The Directors have pleasure in presenting the Twelfth Annual Report together with the accounts for the year ended March 31, 2017 and other prescribed particulars:
1. State of Company''''s affairs
1.1 Financial Performance
The financial highlights for the year under review are as follows:
Sales and Operating Revenues
Profit Before Tax (PBT)
Provision for Tax
Profit After tax (PAT)
Surplus brought forward
Amount available for appropriation
Key performance indicators, operational performance and balance sheet summary are furnished in page nos. 4-5 of this annual report.
The Sales and Other Operating Revenue grew by 8.7%.The Profit before tax improved by 19.4% over the previous year. Earnings per share for the year 2016-17 was Rs. 43.86 as against Rs.32.54 in the previous year.
There was no material changes and commitments, affecting the financial position of the Company between the end of the financial year of the Company and the date of the report other than those disclosed in the financial statements.
There was no change in nature of business during the year. The Company is a subsidiary company of Rane Holdings Limited (RHL/holding company). The Company does not have any subsidiary, associate or joint venture.
During the year 2016-17, the board of directors declared an interim dividend of 60% (i.e., Rs.6/- per share of Rs.10/- each, fully paid-up) and the same was paid on February 9, 2017 to all the eligible shareholders whose name appeared in the register of members of the Company as on February 2, 2017, being the Record Date fixed for this purpose.
The board of directors of the have considered and recommended a final dividend of 90% (i.e Rs.9/-per share of Rs.10/- each, fully paid-up) for approval of shareholders at the ensuing twelfth Annual General Meeting (AGM) to be held on August 23, 2017 The total dividend amount inclusive of distribution tax, surcharge and cess thereon would be Rs.8.57 Crores. The final dividend, if declared by the shareholders, will be paid on August 30, 2017 to all the eligible shareholders whose name appears in the register of members of the Company as on August 16, 2017, being the Record Date fixed for this purpose.
1.3 Management Discussion & Analysis
Your Company is engaged in the manufacturing and marketing of auto components for transportation industry viz., friction material (Brake Linings, Clutch Facings, Clutch Buttons, Disc Pads, Brake Shoes and Brake Blocks). A detailed analysis on the performance of the industry, the Company, internal control systems, risk management are discussed in the Management Discussion and Analysis report forming part of this report and annexed as Annexure A''''.
2. Board of Directors
The composition of the Board of Directors of the Company is furnished in the Corporate Governance Report annexed to this report.
Mr. S A Murali Prasad (DIN: 00001432) retired as per retirement policy of the company, with effective from the conclusion of meeting of Board of Directors held on October 25, 2016 and the board places on record its appreciation for his valuable contributions to the organisation during his tenure.
During the year, Mr. P S Kumar (DIN: 00267280) was coopted to the Board as an additional director (in the category of Non-Executive, Independent) with effect from January 20, 2017 based on the recommendation of the Nomination and Remuneration Committee. The appointment of Mr. P S Kumar is subject to the approval of the shareholders at the ensuing 12th AGM in the first term, effective from January 20, 2017 till the conclusion of 14th AGM
Mr. S Sandilya (DIN: 00037542), Mr Anil Kumar V Epur (DIN: 00202454), Mr. S C Gupta (DIN: 02085068), appointed as Independent Directors by the shareholders at the 9th AGM held on July 22, 2014, for a period of three years, hold office upto the conclusion of the ensuing 12th AGM.
Based on the Board evaluation, the Nomination and Remuneration Committee at its meeting held on May 17, 2017, have recommended their re-appointment as Independent Directors, for a second term as set out in the notice convening the 12th AGM which contains necessary resolution for their re-appointment for a second term, by way of special resolution.
The terms and conditions of appointment of independent directors have been disclosed on the website of the Company and available at http://ranegroup.com/pdf/investors/rbl/rbltermsid.pdf
All 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 Companies Act 2013 (Act) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR).
2.2 Retirement by rotation
At the ensuing Annual General Meeting (AGM), Mr. Kazuhiro Iwata (DIN: 06875329), retires by rotation and being eligible, offers himself for re-appointment. The notice convening the AGM includes the proposal for his re-appointment as director.
2.3 Board Meetings
A calendar of meetings is prepared and circulated in advance to the directors. During the year, five (5) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening period between two consecutive meetings was less than 120 days.
2.4 Meeting of Independent Directors
During the year, one separate meeting of Independent Directors was held. In the said meeting, the independent directors assessed the quality, quantity and timeliness of flow of information between the management and the Board at the meeting and expressed that the current flow of information and contents were adequate for the Board to effectively perform its duties. They also reviewed the performance of the non-independent directors and the board as a whole and the performance of the chairperson of the Company taking into account the views of executive directors and other non-executive directors.
