BOARDS' REPORT

To

The Members of

Porwal Auto Components Ltd.

Pithampur-454775

1.1 Your directors are pleased to present the 23rd Annual Report together with the Audited financial Statement for the year ended 31st March, 2015.

1.2 OPERATIONS AND FUTURE OUTLOOK

The Indian auto industry has entered the new fiscal on an optimistic note after reporting a 7.22% increase in overall vehicle sales in 2014-15, ending two years of sales fall, on the back of rising demand for passenger vehicles, two wheelers and medium and heavy commercial vehicles. The Passenger Vehicle Segment during the year under review grew by about 5% over the previous year. The Commercial Vehicle Segment remained flat after two years of successive de-growth of about 9% and 16%. Tractors however registered a 13% fall in Sales.

For the current fiscal, the industry expects sales to grow across all segments. In this challenging environ­ment, the company kept its focus on improving operational efficiencies to remain competitive and also facing the tough competition. The company continued its strong growth across major markets, as the automotive sector's revenue is generated primarily by sales of vehicles, parts and accessories. It is expected that FY 2015-16 will be much better for the industry as compared to the last fiscal year and conditions will be more favorable for automobile sector.

Looking to bright prospects in the solar industries and high consumption of power, your Company has set-up solar power generation unit in the financial year 2013-14 at village Kadodiya, Tarana Dist. Ujjain M.P. for captive consumption. By putting solar power generation unit, the company provides electricity units to Madhya Pradesh Paschim Kshetra Vidyut Vitaran Co. Ltd. (MPPVVCL) and receives the credit of the same by the settlement of electricity bill. During the year 2014-15 the Company has earned total receipts of Rs. 402.94 Lacs form solar power generation unit.

1.3 Change in nature of Business

During the year there was no change in business activity of the company.

1.4 Changes in Share Capital

During the Financial Year 2014-15 there was no change in capital structure of the company. The paid up equity capital as on March 31, 2015 was Rs.1510 Lakhs. During the year under review, the company has not issued shares with differential voting rights nor has granted any stock option or sweat equity shares.

1.5 Revision of Annual Financial Statement

There was no case of revision in financial statement during the year.

2. Transfer to Reserves

During the year the Company has not transferred any amount to the reserves.

3. Dividend

In view of the Strengthening position of the Company the Director of the Company have decided not to pay dividend for the year.

4. Deposits

During the year under review, your Company did not accept any deposits within the meaning of provisions of Chapter V - Acceptance of Deposits by Companies of the Companies Act, 2013 read with the Companies (Acceptance of Deposits) Rules, 2014.

5. Material changes and commitments after the end of Financial Year

There are no material changes and commitments affecting financial position of the company which have occurred between the end of the financial year of the company and date of the report.

6. Subsidiary, Associate Companies or Joint Venture

The Company does not have any subsidiary company or associate company or any joint venture or Holding company.

7. Extracts of Annual Return

Pursuant to sub-section 3(a) of Section 134 and sub-section (3) of Section 92 of the Companies Act 2013, read with Rule 12 of the Companies (Management and Administration) Rules, 2014 the extracts of the Annual Return as at March 31, 2015 forms part of this report as Annexure I.

8. Number of Meetings of the Board

During the year under review the Board meets five times viz. May 29, 2014; July 30, 2014; October 30, 2014, January 30, 2015 and March 30, 2015. The details of meetings of the Board and the attendance of Directors are provided in the Corporate Governance Report.

9. Directors' Responsibility Statement

In terms of Section 134(3) (c ) of the Companies Act, 2013, your Directors state that:

a . In the preparation of the Annual Accounts, the applicable Accounting Standards have been followed along with proper explanation relating to material departures.

b . 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 at the end of the financial year and of the profit for the year ended on that period.

c. The Directors 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 frauds and other irregularities.

d . The Directors have had prepared the annual accounts on a going concern basis.

e . The Directors have laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively.

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

10. Reporting of fraud by Statutory Auditors

There were no fraud in the Company; hence no reporting was made by statutory auditors of the Company under sub-section (12) of section 143 of Companies Act, 2013.

11. Appointment and Declaration by Independent Directors

11.1 Appointment of Independent Directors

At the Annual General Meeting held on 29.09.2014, the members approved the appointment of Mr. Nitin Dafira, Mr. Surajmal Kucheria & Mr. Ramesh Kashyap as Independent Directors of the Company for a term of 5 years to hold the office till 31st March, 2019 who are not liable to retire by rotation.

