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Corporate Information
  •         DIRECTOR'S REPORT
Bharat Forge Ltd
Industry : Castings & Forgings
BSE Code:500493NSE Symbol:BHARATFORGP/E(TTM):23.62
ISIN Demat:INE465A01025Div & Yield %:0.96EPS(TTM):22.09
Book Value (Rupee ):121.771481Market Cap (Rupee Cr.):24292.09Face Value(Rupee):2
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For the year ended March 31, 2019

To the Members,

Your Directors have pleasure in presenting the 58th [Fifty-Eighth] Annual Report on the business and operations of the Company together with the audited financial statements for the Financial Year ended March 31, 2019.

1. FINANCIAL HIGHLIGHTS

The financial performance of the Company on standalone and consolidated basis for the Financial Year ended March 31, 2019 as compared to previous year is summarised in the following table:

In Rs. Million

Particulars

Standalone

Consolidated

31-Mar~19 31~Mar~18 31-Mar~19 31~Mar~18
Total Income 66,860.07 54,916.37 1,03,485.26 85,566.79
Exports Revenue 37,258.44 29,711.73 73,539.84 61,230.68
Net Profit
Profit for the year before Taxation and Exceptional item 16,230.78 12,638.75 16,103.56 12,915.87
Share of [loss]/ Profit of associates and Joint Venture - - [113.75] [3.78]
Add / [Less]: Exceptional item - [1,332.05] - [954.48]
Provision for Taxation:
Current Tax 5,350.68 4,161.42 5,742.68 4,318.49
Deferred Tax 167.29 72.33 [78.83] 99.44
Profit for the year 10,712.81 7,072.95 10,325.96 7,539.68
Less: Non-controlling interest - - 4.23 [84.76]
Profit for the year attributable to equity holders of parent 10,712.81 7,072.95 10,321.73 7,624.44
Items of other Comprehensive Income for the year [Net of tax] [121.25] 202.71 [118.15] 251.19
Total 10,591.56 7,275.66 10,203.58 7,875.63
Balance of Profit from Previous year 34,083.21 29,429.22 33,676.24 28,493.30
Profit available for Appropriation 44,674.77 36,704.88 43,879.82 36,368.93
Appropriations:
Interim Dividend on Equity Shares 1,163.97 931.18 1,163.97 931.18
Tax on above dividend 239.26 189.56 239.26 189.56
Final Dividend on Equity Shares 1,163.97 1,163.97 1,163.97 1,163.97
Tax on above dividend 239.26 236.96 239.26 236.96
Transferto General Reserve 100.00 100.00 100.00 100.00
Adjustment during the year - - - 71.02
Surplus retained in Statement of Profit and Loss 41,768.31 34,083.21 40,973.36 33,676.24

2. DIVIDEND

The Board, in its meeting held on November 2, 2018 declared an interim dividend of Rs. 2.50 per equity share [i.e.125%] of the face value of Rs. 2/- each aggregating to Rs. 1,163.97 Million plus applicable taxes thereon.

Based on the Company's performance, the Directors are pleased to recommend for approval of the members a final dividend of Rs. 2.50 per equity share [i.e. 125%} of the face value of Rs. 2/- each. The final dividend on equity shares, if approved by the members would involve a cash outflow of Rs. 1,163.97 Million plus a dividend tax of Rs. 239.26 Million.

The total dividend for the financial year ended March 31, 2019, including the proposed final dividend would aggregate to Rs. 2,806.46 Million inclusive of the dividend tax.

The dividend payout has been determined in accordance with the Dividend Distribution Policy of the Company.

Pursuant to Regulation 43A of the 5EBI [Listing Obligations and Disclosure Requirements] Regulations, 2015, the Company had adopted the Dividend Distribution Policy which is attached as Annexure "A" to this report and is also available on the Company's website, at: www.bharatforge.com/investors/corporate-governance/policies .

3. RESERVES

During the year under review, the Company proposes to transferRs. 100.00 Million to the General Reserve.

An amount of Rs. 41,768.31 Million is proposed to be retained as surplus in the Profit and Loss account.

