration Committee, Stakeholders' Relationship Committee and Corporate
Social Responsibility Committee, are constituted in accordance with Companies Act, 2013
("the Act") and the SEBI (Listing Obligations and Disclosure Requirements)
Regulations, 2015 ("Listing Regulations"). The Corporate Governance Report
contains the composition of the Board of Directors of the Company and its Committees.
All the Directors have affirmed compliance with the Code of Conduct of the Company. The
Independent Directors have affirmed that they satisfy the criteria laid down under section
149(6) of the Act and Regulation 25 and other applicable regulations of the Listing
Regulations, as amended from time to time. Further, in terms of Section 150 of the Act
read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules,
2014, Independent Directors of the Company have confirmed that they have registered
themselves with the databank maintained by the Indian Institute of Corporate Affairs
(IICA) and have passed the proficiency test, if applicable to them. The Board of Directors
at its first meeting of FY 2022-23 has taken on record the declarations and confirmations
submitted by the Independent Directors. During the year, the Board had not appointed any
person as an Alternate Director for an Independent Director on the Board. The Company has
obtained a certificate from a Company Secretary in Practice that none of the Directors on
the Board of the Company has been debarred or disqualified from being appointed or
continuing as Directors of Companies by the SEBI / Ministry of Corporate Affairs or any
such statutory authority.
During the year under review there has been no change in the constitution of Board i.e.
the structure of the Board remains the same.
The Board is of the opinion that the Independent Directors of the Company possess
requisite qualifications, experience and expertise in the fields of finance, people
management, strategy, auditing, tax advisory services and they hold highest standards of
integrity.
DIRECTOR RETIRING BY ROTATION
In accordance with the Articles of Association of the Company and Section 152 of the
Act read with the Companies (Appointment and Qualification of Directors) Rules, 2014
(including any statutory modification(s) or re-enactment(s) thereof for the time being in
force) Mrs. Urja Harshal Shah, Executive Director (DIN: 02675341) is due to retire by
rotation at the ensuing Annual General Meeting and being eligible, offers herself for
re-appointment.
A brief profile of Mrs. Urja Harshal Shah is provided in the Notice of the ensuing
Annual General Meeting of the Company.
KEY MANAGERIAL PERSONNEL
The following persons have been designated as the Key Managerial Personnel of the
Company pursuant to Section 2(51) and 203 of the Companies Act, 2013 read with Companies
(Appointment and Remuneration of Managerial Personnel) Rules 2014:
- Mr. Harish Sheth, Chairman & Managing Director
- Mr. Udit Sheth, Vice Chairman
- Mrs. Urja Shah, Executive Director
- Mr. Shrinivasan Sivasubrahmanyan Iyer, Chief Financial Officer (Appointed w.e.f.
November 14, 2022)
- Mr. Hiren Vala, Company Secretary and Compliance officer.
During the year under review, Mr. Rovinder Singla resigned as Chief Financial Officer
of the Company with effect from May 30, 2022 and Mr. Jatinder Bir Singh Gujral retired as
Chief Executive Officer of the Company with effect from October 31,2022. Since Chairman
and Managing Director is also designated as Chief Executive Officer, it is not considered
necessary to appoint a fresh Chief Executive Officer on resignation of Mr. Jatinder Bir
Singh Gujral as Chief Executive Officer.
BOARD AND COMMITTEE MEETINGS
The schedule of meetings of the Board of Directors and Committees of the Board is
circulated to the Directors in ad-
vance. During the year, four (4) Board Meetings were convened and held, the details of
which are given in the Corporate Governance Report. The time gap between the Board Meeting
convened on 12th February, 2022 and 6th July, 2022 was 144 days which is more than the
prescribed time limit of 120 days. Accordingly, the Company has not complied with Section
173 of the Companies Act, 2013, Para 2.1 on Secretarial Standards - 1 on Board Meetings
and Regulation 17 (2)_of SEBI (LODR) Regulations, 2015. However, the Company has convened
4 Board Meetings during the financial year ended 31st March, 2023. The details of
Committee meetings are provided in the Corporate Governance report. For eligible matters,
the Board / its Committees may also accord approvals through resolutions passed by
circulation, between two meetings.