3. Board and Management
3.1 Board evaluation
During the year, a formal process for annual evaluation of performance of Board, its committees and directors individually was carried out as per the criteria laid down by the Nomination and Remuneration Committee, pursuant to the provisions of the Companies Act, 2013 (CA 2013) and SEBI LODR.
The criteria for evaluation of board and its committees were founded on the structure, composition, board-management relationship, effectiveness in terms of roles and responsibilities and processes encompassing the information flow and functioning. The guiding standards for the assessment of performance of directors (including the independent directors) were their attendance and participation at board meetings, sharing of their relevant domain expertise, networking in other forums, their strategic inputs and demonstration towards governance compliances.
For evaluation of performance of the Chairman additional aspects like institutional image building, providing guidance on strategy and performance, maintaining an effective and healthy relationship between the board and the management were taken into consideration.
The evaluation was carried out through a structured methodology approved by the Nomination and Remuneration Committee after ensuring that the aspects under each of the laid down criteria are comprehensive and commensurate with the size of the board and the Company. The Nomination and Remuneration Committee, reviews and makes recommendation to the board, from time to time, for ensuring an optimum composition of the Board and its Committees, induction of directors into the Board, participation on the Board effectiveness and evaluation process. The outcome of the evaluation also forms the basis for the Nomination and Remuneration Committee while considering re-appointment of Directors and appointment in various Committee(s) of the Board.
3.2 Familiarisation program for independent directors
The familiarisation program for independent directors and details of familiarisation program for independent directors has been put up on the website and available at http://ranegroup.com/ ranebrakelining/rblinvestors.html
3.3. Key Managerial Personnel
Mr. Vinay Lakshman, Managing Director (MD), Mr. M A P Sridhar Kumar, Vice President - Finance & Chief Financial Officer (CFO] and Mr. Venkatraman, Secretary hold the office of Key Managerial Personnel within the meaning of Section 2(51) of the Companies Act, 2013.
During the year there was no change in the Key Managerial Personnel (KMP).
3.4 Remuneration policy
The Nomination and Remuneration Committee has laid down a policy on appointment and remuneration of Directors, Key Managerial Personnel (KMP) and Senior Management Personnel (SMP). The same is annexed herewith as ‘Annexure - B''''.
4.1 Audit Committee
In terms of the provisions of Section 177 of the Companies Act, 2013 and Regulation 18 of SEBI LODR, the Audit Committee of the Board acts in accordance with terms of reference prescribed therein. Detailed disclosure on compositions, terms of reference and meetings of the Audit Committee are furnished in the Corporate Governance Report.
4.2 Statutory Auditors
M/s. Varma & Varma, Chartered Accountants were appointed as Statutory Auditors at the ninth AGM held on July 22, 2014, for a period of three years i.e., until the conclusion of the ensuing twelfth AGM, subject to ratification by members at every AGM.
Pursuant to the provisions of Section 139, 141 read with Companies [Audit and Auditors) Rules, 2014 and any other applicable provisions of the Act, including rules made thereunder, the Audit Committee at its meeting held on May 17, 2017 has reviewed the proposal to re-appoint M/s. Varma & Varma as Statutory Auditors of the Company for a second term of five consecutive years commencing from the conclusion of 12th AGM [2017) untill the conclusion of 17th AGM [2022) and recommended the same to the board for proposing it to the shareholders at the ensuing 12th AGM.
The Company has received a letter from M/s. Varma & Varma consenting to the re-appointment and confirmation to the effect that their appointment, if made, would be within the prescribed limits and that they do not suffer from any disqualification under Section 141 of the Companies Act, 2013 and the rules made thereunder. M/s. Varma & Varma have also submitted the peer review certificate issued to them by The Institute of Chartered Accountants of India. The notice of the ensuing 12th AGM contains necessary resolution in this regard. Members may consider appointing M/s. Varma & Varma as Statutory Auditors of the Company as per the provisions of the Companies Act, 2013 till the conclusion of the 17th AGM [2022).
During the year under review, the Auditors have not reported any matter under Section 143 [12) of the Act and therefore no detail is required to be disclosed under Section 134[3)[ca) of the Companies Act, 2013. The Statutory Auditors'''' Report to the members for the year ended March 31, 2017 does not contain any qualification, reservation, adverse remark or disclaimer.
4.3 Cost Audit
Cost audit is not applicable to the Company as per the threshold limits prescribed under Companies [Cost Records and Audit) Rules, 2014.
4.4 Secretarial Auditors
The Company had appointed M/s. S Krishnamurthy & Co., Company Secretaries in practice, to undertake the Secretarial Audit of the Company. The report on the Secretarial Audit carried out for the year 2016-17 is annexed herewith as ''''Annexure C''''. The secretarial audit report does not contain any qualification, reservation, adverse remark or disclaimer..