During the year, the Board of Directors at their meeting held on 30.03.2015 have appointed Mrs. Rajni Jain as an Additional Director in the capacity of Non executive Independent Director to hold office up to the date of forthcoming Annual General Meeting.

11.2 Declaration by Independent Directors

All Independent Directors of your Company have given a declaration pursuant to Section 149(7) of the Companies Act, 2013 affirming compliance to the criteria of Independence as laid down under Section 149(6) of the Companies Act, 2013 and Clause 49 of the Listing Agreement with stock exchanges. Based on the declaration(s) of Independent Directors, the Board of Directors recorded its opinion that all Independent Directors are independent of the Management and have fulfilled the conditions as specified in the Companies Act, 2013, rules made thereunder as well as concerning provisions of Clause 49 of the Listing Agreement with stock exchanges.

11.3 Meetings of Independent Directors

During the year under review, a separate meeting of Independent Directors was held on March 30, 2015, interalia, to discuss:

• evaluation of the performance of Non-Independent Directors and Board of Directors as a whole.

• evaluation of the performance of the Chairman of the Company, taking into account the views of the Executive Directors.

• evaluation of the quality, content and timelines of flow of information between the management and the Board that is necessary for the Board to effectively and necessarily perform its duties.

All the Independent Directors were present at the said Meeting.

11.4 Familiarization Programme

The Company shall through its Executive Directors / Senior Managerial Personnel conduct programs / presen­tations periodically to familiarize the Independent Directors with the strategy, operations and functions of the Company.

The details of familiarization programme have been posted on the website of the Company under the web link -<http://www.porwalauto.com/FamiliarisationProgrammeforIndependentDirectors.pdf>

12. Nomination & Remuneration Committee and Stakeholders Relationship Committee

As per the requirement of Section 178 of the Companies Act, 2013 and clause 49 of listing agreement the Company have constituted Nomination and Remuneration Committee and Stakeholders Relationship Commit­tee. The Composition of the above Committees, their terms of reference detailed in the report of Corporate Governance.

13. Remuneration Policy

The Board on the recommendation of the Nomination and Remuneration Committee has approved and adopted a Remuneration Policy for selection and appointment of Directors, Senior Management personnel and their remuneration. The Remuneration Policy of the Company forms part of this report as Annexure II.

14. Auditors

14.1 Statutory Auditor

At the Annual General Meeting held on 29th September 2014, M/s ASSG & Associates, Chartered Accountants (ICAI Firm Registration No. 012120C) were appointed as statutory auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the calendar year 2017. In terms of the first proviso to section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting. Accordingly, the appointment of M/s ASSG & Associates, as statutory auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of section 141 of the Companies Act, 2013.

Explanation to Auditor's Remark

The Board has duly reviewed the statutory Auditors Report on the Accounts. The notes forming part of the accounts referred to in the Auditors Report of the Company are self explanatory and do not call for any further explanation.

14.2 Secretarial Auditor

The Board has appointed Mr. Ashish Nayak, Practicing Company Secretary, to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith marked as Annexure III to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark.

The Board in its meeting held on 10.08.2015 has appointed Ms. Shraddha Jain, Practicing Company Secretary as Secretarial Auditor of the Company to conduct Secretarial Audit for the financial year 2015-16.

14.3 Cost Record and Cost Audit

Your company does not fall within the provisions of Section 148 of Company's Act, 2013 read with the Companies (Cost records & Audit) Rules, 2014, therefore no such records required to be maintained.

15. Particulars of loans, guarantees or investments

Details of loans, guarantees and investments covered under the provisions of Section 186 of the Companies Act, 2013 are given in the Notes to the financial statements.

16. Particulars of contracts or arrangements with Related Parties

All contracts / arrangements / transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on an arm's length basis. During the year, the Company had not entered into any contract / arrangement / transaction with related parties which could be considered material in accordance with the policy of the Company on materiality of related party transactions.

The Policy on materiality of related party transactions and dealing with related party transactions as ap­proved by the Board may be accessed on the Company's website at www.porwalauto.com  

Suitable disclosures as required under AS-18 have been made in the Notes to the financial statements.

17. Conservation of Energy, technology absorption, foreign exchange earnings and outgo

Information as per Companies(Disclosure of particulars in the Report of Board of Directors) Rules, 1988 relating to conservation of energy, technology absorption, foreign exchange earnings and outgo are given in Annexure IV forming part of this report.