DECLARATION BY INDEPENDENT DIRECTORS
As stipulated under the provisions of Section 149(6) of Act and Regulation 25 of
Listing Regulations, the requisite declarations have been received from the Independent
Directors regarding meeting the criteria of Independence as laid down under those
provisions. 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
exist or may be reasonably anticipated, that could impair or impact their ability to
discharge their duties.
The Board took on record the declaration and confirmation submitted by the independent
directors regarding their meeting the prescribed criteria of independence, after
undertaking due assessment of the veracity of the same as required under Regulation 25 of
the Listing Regulations.
PERFORMANCE EVALUATION OF BOARD
In line with the statutory requirements enshrined under the Companies Act, 2013 and the
SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board
carried out a performance evaluation. A formal evaluation of performance of the Board,
it's Committees, the Chairman and that of the individual Directors was carried out for the
financial year 2022-23.
The evaluation of Individual Directors was done taking into consideration the role
played by each Director as a member at the respective meetings, in pursuit of the purpose
and goals, participation at the meetings, independent views and judgement, initiative,
ownership of value building.
The performance of the Committees was evaluated by the Board after seeking inputs from
the Committee members on the basis of the criteria such as the composition of Committees,
effectiveness of Committee meetings, information shared and participation of members. In
respect of evaluation for performance of the Board, the parameters inter alia comprised of
key areas such as Board composition, competency of Directors, diversity, frequency of
Board and Committee meetings, information sharing and disclosures made to the Board and
its Committees. The responses received on evaluation of the Board and its Committees and
that of the individual Directors were shared with the Chairman.
The overall performance evaluation process for functioning of Board and its Committees
was based on discussions amongst the Board Members, Committee Members and responses shared
by each Member. The Board found that there was considerable value and richness in the
discussions and deliberations. Based on the outcome of the evaluation, the Board and
Committees have agreed for possible continuous improvisation to ensure better
effectiveness and functioning of the Board and Committees.
Similarly, the Board at its meeting assessed the performance of the Independent
Directors. The Directors were quite satisfied with the results of the performance
evaluation of the Board & its Committees, Chairman and individual directors.
FAMILIARIZATION PROGRAM FOR THE INDEPENDENT DIRECTORS
In compliance with the requirement of the Listing Regulations, the Company has put in
place a familiarization program for the Independent Directors to familiarize them with
their roles, rights, responsibilities as directors, nature of the industry in which the
Company operates, business model of the Company and related matters. The details of
familiarization program are explained in the Corporate Governance Report. The said details
are also available on the website of the Company at the link
https://setcoauto.com/policies-code-of-conduct/.
NOMINATION AND REMUNERATION POLICY
In terms of requirements prescribed under Section 178 of the Companies Act, 2013, the
Company has framed a Nomination and Remuneration Policy for appointment and remuneration
of the Directors, Key Managerial Personnel and Senior Management (the
"Policy").
The purpose of this Policy is to establish and govern the procedure as applicable inter
alia in respect to the following:
a. To evaluate the performance of the members of the Board.
b. To ensure remuneration to Directors, Key Managerial Personnel and Senior Management
involves a balance between fixed and incentive pay reflecting short and long term
performance objectives appropriate to the working of the Company and its goals.
c. To retain, motivate and promote talent and to ensure long term sustainability of
talented managerial persons and create competitive advantage.
The Policy is available on the website of the Company -
https://setcoauto.com/policies-code-of-conduct/
AUDIT AND ALLIED MATTERS AUDIT COMMITTEE
The composition, terms of reference and meetings of the Audit Committee are disclosed
in the Corporate Governance Report section of the Annual Report. The Audit Committee of
the Board acts in accordance with the terms of reference, which is in compliance with the
provisions of Section 177 of the Act and Regulation 18 of Listing Regulations and other
applicable provisions of Listing Regulations, as amended from time to time.