4. PERFORMANCE OF THE COMPANY

The financial year 2018-19 has been a record year for your Company, with strong revenue and profit growth. In the financial year 2018-19, the revenue of the Company increased by 21.75% and Profit after Tax increased by 51.46%, as compared to the last financial year 2017-18 on a standalone basis. Domestic revenue increased by 17.45% to Rs. 29,601.64 Million as compared to last year of Rs. 25,204.64 Million. Whereas export revenue grew by 25.4% to Rs. 37,258 Million as compared to last year of Rs. 29,712 Million. The Balance Sheet of your Company continued to become stronger with the improvement in all the key financial ratios as compared to the last financial year 2017-18. ROCE [Net of Cash] has witnessed sharp growth of 24.7% despite significant new capacity creation and strategic initiatives on e-mobility.

On a consolidated basis, the Company, its subsidiaries and joint venture companies, achieved revenue of Rs. 103,485 Million as against Rs. 85,566.79 Million, a growth of 20.94%. Under International business, the Company recorded highest revenue from heavy vehicle business in LY 2018-19 at Rs. 15,912 Million. The passenger vehicle segment has been on a positive growth from the last five years from Rs. 420 Million in LY 2013-14 to Rs. 4,875 Million in LY 2018-19. Witnessing another good year for Oil & Gas Industry in North America, in the LY 2018-19, the Company recorded highest ever revenues from Industry segment at Rs. 16,471 Million.

During the year, your Company has set-up a facility viz., "The Centre for Light Weighting Technology" at Nellore, Andhra Pradesh. The facility is expected to be operationalized by the third quarter of the financial year 2019-20. The facility will manufacture critical light weight components in Aluminum. The Company has also undertaken an expansion of its forging and machining capacity at Baramati, Pune. This will cater the requirements of Automotive and Industrial market globally.

5. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT, 2013

Particulars of loans, guarantees and investments covered under Section 186 of the Companies Act, 2013, forms part of notes to the financial statement provided in this Annual Report.

6. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES

All contracts or arrangements entered into by the Company with Related Parties are at arm's length basis and are in the ordinary course of business.

Pursuant to Section 134 of the Companies Act, 2013 read with Rule 8[2] of the Companies [Accounts] Rules, 2014, the particulars of transactions with related parties are provided in Lorm AOC-2 which is annexed as Annexure "B" to this report. Related Party disclosures as per Ind AS 24 have been provided in Note 39 to the financial statement.

The Related Party Transaction Policy has been amended in line with the requirements of 5EBI [Listing Obligations and Disclosure Requirements] [Amendment] Regulations, 2018 and adopted effective from April 1, 2019. The revised policy as approved by the Board has been displayed on the Company's website at: www.bharatforge.com/investors/corporate- governance/policies .

7. DEPOSITS

During the year under review, the Company has not accepted any deposit under Chapter V of the Companies Act, 2013.

8. INTERNAL FINANCIAL CONTROLS

The Company has in place adequate internal financial controls with reference to financial statements. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

9. RISK MANAGEMENT

The Company has a robust risk management framework comprising risk governance structure and defined risk management processes. The Board of Directors of the Company has formed a Finance and Risk Management Committee to frame, implement and monitorthe risk management plan forthe Company. The committee is responsible for reviewing the risk management plan and ensuring its effectiveness. The Audit Committee has additional oversight in the area of financial risks and controls. The major risks identified by the businesses and functions are systematically addressed through mitigating actions on a continuing basis. The development and implementation of risk management policy has been covered in the Management Discussion and Analysis [MDA], which forms part of this report.

10. MATERIAL CHANGES AND COMMITMENTS, AFFECTING THE FINANCIAL POSITION OF THE COMPANY

There are no adverse material changes or commitments occurred after March 31, 2019 which may affect the financial position of the Company or may require disclosure.

11. SIGNIFICANT AND MATERIAL ORDERS

There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status and Company's operations in future.

12. STATE OF COMPANY'S AFFAIRS

Discussion on state of affairs of the Company has been covered as part of the Management Discussion and Analysis [MDA]. MDA for the year under review, as stipulated under Regulation 34 of SEBI [Listing Obligations and Disclosure Requirements] Regulations 2015, is presented in a separate section forming part of this Annual Report.

13. SHARE CAPITAL

The paid-up Equity Share Capital of the Company as on March 31, 2019 stood at Rs. 931.27 Million.

During the year under review, the Company has not issued shares with the differential voting rights nor has granted any stock options or sweat equity. As on March 31, 2019, none of the Directors of the Company hold instruments convertible into equity shares of the Company.

14. TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND CIEPF')

Pursuant to the provisions of the Companies Act, 2013 and Investor Education and Protection Fund Authority [Accounting, Audit, Transfer and Refund] Rules, 2016 [IEPF Rules], the declared dividends, which remained unpaid or unclaimed for a period of 7 [seven] years and shares thereof shall be transferred by the Company to the Investor Education and Protection Fund [IEPF] established by the Central Government.

Accordingly, during the year, the Company has transferred the unpaid or unclaimed dividend for a period of 7 [seven] years from the date they became due for payment alongwith the shares thereof, to IEPF. The shareholders have an option to claim their shares and / or amount of dividend transferred from IEPF. No claim shall be entertained against the Company for the amounts and shares so transferred.

The list of equity shareholders whose shares are transferred to IEPF can be accessed on the website of the Company at below mentioned link: www.bharatforge.com/investors/shareholders-information/unclaimed-dividend

The Company has sent notices to respective shareholders who have not claimed dividend for 7 [seven] consecutive years and whose shares are liable to be transferred to IEPF during the financial year 2019-20. The newspaper advertisement stating the same has also been published in the newspapers. The list of equity shareholders whose shares are liable to be transferred to IEPF can be accessed on the website of the Company at below mentioned link: www.bharatforge.com/investors/shareholders-information/unclaimed-dividend

15. EXTRACT OF ANNUAL RETURN

In accordance with Section 134[3][a] of the Companies Act, 2013, an extract of the Annual Return of the Company in Form MGT-9 is appended as Annexure "C" to this Report.

16. DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134[5] of the Companies Act, 2013, Directors confirm that:

a. in preparation of the annual accounts for the financial year ended March 31, 2019, the applicable Accounting Standards have been followed and there were no 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 on March 31, 2019 and of the profit of the Company for that period;

c. they have 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;

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 that such internal financial controls are adequate and are operating effectively; and

f. they have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

17. DIRECTORS AND KEY MANAGERIAL PERSONNEL [KMP)

In terms of provisions of the Companies Act, 2013 and the Articles of Association of the Company, Mr. B. P. Kalyani [DIN : 00267202] and Mr. Kishore Saletore [DIN : 01705850], Directors of the Company, retire by rotation at the ensuing Annual General Meeting and being eligible have offered themselves for re-appointment.

During the year, the Board of Directors of the Company re-appointed Mr. Amit B. Kalyani [DIN : 00089430] as the Executive Director of the Company for a period of 5 [five] years, commencing from May 11, 2019. Further, at the Board Meeting held on May 20, 2019, Mr. Amit B. Kalyani has been re-designated as a Deputy Managing Director of the Company. The appointment is subject to approval of the shareholders. Accordingly, the resolution for re-appointment of Mr. Amit B. Kalyani forms part of Notice convening the 58th Annual General Meeting ["AGM"].

As per the Retirement Policy for Non-Executive Directors of the Company, Mr. Naresh Narad [DIN : 02737423] and Dr. T. Mukherjee [DIN : 00004777] retired from the Board of the Company, from the closure of working hours on March 31, 2019. The Board places on record its sincere appreciation of the contribution made by Mr. Naresh Narad and Dr. T. Mukherjee during their tenure with the Company.

Mr. P. G. Pawar, Mr. 5. M. Thakore, Mrs. Lalita D. Gupte, Mr. Vimal Bhandari and Mr. P. H. Ravikumar were appointed as Non- Executive Independent Directors, for a period of 5 [five] years from September 4, 2014. Based on the recommendation of the Nomination and Remuneration Committee, their re-appointment for a second term of 5 [five] years is proposed at the ensuing AGM for the approval of the Members by way of special resolution.

Further, the Board of Directors in its meeting held on June 21, 2019, appointed Mr. Dipak Mane [DIN : 01215889] and Mr. Murali Sivaraman [DIN : 01461231], as Additional Independent Directors of the Company. The said appointment is till the ensuing Annual General Meeting. The Directors have proposed to appoint Mr. Dipak Mane and Mr. Murali Sivaraman as Independent Directors of the Company, for the period of 5 [five] consecutive years; which is subject to approval of the shareholders of the Company. Accordingly, the resolutions for appointment of Mr. Dipak Mane and Mr. Murali Sivaraman forms part of Notice convening the 58th Annual General Meeting.

The Company has received declarations from all the Independent Directors of the Company confirming that they meet the criteria of independence as prescribed under Section 149[6] of the Companies Act, 2013 and Regulation 25 of SEBI [Listing Obligations and Disclosure Requirements] Regulations, 2015.