18. Risk Management

The Company has developed a Risk Management Policy which laid down the procedures to inform to the Board about the risk assessment and minimization procedures. The main aim to develop a risk management policy is to identify, monitor and take precautionary measures in respect of the events that may pose risks for the business.

19. Corporate Social Responsibility

Your company does not meet the requirements of Section 135 of Companies Act, 2013 for establishing Corporate Social responsibility (CSR) committee; therefore no such committee was established by the Board.

20. Performance Evaluation of the Board

Pursuant to the provisions of section 134 of Companies Act 2013 and Clause 49 of the Listing Agreement, the Board has carried out an annual evaluation of its own performance, performance of the Directors as well as the evaluation of the working of its Committees.

The performance evaluation of the Independent Directors was carried out by the entire Board, excluding the Director being evaluated.

The Nomination and Remuneration Committee has defined the evaluation criteria for the Performance Evalu­ation process for the Board, its Committees and Director including the Independent Directors.

The statement indicating the manner in which formal annual evaluation of the Directors, the Board and Board level Committees are given in detail in the report on Corporate Governance, which forms part of this Annual Report.

21. Directors and Key Managerial Personnel

Mr. Mukesh Jain, retires by rotation at the forthcoming Annual General Meeting, and being eligible offers himself for re-appointment.

During the year, the Board of Directors appointed Mrs. Rajni Jain as an Additional Director in the capacity of Non-Executive Independent Director with effect from 30.03.2015 to hold office up to the date of forthcoming Annual General Meeting. The Board proposed the appointment of Mrs. Rajni Jain as Independent Director for a term of 5 years as per requirement of section 149 of the Companies Act, 2013 as well as Clause 49 of the Listing Agreement to hold the office till 29th March, 2020 on non-rotational basis.

The Company has also received notice in writing from the member as required under section 160 of the Act for proposal for appointment of Mrs. Rajni Jain as Independent Director of the Company at the ensuing Annual General Meeting.

The Board recommends the resolution for approval of members for the above appointments.

During the year under review, the members approved the appointment of Mr. Nitin Dafira, Mr. Surajmal Kucheria & Mr. Ramesh Kashyap as Independent Director for a term of 5 years to hold the office till 31st March, 2019 who are not liable to retire by rotation. The members have also re-appointed Mr. Surendra Jain as Chairman, Mr. Devendra Jain as Managing Director and Mr. Mukesh Jain as Whole Time Director of the Company for further period of three years till 31st July 2017.

At the Board Meeting held on 29th May 2014, Mr. Shailesh Jain appointed as CFO & Ms. Shilpa Gulani appointed as company secretary of the Company.

Disqualifications of Directors

During the year declarations received from the Directors of the Company pursuant to Section 164 of the Companies Act, 2013. Board appraised the same and found that none of the director is disqualified for holding office as director.

22. Code of Conduct

The Company has laid down a code of conduct for all Board members and senior management and Indepen­dent Directors of the Company. All the Board members including independent directors and senior manage­ment personnel have affirmed compliance with the code of conduct.

23. Significant and material orders passed by the regulators or courts

There are no significant or material orders passed by the Regulators / Courts which would impact the future operations / going concern status of the Company.

24. Internal Financial Controls and its adequacy

The Company has comprehensive Internal Financial Controls system for all major processes including financial statements to ensure reliability of reporting. The system also helps management to have timely data on various operational parameters for effective review. It also ensures proper safeguarding of assets across the Company and its economical use. The internal financial controls system of the Company is commensurate with the size, scale and complexity of its operations. The system and controls are periodically reviewed and modified based on the requirement.

The internal and operational audit is entrusted to M/s Jain Praveen and Associates, Chartered Accountants. The main thrust of internal audit is to test and review controls, appraisal of risks and business processes, besides benchmarking controls with best practices in the industry. Based on the audit observations & sugges­tions, follow up & remedial measures are being taken on a regular basis.

25. Audit Committee

The Audit Committee comprises of Mr. Nitin Dafria as Chairman, Mr. Surajmal Kucheria and Mr. Ramesh Kashyap as members. All the recommendations made by the Audit Committee were accepted by the Board. The details of meeting of Audit Committee held during the year, its composition, terms of reference are given in the Report on Corporate Governance.