STATUTORY AUDITOR
In accordance with the provisions of the Companies Act, 2013 and rules thereunder, M/s.
Sharp & Tannan Associates, Chartered Accountants, were appointed Auditors of the
Company for a period of 3 years to hold office from the conclusion of the 39th Annual
General Meeting (AGM) held on September 19, 2022 until the conclusion of the AGM to be
held in the year 2025. The statutory auditors have confirmed that they are not
disqualified from continuing as auditors of the Company.
AUDITORS QUALIFICATION IN CONSOLIDATED AUDITORS REPORT
a. Basis for Qualified Opinion' issued by Statutory Auditors on the subsidiary viz.
Lava Cast Private Limited ('LCPL') vide their report on the standalone Ind AS financial
statement of LCPL, to the extent the same are found significant as per the Guidance issued
by the Institute of Chartered Accountants of India, from time to time and which also forms
the basis for qualified opinion in their audit report on the accompanying consolidated Ind
AS financial Statements of the Group:
"The Company has received a recall notice on 16 January 2023 from its lender i.e.
Bank of Baroda for outstanding loan facilities of Rs. 145.85 Crores (Refer Note No. 14 and
Note No 17 to the financial results). The Balance reflected as per Company's books of
accounts is Rs. 112.53 Crores. As informed to us, the difference is subject to
reconciliation and Company's management is in the process of discussing and resolving this
matter with the lender. In light of the above, we are unable to quantify the consequential
impact on Company's total borrowings, interests and other charges accrued on the results
for the quarter and year ended on March 31, 2023".
b. 'Basis for Qualified Opinion' issued by independent auditor on the subsidiary viz.
WEW Holding Limited ('WEWHL') vide their audit report on the standalone financial
statement of WEWHL, to the extent the same are found significant as per the Guidance
issued by the Institute of Chartered Accountants of India, from time to time and which
also forms the basis for qualified opinion in our audit report on the accompanying
consolidated Ind AS financial Statements of the Group:
"As state in note 6 to the financial statements, Secto Automotive (UK) Limited is
a subsidiary of the Company. Consolidated financial statements have not been prepared as
required by International Financial Reporting Standards (IFRS) 10, Consolidated Financial
Statements. In our opinion, consolidated financial statements are necessary for a proper
understanding of the Group's state of affairs".
c. Basis for Qualified Opinion' issued by independent auditor on the subsidiary viz.
SETCO MEA DMCC, UAE, vide their audit report on the standalone financial statement, to the
extent the same are found significant as per the Guidance issued by the Institute of
Chartered Accountants of India, from time to time and which also forms the basis for
qualified opinion in our audit report on the accompanying consolidated Ind AS financial
Statements of the Group:
"As state in note 2(a) to the financial statements, there is deficiency of net
assets of AED 1,944,407/- as accumulat-
ed losses up to 31 March 2023 of AED 2,078,821/- exceeds share capital of AED
100,000/-. The continuance of the business as going concern is dependent upon the
Company's ability to carry on the business and to generate the profits and the continuous
financial support from the shareholder".
DIRECTORS' COMMENTS ON AUDITORS QUALIFICATION IN CONSOLIDATED AUDITORS REPORT:
a. The difference in figures of liabilities as per Company's records and the record of
the bank is probably an account of penal interest recognized by the bank in past years
when the account was treated as Non-Performing Asset (NPA). In view of the company's
application to the bank for a restructuring of the liabilities, on reconciliation of the
account the difference on either side will be recognized accordingly.
b. The Subsidiaries accounts (WEW Holding Ltd. and Setco Automotive (UK) Ltd.) are not
compiled in accordance with IFRS, Since the there is no major business activities. Since
these accounts are ultimately consolidated with that of the parent Company (Setco
Automotive Ltd) which complies with applicable Accounting Standards (Ind - AS) and the
purpose of disclosures and compliances of Accounting Standards are served.
c. The Setco MEA, DMCC, foreign subsidiary has prepared its financial statement on a
going concern basis. However, the foreign subsidiary has eroded its entire net-worth due
to accumulated losses. In view of review of the revised plan based on potential of the
business and the support of its parent Company, position to meet its liabilities in the
near future, the going concern status of the subsidiary will improve.