The disclosures pertaining to Directors being appointed/re-appointed as required pursuant to Regulation 36 of the SEBI Listing Regulations given in the explanatory statement to the Notice convening the 58th Annual General Meeting of the Company for reference of the shareholders.

18. NUMBER OF MEETINGS OF THE BOARD

The Board met 4 [Four] times during the year. Also a separate meeting of Independent Directors was convened as prescribed under Schedule IV of Companies Act, 2013 was held during the year under review. The details of meetings of Board of Directors are provided in the Report on Corporate Governance that forms part of this Annual Report. The maximum interval between any two meetings did not exceed 120 days as prescribed under the Companies Act, 2013.

19. BOARD 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, SEBI Listing Regulations and the Guidance Note on Board Evaluation issued by the Securities and Exchange Board of India on May 24, 2017. The performance of the board was evaluated by the board after seeking inputs from all the directors on the basis of 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 on the basis of criteria such as, the composition of committees, effectiveness of committee meetings etc. In a separate meeting of independent directors, performance of non-independent directors, the Chairman of the Company and the board as a whole was evaluated, taking into account the views of executive directors and non-executive directors.

The Board and the Nomination and Remuneration Committee reviewed the performance of individual directors on the basis of criteria such as, the contribution of the individual director to the board and committee meetings like preparedness on the issues to be discussed, meaningful and constructive contribution and inputs in meetings etc.

In the board meeting that followed the meeting of the independent directors and meeting of Nomination and Remuneration Committee, 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.

20. FAMILIARISATION PROGRAMME

The Company, on a regular basis, makes detailed presentations to the entire Board including Independent Directors on the Company's operations and business plans, strategy, global and domestic business environment and the business model of its respective businesses. Such presentations are made by the senior management/leadership team/function heads so that the Independent Directors can have direct interaction with them. The Board members are provided with necessary documents/ brochures, reports and internal policies to enable them to familiarise with the Company's procedures and practices.

The Independent Directors were also briefed regularly on the R&D and Innovation initiatives in the Company.

The details of programmes for familarisation for Independent Directors are posted on the website of the Company and can be accessed at: www.bharatforge.com/assets/pdf/investor/familiarisation-programme-for-independent-directors

21. BUSINESS RESPONSIBILITY REPORT

The 5EBI [Listing Obligations and Disclosure Requirements] Regulations, 2015 ["Regulation"] mandates inclusion of the Business Responsibility Report [BRR] as a part of Annual Report of Top 500 Listed entities based on market capitalization. In compliance with the Regulation, we have provided the BRR as a part of this Annual Report.

22. INFORMATION PURSUANTTO RULES OFTHE COMPANIES (APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES, 2014

Sr. No. Information Required Input
1 The ratio of the remuneration of each director to the median remuneration of the employees of the Company for the financial year Please refer Annexure "D"
2 The percentage increase in remuneration of each director, Chief Linancial Officer, Chief Executive Officer, Company Secretary or Manager, if any, in the financial year; Please refer Annexure "D"
3 The percentage increase in the median remuneration of employees in the financial year 18.60%
4 The number of permanent employees on the rolls of Company 4,711
5 Average percentile increase already made in the salaries of employees other than the managerial personnel in the last financial year and its comparison with the percentile increase in the managerial remuneration and justification thereof and point out if there are any exceptional circumstances for increase in the managerial remuneration Percentage increase in salaries of managerial personnel at 50th Percentile is: 15.16% Percentage increase in salaries of non- managerial personnel at 50th Percentile is: 16.91%
The increase in remuneration is not solely based on Company performance but also includes various other factors like individual performance, experience, skill sets, academic background, industry trends, economic situation and future growth prospects etc. besides Company performance. There are no exceptional circumstances for increase in the managerial remuneration.
6 Affirmation that the remuneration is as per the remuneration policy of the Company. The remuneration paid to the Directors is as per the Remuneration policy of the Company.
7 Statement showing the names of the top ten employees in terms of remuneration drawn and the name of every employee, who- Please refer Annexure "E"
[i] if employed throughout the financial year, was in receipt of remuneration for that year which, in the aggregate, was not less than one crore and two lakh rupees;
[ii] if employed for a part of the financial year, was in receipt of remuneration for any part of that year, at a rate which, in the aggregate, was not less than eight lakh and fifty thousand rupees per month;
[iii] if employed throughout the financial year or part thereof, was in receipt of remuneration in that year which, in the aggregate, or as the case may be, at a rate which, in the aggregate, is in excess of that drawn by the managing director or whole-time director or manager and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the Company.