26. Whistle Blower/Vigil Mechanism Policy

Your Company has established a Whistle Blower/ Vigil Mechanism Policy to enable Directors and employees of the Company to report unethical behavior, actual or suspected fraud or violation of the Company's Code of Conduct. The Policy provides adequate safeguards against victimization of Directors/ employees and direct access to the Chairman of the Audit Committee in exceptional cases.

The Whistle Blower Policy has been disclosed on the Company's at www.porwalauto.com  and circulated to all the Directors and employees.

27. Commission received by directors from holding/subsidiary

The Company does not have any holding/ subsidiary company. Hence provisions of section 197 (14) of Companies Act, 2013 are not applicable to the Company.

28. Disclosure of ratio of remuneration of Directors and Key Managerial Personnel

The prescribed particulars of employees required under section 197(12) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is enclosed as Annexure V and forms the part of this Directors Report

29. Particulars of Employees

During the year, there was no employee drawing remuneration in excess of Rs. 60,00,000/- p.a. or Rs. 5,00,000/- p.m. Accordingly, information required to be given pursuant to provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, has not been given here.

30. Voting Rights of employees

During the year under review the company has not given loan to any employee for purchase of its own shares as per section 67 (3) (c) of Companies Act, 2013.

31. Disclosure regarding issue of Employee Stock Options

The Company does not have issued shares under employee's stock options scheme pursuant to provisions of Section Rule 12(9) of Companies (Share Capital and Debenture Rules, 2014).

Disclosure regarding issue of Sweat Equity Shares

The Company has not issued sweat equity shares pursuant to provisions of Section 54 read with Rule 8 of Companies (Share Capital and Debenture Rules, 2014) during the Financial Year.

Corporate Governance Report

Report on Corporate Governance as required under the Listing Agreement with the Stock Exchange along with the certificate of the Auditors, M/s. ASSG & Associates, confirming compliance of conditions of Corporate Governance as stipulated under Clause 49 of the Listing Agreement with the Stock Exchange are attached to this report as Annexure VI.

Management Discussion and Analysis Statement

Management Discussion and Analysis statement as required under the Listing Agreement with the Stock Exchange are attached to this report as Annexure - VII.

Listing at Stock Exchange

The Equity shares of the Company are listed with BSE Ltd, Mumbai.

Depository System

Your Company's shares are tradable compulsorily in electronic form and your Company has connectivity with both the Depositaries i.e. National Securities Depository Limited (NSDL) and Central Depository Service (India) Limited (CDSL). In view of the numerous advantage offered by the Depository System, members are requested to avail of the facility of Dematerialization of the Company's shares on either of the Depositories mentioned as aforesaid.

Environment and Safety

The Company is conscious of the importance of environmentally clean and safe operations. The Company's policy required conduct of operations in such a manner, so as to ensure safety of all concerned, compliances environmental regulations and preservation of natural resources.

Industrial Relations

Industrial relations remained cordial throughout the year. Your Directors recognize and appreciate the sincere and hard work, loyalty, dedicated efforts and contribution of all the employees in the growth and performance of the Company during the year.

The Company continues to accord a very high priority to both industrial safety and environmental protection and these are ongoing process at the Company's plant and facilities to maintain high awareness levels. The Company as a policy re-evaluates safety standards and practices from time to time in order to raise the bar of safety for its people as well as users and customers.

Disclosure 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 the Workplace, in line with the provisions of the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013 and the Rules made there under. The Policy aims to provide protection to employees at the workplace and prevent and redress complaints of sexual harassment and for matters connected or incidental thereto, with the objective of providing a safe working environment, where employees feel secure. Internal Complaints Committee has been set up to redress complaints received regarding sexual harassment.

It may be noted that during the year 2014-15, no grievance / complaint from any women employee was reported.

Acknowledgements

Your Directors place on record their gratitude to all the Government and semi government departments and Company's Bankers, for the assistance and co-operation and encouragement they extended to the Com­pany. Your Directors also wish to place on record their sincere thanks and appreciation for the continuing support and unstinting efforts of Customer, Vendors, Employees and all other stakeholders in ensuring an excellent all around operational performance.

For & on behalf of the Board of Directors

Porwal Auto Components Limited

SURENDRA JAIN

Chairman

Place: Pithampur

Date: 10.08.2015

Registered office

Plot No. 209, Sector No. 1, Industrial Area, Pithampur (M.P.) 454775