COST AUDIT & MAINTENANCE OF COST RECORDS
The appointment of Cost Auditor is not applicable to the Company under Companies (Cost
Records and Audit) Rules, 2014. Further, the maintenance of cost records as prescribed
under provisions of Sec 148(1) of the Companies Act, 2013 are not applicable for the
business activities carried out by the Company.
SECRETARIAL AUDITOR AND SECRETARIAL AUDIT REPORT
Your Company has undertaken Secretarial Audit for the financial year 2022-23 which,
inter alia, includes audit of compliance withtheCompaniesAct,2013and theRulesmade
undertheAct,SEBIListingRegulationsandapplicableRegulationsprescribed by the Securities and
Exchange Board of India and Secretarial Standards issued by the Institute of the Company
Secretaries of India. Pursuant to the provisions of Section 204 of the Companies Act, 2013
and the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the
Board of Directors had appointed M/s. P P Shah & Co., Practicing Company Secretaries
(Membership No.1483, CP No. 436) to conduct the Secretarial Audit of the Company for
financial year 2022-23.
The Secretarial Audit Report for the financial year ended March 31, 2023 is annexed
herewith marked as Annexure A in Form MR-3 to this Report.
Pursuant to Regulation 24A of the Listing Regulations, the Company has obtained Annual
Secretarial Compliance Report from M/s. P P Shah & Co. on compliance of all applicable
SEBI Regulations and circulars / guidelines issued there under and the same were submitted
with the Stock Exchanges.
The observations and comments given by the Secretarial Auditor in the Report are self -
explanatory and hence do not call for any further comments under section 134 of the Act.
SECRETARIAL AUDIT OF MATERIAL UNLISTED INDIAN SUBSIDIARY
Pursuant to provisions of Regulation 24A of SEBI Listing Regulations, Secretarial Audit
was undertaken for our material unlisted subsidiary - Setco Auto Systems Private Limited
and Lava Cast Private Limited. The Secretarial Audit Report for aforesaid material
unlisted subsidiary company is available on Company's website, www.setcoauto.com.
SECRETARIAL STANDARDS
During the year under review, the company has complied with all applicable Secretarial
Standards issued by The Institute of Company Secretaries of India.
CREDIT RATINGS
The Company has not issued any securities and does not have any fixed deposit
programme/borrowing or any scheme or proposal involving mobilization of funds in India or
abroad during the financial year ended 31st March 2023, the Company was not required to
obtain credit ratings in respect of the same.
DIRECTORS' RESPONSIBILITY STATEMENT
Pursuant to the requirements under Section 134(5) of the Act with respect to Directors'
Responsibility Statement, it is hereby confirmed that:
i. In the preparation of the annual accounts for the financial year ended 31st March,
2023, the applicable accounting standards have been followed along with proper explanation
relating to material departures, if any;
ii. 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 your Company as at 31st March, 2023 and of the profit
and loss of the Company for the financial year ended 31st March, 2023;
iii. The Directors had taken proper and sufficient care for the maintenance of adequate
accounting records in accordance with the provisions of the Companies Act, 2013 for
safeguarding the assets of the Company and for preventing and detecting fraud and other
irregularities;
iv. The Directors had prepared the annual financial statements for the financial year
ended March 31, 2023 on a 'going concern' basis;
v. The Directors had laid down internal financial controls to be followed by the
Company and such internal financial controls are adequate and are operating effectively;
and
vi. 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.
CONTRACTS AND ARRANGEMENTS WITH RELATED PARTIES
The Company undertakes various transactions with related parties in the ordinary course
of its business. All transactions entered into with related parties as defined under the
Companies Act, 2013 during the financial year, were in the ordinary course of business and
on an arm's length pricing basis and do not attract the provisions of Section 188 of the
Companies Act, 2013.