23. NOMINATION AND REMUNERATION POLICY

During the year, the Company has revised the Nomination and Remuneration Policy, in accordance with the SEBI [Listing Obligations and Disclosure Requirements] [Amendment] Regulations, 2018. The salient features of the Policy and changes therein are set out in the Corporate Governance Report which forms part of this Annual Report.

The said Policy of the Company, inter alia, provides that the Nomination and Remuneration Committee shall formulate the criteria for appointment of Directors on the Board of the Company and persons holding Senior Management positions in the Company, including their remuneration and other matters as provided under Section 178 of the Companies Act, 2013 and SEBI Listing Regulations. The Policy is also available on the Company's website at: www.bharatforge.com/ investors/corporate-governance/policies

24. CORPORATE GOVERNANCE

The Company is committed to maintain the highest standards of Corporate Governance and adhere to the Corporate Governance requirements set out by SEBI. The Company has implemented several best Corporate Governance practices as prevalent globally. The report on Corporate Governance as stipulated under the SEBI [Listing Obligations and Disclosures Requirements] Regulations, 2015 forms an integral part of this Annual Report. The requisite certificate from the Practicing Company Secretary confirming compliance with the conditions of Corporate Governance is attached to the report on Corporate Governance.

25. SUBSIDIARIES, JOINT VENTURES AND ASSOCIATE COMPANIES

During the year under review, the Board approved acquisition of 35.26% stake in Tevva Motors [Jersey] Limited, Jersey. Tevva Motors is the world's leading developer of Electric Ranged Extended Vehicles [EREVs] and also developing sophisticated software for autonomous vehicle pollution management in urban and in environmentally sensitive locations.

As on March 31, 2019, the Company has 22 [Twenty Two] subsidiaries [including step down subsidiaries] and 2 [Two] Associate Companies. In accordance with Section 129[3] of the Companies Act, 2013, the Company has prepared the consolidated financial statement, which forms part of this Annual Report. Further, a statement containing salient features of the financial statements of our subsidiaries in the prescribed Form AOC-1 is presented in a separate section forming part of the financial statements.

Pursuant to Section 136 of the Companies Act, 2013, the audited financial statements, including the consolidated financial statements and related information of the Company and separate audited accounts in respect of subsidiaries, are available on the website of the Company at: http://bharatforge.com .

The Policy on Material Subsidiaries has been amended in line with the requirements of the SEBI [Listing Obligations and Disclosure Requirements] [Amendment] Regulations, 2018 and adopted w.e.f. April 1, 2019. The key changes include, inter-alia, the definition of material subsidiary. Pursuant to revised Policy and as per consolidated audited Financial Statements for the year ended March 31, 2019, Bharat Forge CDP GmbH, Bharat Forge International Limited and Bharat Forge Global Holding GmbH have become material subsidiaries of the Company.

26. AUDIT COMMITTEE

The Audit Committee comprises of Mr. P. G. Pawar- Chairman of the Committee and Independent Director, Mr. S. M. Thakore - Independent Director, Mr. P. H. Ravikumar - Independent Director and Mr. P. C. Bhalerao - Non-Executive Director.

All the recommendations made by the Audit Committee were deliberated and accepted by the Board during the financial year 2018-19.

27. AUDITORS

A. Statutory Auditors and Audit Report

At the 56th Annual General Meeting of the Company held on August 10, 2017, M/s. S R B C & CO LLP, Chartered Accountants, Pune [Firm Registration No. 324982E/E300003] were appointed as Statutory Auditors to hold office upto the conclusion of the 61st Annual General Meeting of the Company to be held in the year 2022, subject to ratification of appointment at every Annual General Meeting. However, the Companies [Amendment] Act, 2017, published in the Gazette of India on January 3, 2018, omitted first proviso to Section 139[1] of Companies Act 2013, which provided for ratification of appointment of Statutory Auditors by members at every AGM. The said amendment has been effective from May 7, 2018.

In view of the above, at the 57th Annual General Meeting of the Company held on August 9, 2018, the members of the Company ratified the appointment of M/s. S R B C & CO LLP, Chartered Accountants, Pune [Firm Registration No. 324982E/E300003], as Statutory Auditors of the Company, upto the conclusion of the 61st Annual General Meeting of the Company to be held in the year 2022 and the Statutory Auditors are not liable for ratification at every Annual General Meeting.