4.5 Internal Auditors
The Company continues to engage M/s. Capri Assurance and Advisory Services, a firm of independent assurance service professionals, as Internal Auditors of the Company. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, and assessing the internal control strengths in all areas. Internal Auditors findings are discussed with the process owners and suitable corrective actions are taken as per the directions of Audit Committee on a regular basis to improve efficiency in operations.
5. Directors'''' responsibility statement
In terms of Section 134(3)(c) read with section 134(5) of the Companies Act, 2013, the directors, to the best of their knowledge and belief based on the information and explanations obtained by them, confirm that:
i. in the preparation of the financial statements for the financial year 2016-17, the applicable accounting standards had been followed and there were no material departures;
ii. they had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 of the Company for the year under review;
iii. they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company, preventing and detecting fraud and other irregularities;
iv. they had prepared the financial statements for the financial year on a ''''going concern'''' basis ;
v. they had laid down internal financial controls to be followed by the Company and such internal financial controls were adequate and were operating effectively ; and
vi. they had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.
6. Related Party Transactions
All related party transactions that were entered into during the financial year were on an arm''''s length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Related Parties which may have potential conflict with the interest of the Company at large.
All Related Party Transactions are placed before the Audit Committee for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are foreseen and repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted are reviewed by the Audit Committee on a quarterly basis.
The Company has put in place proper system for identification and monitoring of such transactions. The policy on Related Party Transactions as approved by the Board is uploaded on the Company''''s website (http://ranegroup.com/pdf/policies/rblrpt. pdf). None of the Directors or Key Managerial Personnel or Senior Management Personnel has any material financial and commercial transactions, where they have personal interest, which may have potential conflict with interest of the Company at large.
.7. Corporate Social Responsibility (CSR)
The vision on Corporate Social Responsibility (CSR) is: "To be socially and environmentally responsive organization committed to improve quality of life within and outside”. The CSR activities of Rane Group focus on four specific areas of : (a) Education (b) Healthcare (c) Community Development and (d) Environment.
The CSR activities undertaken by the Company are in line with the CSR Policy and recommendations of the CSR Committee comprising of Mr. L Lakshman, Committee Chairman, Mr. L Ganesh, Director and Mr.S C Gupta, independent director, as members. The Annual Report on CSR activities carried out during the year 2016-17 is annexed as ‘Annexure D''''. The CSR policy of the Company is available in the Company''''s website (http://www.ranegroup.com/ pdf/policies/rblcsr.pdf)
8. Fixed Deposits
The Company had discontinued accepting or renewing the fixed deposits with effect from April 1, 2014 and has not accepted deposits falling within the ambit of Chapter V, Section 73 of the Companies Act, 2013. Pursuant to the order of Company Law Board (CLB) had vide its order dated September 16, 2015 the company has repaid all the outstanding deposits and interest thereon during the year and there are no outstanding deposits / interest, as on March 31, 2017 The Company has not defaulted in repayment of any fixed deposits or any interest thereon.
9. Energy conservation, technology absorption and foreign exchange earnings and outgo
The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as Annexure E''''.
10. Particulars of Directors, Key Managerial Personnel and Employees
The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of Directors, Key Managerial Personnel (KMP) and Employees of the Company are provided in the Annual Report is annexed herewith as ''''Annexure F.
11. Corporate Governance Report
Your Company has complied with the corporate governance requirements pursuant to Regulation 34 and schedule V of SEBI LODR. Detailed report on the compliance and a certificate by the Statutory Auditors forms part of this report as ‘Annexure G''''.
12. Other disclosures
a) Details of loan, guarantees and investments under the provisions of Section 186 of the Companies Act, 2013, if any, are given in the notes to the Financial Statements.
b) The Internal control systems and adequacy are discussed in detail in the Management Discussion and Analysis annexed to the Directors Report.
c) There was no significant material order passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.
d) The details forming part of the extract of the Annual Return under Section 92(3) of the Companies Act, 2013 in form MGT-9 is annexed herewith as ‘Annexure H''''.
e) The Company has established a formal vigil mechanism named ''''Rane Whistle Blower Policy'''' for reporting improper or unethical practices or actions which are violative of the code of conduct of the Company.
f) The Company believes that women should be able to do their work in a safe and respectful environment that encourages maximum productivity. The Company has a zero tolerance towards sexual harassment. The Company has adopted a policy on prevention of sexual harassment of women at work place and put in place proper mechanism across the Company. There was no case reported during the year under review through this mechanism.
For and on behalf of the Board
Chennai VINAY LAKSHMAN
May 17, 2017 Managing Director