All Related Party Transactions are placed before the Audit Committee as also the Board
for approval. The transactions entered into pursuant to the omnibus approval so granted
and a statement giving details of all related party transactions is placed before the
Audit Committee and the Board of Directors for their approval on a quarterly and annual
basis.
There were no materially significant transactions with the related parties during the
financial year, which were in conflict with the interest of the Company and hence,
enclosing of Form AOC-2 is not required. Suitable disclosure as required by the Accounting
Standard (AS-18) has been made in the notes to the Financial Statements.
The Policy on materiality of related party transactions and dealing with related party
transactions may be accessed on the Company's website at the link
https://setcoauto.com/policies-code-of-conduct/.
The details of related party transactions as per Indian Accounting Standards (IND AS) -
24 are set out in Note 32 to the Standalone Financial Statements of the Company.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
The Company has constituted the Corporate Social Responsibility (CSR) Committee in
compliance with Section 135 of the Act read with the Companies (Corporate Social
Responsibility Policy) Rules, 2014. The CSR Committee has formulated a Corporate Social
Responsibility Policy (CSR policy) indicating the activities to be undertaken by the
Company.
The CSR policy may be accessed on the Company's website at the link
https://setcoauto.com/policies-code-of-conduct/.
At present, the CSR Committee of the Board consists of namely Mrs. Urja Harshal Shah,
as Chairperson, Mr. Udit Sheth, Dr. Arun Arora and Ms. Suhasini Sathe, Directors, as
members.
The disclosure with respect to CSR activities forming part of this report is given as Annexure
- B.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO:
A. Conservation of Energy: The operations of the Company are not energy - intensive.
However, the Company takes necessary steps wherever applicable, to conserve energy. To
this extent, employees and operators are regularly educated about saving energy.
B. Technology Absorption: The Company's product i.e. clutches for commercial vehicles
are manufactured under the proprietary technology and heritage 'Lipe' Brand. Most of the
components for manufacturing clutches are procured indigenously except for certain
critical components, for offering better quality at a competitive price to customers,
being imported.
C. Foreign Exchange Earnings and Outgo: Details of foreign exchange earnings and outgo
during the financial year 2022-23, are provided in the Notes to Standalone and
Consolidated Financial Statements of the Company, forming part of this Annual Report.
CORPORATE GOVERNANCE
We comply with the Securities and Exchange Board of India (SEBI)'s guidelines on
Corporate Governance. A report on Corporate Governance alongwith a certificate from the
Secretarial Auditors of the Company regarding the compliance with provisions of corporate
governance as stipulated under Schedule V of the Listing Regulations forms a part of this
Annual Report.
All Board members and senior management personnel have affirmed compliance with the
Code of Conduct for the year 2022-23. A declaration to this effect signed by the Chairman
& Managing Director of the company is contained in this Annual Report.
The Chief Executive Officer/Chief Financial Officer (CEO/CFO) certification as required
under SEBI Listing Regulations and the said certificate is contained in this Annual
Report.
RISK MANAGEMENT
The Company has a well-defined process in place to ensure appropriate identification
and mitigation of risks. Risk identification exercise is inter-woven with the annual
planning cycle which ensures both regularity and comprehensiveness. The identification and
mitigation of strategic, business, operational and process risks are carried out for all
functions. Your Company is committed to managing the risks in a proactive and efficient
manner.
Your Company, through its risk management process, strives to contain impact and
likelihood of the risks within the risk appetite as agreed from time to time with the
Board of Directors.
ANNUAL RETURN
Pursuant to the provisions of Section 134(3) (a) of the Act, the draft annual return as
on 31st March, 2023 prepared in accordance with the provisions of Section 92(3) of the Act
is made available on the website of your Company and can be assessed using the link
https://www.setcoauto.com/Investors.
INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
As per section 124 of the Companies Act, 2013 read with the Investor Education and
Protection Fund Authority (Accounting, Audit, Transfer and Refund) Rules, 2016 and
subsequent amendments thereto ("the Rules"), all shares in respect of which
dividends have not been paid or claimed for seven consecutive years or more shall be
transferred to Investor Education and Protection Fund (IEPF). In line with the aforesaid
provisions, during the year, unclaimed interim dividend declared for the FY 2014-15 &
unclaimed final dividend declared for the FY 2014-15 along with the underlying shares on
which dividend has not been claimed for seven years have been transferred to IEPF. The
List of shareholders whose dividends/ shares have been transferred to IEPF is available on
the website of the company https://setcoauto.com/ investor-education-protection-fund/ and
also the procedure for claiming such unclaimed dividends/ shares from IEPF has been made
available on website of the company
https://setcoauto.com/investor-education-protection-fund/
INTERNAL CONTROLS
The Company has in place a well-established and robust internal control systems which
are commensurate with the nature of its business, size & scale and complexity of its
operations. Internal control systems comprising of policies and procedures are designed to
ensure sound management of the Company's operations, safe keeping of its assets, optimal
utilisation of resources, reliability of its financial information and compliance. Systems
and procedures are periodically reviewed to keep pace with the growing size and complexity
of the Company's operations. The Audit Committee also periodically reviews the adequacy
and effectiveness of internal control systems and provides guidance for further
strengthening them.
During the year under review, no material observation has been made by the Internal
Auditor or Statutory Auditors of the Company in relation to the efficiency and
effectiveness of such controls.
INTERNAL FINANCIAL CONTROLS
The Company has appropriate internal control system in place to ensure reliability of
financial reporting, orderly and efficient conduct of business, compliance with policies,
procedures, safeguarding of assets and economical and efficient use of resources.
Appropriate review and control mechanisms are in place to ensure that such control systems
are adequate and operate effectively.
Audit Committee and the Board review these internal control systems to ensure they
remain effective and are achieving their intended purpose. The Company's internal audit
team conducts periodic audits, checks and has laid down controls to prevent, detect and
correct any irregularities in the operations of the Company.
INDIAN ACCOUNTING STANDARDS (IND AS) 2015
The annexed financial statements comply in all material aspects with the Indian
Accounting Standards (Ind AS) notified under section 133 of the Act [Companies (Indian
Accounting Standards) Rules, 2015] and other relevant provisions of the Act.
CONSOLIDATED FINANCIAL STATEMENTS
The consolidated financial statements of your Company for the financial year ended 31st
March 2023 have been prepared in accordance with the provisions of the Companies Act,
2013, Listing Regulations and the Accounting Standards. The audited consolidated financial
statements, together with the Auditors' Report, form a part of the Annual Report. However,
a statement containing salient features of financial statements of subsidiaries as per 129
(3) of the Act, is included in this Annual Report in form AOC-1 as Annexure - C to
the Directors' Report. Pursuant to the provisions of Section 136 of the Companies Act,
2013 the financial statements, the consolidated financial statements, along with relevant
documents and separate audited accounts in respect of subsidiaries, are available on the
website of the Company and can be assessed using the link
https://setcoauto.com/financial-statements-of-subsidiaries/.
During the financial year under review, no Company has become or ceased to be your
Company's subsidiary or associate. The Company does not have any Joint Venture.
HUMAN RESOURCES
Your Company takes great pride in its Human Capital and takes significant effort in
hiring, advancing and retaining the talent. The Company's comprehensive Human resource
strategy takes cognizance of the key aspects of people development such as employee
engagement, talent management, performance management capability development and
progressive industrial relations. Training and consequent learning, therefore, forms an
important element of each employee's career growth. The endeavor is to build and
strengthen organizational capabilities thereby enabling the Organization to sustain
attractive growth in a dynamic business environment.
Setco ensure that there is full adherence to the code of ethics and fair business
practices. It provides an equal opportunity, employees are evaluated solely on the basis
of their qualifications and performance. The Human Resource function is a business partner
that focusses on improving the way of life, work culture, employee engagement,
productivity, effectiveness and efficiency. The Company believes in developing an
efficient and committed employee base that is aware and empowered.