The Auditor's Report for FY 2018-19 does not contain any qualification, reservation or adverse remark. The Auditor's Report is enclosed with the Financial Statements in this Annual Report.

B. Secretarial Auditor and the Audit

The Board has appointed M/s. SVD & Associates, Company Secretaries, Pune, to conduct Secretarial Audit for the financial year 2018-19. The Secretarial Audit Report for the financial year ended March 31, 2019 is appended as Annexure "F" to this report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

Further, as required under Section 204 of the Companies Act, 2013 and Rules thereunder, the Board has appointed M/s. SVD & Associates, Company Secretaries, Pune, to conduct Secretarial Audit for the financial year 2019-20.

C. Cost Auditors

The Board of Directors, on the recommendation of Audit Committee, has appointed M/s. Dhananjay V. Joshi & Associates, Cost Accountants, Pune, [Firm Registration No. : 00030] as Cost Auditors to audit the cost accounts of the Company for the financial year 2019-20. As required under the Companies Act, 2013, a resolution seeking Member's approval for the remuneration payable to the Cost Auditors forms part of Notice convening the 58th Annual General Meeting.

The Cost Audit report for the Financial Year 2017-18 was filed with the Ministry of Corporate Affairs on October 8, 2018.

D. Reporting of fraud by auditors

During the year under review, the Auditors of the Company have not reported any fraud as specified under Section 143[12] of the Companies Act, 2013 to the Audit Committee.

28. CORPORATE SOCIAL RESPONSIBILITY ACTIVITIES

The Company has been carrying out various Corporate Social Responsibility [CSR] activities. These activities are carried out in terms of Section 135 read with Schedule VII of the Companies Act, 2013 as amended from time to time and the Companies [Corporate Social Responsibility Policy] Rules, 2014.

The brief outline of the Corporate Social Responsibility [CSR] policy of the Company and the initiatives undertaken by the Company on CSR activities during the year under review are set out in Annexure "G" of this report in the format prescribed in the Companies [Corporate Social Responsibility Policy] Rules, 2014. For other details regarding the CSR Committee, please refer to the Corporate Governance Report, which is a part of this report. The CSR policy is also available on the Company's website at the link: www.bharatforge.com/investor/policy

29. OBLIGATION OF COMPANY UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013

The Company has zero tolerance for sexual harassment at workplace and has adopted a Policy on prevention, prohibition and redressal of sexual harassment at workplace in line with the provisions of the Sexual Harassment of Women at Workplace [Prevention, Prohibition and Redressal] Act, 2013 and the Rules made thereunder for prevention and redressal of complaints of sexual harassment at workplace. All women associates [permanent, temporary, contractual and trainees] as well as any women visiting the Company's office premises or women service providers are covered under this Policy.

During the year under review, no complaints were received by the Committee constituted under the Sexual Harassment of Women at Workplace [Prevention, Prohibition and Redressal] Act, 2013, which has been resolved.

30. VIGIL MECHANISM

The Company has formulated a Whistle Blower Policy, wherein the Employees / Directors / Stakeholders of the Company are free to report any unethical or improper activity, actual or suspected fraud or violation of the Company's Code of Conduct. The policy provides for a mechanism to report such concerns to the Audit Committee through specified channels. This mechanism provides safeguards against victimisation of Employees, who report under the said mechanism. During the year, the Whistleblower Policy was amended and adopted w.e.f. April 1, 2019 in line with SEBI [Listing Obligations and Disclosure Requirements] [Amendment] Regulations, 2018 enabling employees to report instances of leak of Unpublished Price Sensitive Information [UPSI].

During the year under review, the Company has not received any complaints under the said mechanism. The Whistle Blower Policy of the Company has been displayed on the Company's website at the link: www.bharatforge.com/investors/corporate-governance/policies

31. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The particulars relating to conservation of energy, technology absorption, foreign exchange earnings and outgo, as required to be disclosed under Section 134[3][m] of the Companies Act, 2013 read with Rule 8 of the Companies [Accounts] Rules, 2014 are appended as Annexure "H" to this report.

32. GREEN INITIATIVES

The Company supports and pursues the "Green Initiative'' of the Ministry of Corporate Affairs, Government of India. The Company has effected electronic delivery of Notice of Annual General Meeting and Annual Report to those Members whose e-mail IDs are registered with the Company / Depository Participants. The Companies Act, 2013 and the underlying rules as well as Regulation 36 of Securities and Exchange Board of India [Listing Obligations and Disclosure Requirements] Regulations, 2015, permit the dissemination of financial statements and annual report in electronic mode to the Members.