PREVENTION, PROHIBITION AND REDRESSAL OF SEXUAL HARASSMENT OF WORKMEN AT WORKPLACE
In accordance with the provisions of Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013, the company has framed a Policy on
Prevention of Sexual Harassment at Workplace and constituted an Internal Complaints
Committee for Prohibition, Prevention and Redressal of Sexual Harassment and matters
connected therewith or incidental thereto covering all the related aspects.
All employees (permanent, contract, temporary, trainees) are covered under the policy.
During the year under review, there were no cases reported under the said scheme.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
The Company has a robust vigil mechanism through its Whistle Blower Policy approved and
adopted by Board of Directors of the Company in compliance with the provisions of Section
177 (10) of the Act and Regulation 22 of the Listing Regulations.
The Policy also provides protection to the employees and business associates who report
unethical practices and irregularities.
Your Company has adopted a Vigil Mechanism / whistle blower Policy to enable employees
to raise concerns about unacceptable, improper practices and/or any unethical practices
being carried out in the organisation without the knowledge of management. This Whistle
Blower Policy will also be applicable to the Directors of the Company.
The Audit Committee oversees the vigil mechanism. No employee has been denied access to
the Audit Committee. The Audit Committee reviews on a quarterly basis, reports made under
this policy and implements corrective actions, wherever necessary. The policy has been
appropriately communicated to all the employees and posted on the Company's website at the
link https://setcoauto.com/policies-code-of-conduct/. No such fraud or wrongful conduct
was reported during the year under review.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS
There are no significant or material orders passed by the Regulators or Courts or
Tribunals impacting the going concern status of the Company and its operations in future.
INDUSTRIAL RELATIONS
The relations with the employees have continued to remain cordial.
PARTICULARS OF EMPLOYEES AND RELATED DISCLOSURES
All the employees of Setco Automotive Limited were transferred to Setco Auto Systems
Private Limited w.e.f. 7th September, 2021 and therefore the provisions of section 197 of
the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration
of Managerial Personnel) Rules, 2014 are not applicable to the company.
PROCEEDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE 2016 (IBC')
The Bank of Baroda has filed NCLT petition against the Company as a Corporate Guarantor
and its Subsidiary Lava Cast Private Limited as a Corporate Debtor under Section 7 of the
Insolvency and Bankruptcy Code, 2016 read with Rule 4 of the Insolvency and Bankruptcy
(Application to Adjudicating Authority) Rules 2016. The same has not been admitted by NCLT
till date.
GENERAL
Your Directors state that no disclosure or reporting is required in respect of the
following items as there were no transactions on these items during the year under review:
1. The Company does not Issue equity shares with differential rights as to dividend,
voting or otherwise.
2. One time settlement of loan obtained from the Banks or Financial Institutions.
3. Issue of shares (including sweat equity shares) to employees of the Company under
any scheme save and except ESOS referred to in this Report.
4. Neither the Managing Director nor the Whole-time Directors of the Company received
any remuneration or commission from any of its subsidiaries.
5. None of the Auditors of the Company have reported any fraud as specified under the
second proviso of Section 143 (12) of the Companies Act, 2013 (including any statutory
modification(s) or re-enactment(s) thereof for the time being in force).
6. The Company does not have any scheme or provision of money for the purchase of its
own shares by employees/ Directors or by trustees for the benefit of employees/ Directors.
ACKNOWLEDGEMENTS:
The Board of Directors place on record sincere gratitude and appreciation for all the
employees at all levels for their hard work, solidarity, cooperation and dedication during
the year.
The Board conveys its appreciation for its customers, shareholders, suppliers as well
as vendors, bankers, business associates, regulatory and government authorities for their
continued support
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For and on behalf of the Board |
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Harish Sheth |
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Chairman and Managing Director |
Date: August 14, 2023 |
DIN: 01434459 |
Place: Kalol |
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