For members who have not registered their email addresses, physical copies are sent in the permitted mode.

Your Directors are thankful to the Members for actively participating in the Green Initiative and seek your continued support for implementation of the green initiative.

33. COMPLIANCE WITH SECRETARIAL STANDARDS

The Company complies with all applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

34. ACKNOWLEDGEMENT

Your Directors would like to express their sincere appreciation of the positive co-operation received from the Central Government, the Government of Maharashtra, Financial Institutions and the Bankers. The Directors also wish to place on record their deep sense of appreciation for the commitment displayed by all executives, officers, workers and staff of the Company resulting in the successful performance of the Company during the year.

The Board also takes this opportunity to express its deep gratitude for the continued co-operation and support received from its valued shareholders.

The Directors express their special thanks to Mr. B. N. Kalyani, Chairman and Managing Director, for his untiring efforts for the progress of the Company.

For and on behalf of the Board of Directors

B. N. KALYANI

Chairman and Managing Director

Pune: June 21, 2019

Annexure "A"

DIVIDEND DISTRIBUTION POLICY

1. INTRODUCTION

The Securities and Exchange Board of India ['SEBI'] vide notification dated July 8, 2016 has amended the SEBI [Listing Obligations and Disclosure Requirements] Regulations, 2015 ['SEBI LODR'] whereby it has become mandatory for top five hundred listed companies [based on their market capitalization calculated as on 31st day of March every year to formulate Dividend Distribution Policy and make appropriate disclosures in terms of SEBI LODR in their Annual Reports and on the Company's website.

Accordingly, based on the parameters prescribed by SEBI, the Company has adopted this Policy titled "Dividend Distribution Policy of Bharat Forge Limited" ["The Policy"].

2. PURPOSE AND APPLICABILITY

This Policy reflects the intent of the Company to reward its shareholders by sharing a portion of its distributable profits after retaining sufficient funds for its future growth initiatives and maintaining the financial soundness of the Company. The purpose of this Policy is also to lay down criteria to be considered by the Board of Directors of the Company ["The Board"] in taking decision for recommending dividend to its shareholders for any financial year.

This Policy shall deem to have come into force with effect from the date written herein below.

This Policy shall not apply to:

a] determination and declaration of dividend on preference shares, if any, issued or to be issued by the Company, since dividend on preference shares will always be as per the terms of issue approved by the Shareholders;

b] distribution of dividend in kind, i.e. by issuance of fully or partly paid-up bonus shares [whether equity or preference shares] or other securities;

c] distribution of cash [i] as an alternative to payment of dividend, if any, permissible under the Companies Act, 2013 ["The Act"]; [ii] by way of buy-back of equity shares; [iii] reduction in share capital of the Company; and [iv] on account of fraction entitlement due to sub-division, split of securities or any other similar such corporate action by the Company.

3. DIVIDEND

For the purpose of this Policy, the term "Dividend" means distributable profits of the Company, which are available for distribution in accordance with the provisions of Clause 4 below to the equity shareholders in proportion to the amount paid-up on equity shares held by them. The term "Dividend" also includes Interim Dividend.

4. STATUTORY/OTHER REQUIREMENTS

The Board is expected to adhere to the following while making recommendations to the Shareholders for their approval on dividend payout during any financial year:

a] Companies Act, 2013 and applicable rules thereunder;

b] SEBI [Listing Obligations and Disclosure Requirements] Regulations 2015, as amended from time-to-time;

c] Any other applicable laws for the time being in force; and

d] Financial covenants as may be stipulated by lenders of the Company.

5. THE INTERNAL AND EXTERNAL FACTORS THAT SHALL BE CONSIDERED FOR DECLARATION OF DIVIDEND

5.1 The Board of the Company shall take a decision to declare dividend after taking into account the following internal and external factors:

A. Internal Factors:

The Board shall, among others, consider the following Indicative internal factors [which are illustrative and not exhaustive] while taking a decision for declaration of dividend:

a] The un-consolidated profits of the Company made during the year;

b] Obligations towards the creditors;

c] Business Plans;

d] Expansion plans;

e] Corporate Restructuring plans;

f] Scheme of arrangement, if any; or

g] Any other factors which can have possible material financial implications on the Company.

B. External Factors :

In addition to the above, the Board shall, among others, consider the following indicative external factors [which are illustrative and not exhaustive] while taking a decision for declaration of dividend:

a] Macro-economic environment;

b] Indian/Global Capital Markets;

c] Industry outlook [domestic as also global] for business in which Company operates;

d] Change in taxation laws and economic/trade policies/global trade agreements;

e] Geo-political reasons or

f] Any other external factors which can have a material financial implications on the Company.

5.2 Circumstances under which the Board of the Company may or may not recommend / declare dividend :

Subject to the criteria and other provisions of this Policy, the Board may in its absolute discretion decide not to recommend / declare any dividend for any financial year, including for the reason such as inadequate un-consolidated profits after tax or the growth initiatives of the Company, do not warrant distribution of profits.

5.3 Financial parameters that shall be considered while declaring dividend :

In cases where the Board considers it appropriate to declare Interim Dividend, then for the purposes of declaring Interim Dividend, the Board shall consider un-consolidated profit aftertax [PAT] and overall financial projections for the unexpired potion of the financial year. In cases where the Board considers it appropriate to recommend final dividend for declaration, then for the purposes of declaration of final dividend, the Board shall consider un-consolidated profit after tax, Interim Dividend declared, if any, and earnings that the Board deems appropriate to be carried to reserves to maintain financial health and to fund growth initiatives of the Company. Considering these aspects including the other criteria laid down in this Policy, the Board shall endeavor to maintain an annual dividend payout range of 15% to 35% of the un-consolidated profit after tax of the Company.

6. MANNER OF DIVIDEND PAYOUT

6.1 Final Dividend:

a] The Board shall recommend final dividend usually in the Board Meeting that considers and approves the annual financial statements of the Company.

b] The final dividend, if any, that the Board may consider shall factor Interim Dividend, if any, that it might have declared during the applicable financial year.

6.2 Interim Dividend:

a] The Board may declare Interim Dividend at its complete discretion in line with this Policy, based on distributable profits arrived at on quarterly or half-yearly financial results of the Company.

b] In case no Final Dividend is declared, Interim Dividend paid during the year, if any, will be regarded as Final Dividend for confirmation of shareholders in the Annual General Meeting.

7. MANNER OF UTILISATION OF RETAINED EARNINGS

The Board may consider retained earnings considering weighted average cost of capital in application for growth initiatives, if any, and increase in stakeholder's value from long term perspective. The decision of utilization of the retained earnings of the Company will, among other, be based on the following factors:

a] Strategic and long term plans of the Company;

b] Organic and in-organic growth opportunities available to the Company;

c] Non-fund based needs of the Company, its subsidiaries and Joint Ventures which may require the Company to have a healthy consolidated balance sheet;

d] Decision for issue of bonus, buy-back etc.; and

e] Any other criteria which the Board of the Company may consider appropriate.

8. PARAMETERS TO BE ADOPTED WITH REGARD TO VARIOUS CLASSES OF SHARES

Presently, the Company has only one class of shares i.e. equity shares. As and when it proposes to issue any other class of shares, this policy shall be accordingly modified, if necessary, to cover such other class of securities.

9. DISCLOSURES

The Company shall disclose the Policy on its website and a web link thereto shall be provided in the Annual Report.

10. SCOPE AND LIMITATION

In the event of any conflict between the provisions of this Policy and 5EBI LODR or the Act or any other statutory enactments, rules [collectively "Laws"], the provisions of Laws shall prevail over this Policy.

11. AMENDMENTS AND UPDATIONS

To the extent any change/amendment is required in terms of any applicable law or change in regulations, the regulations shall prevail over this Policy. In such a case, the provisions in this Policy would be modified in due course to make it consistent with such amended law and the amended policy shall be placed before the Board for noting and necessary ratification.

12. REVIEW OF POLICY

The Board of Directors will review the policy periodically and consider modifying, amending, deleting any of the provisions of this Policy. If the Board, at any time, proposes to declare dividend[s] on the basis of criteria other than those specified in this Policy, or proposes to modify any of the criteria, then it shall disclose such changes along with the rationale for the same to the Shareholders on the Company's website and in the Annual Report.

13. DISCLAIMER

This Policy does not purport to or solicit investment in the Company's securities nor this Policy purports to provide any kind of assurance to Shareholders of any guaranteed returns [in any form], for investments in the Company's equity shares.