RANE MADRAS Directors Report

The Directors have pleasure in presenting their Thirteenth 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 standalone financial highlights for the year under review are as follows:

(Rs. in Crores]




Sales and Operating Revenues



Other Income



Profit Before Tax (PBT)



Provision for tax :







MAT Credit availed



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 Company recorded a turnover of Rs. 795.49 crores from its steering and linkage products showing an increase of 13 % over previous year. The company achieved a turnover of Rs. 131.40 crores from die casting business recording 38% increase over previous year. The Company also achieved a turnover of Rs. 39.02 crores from its auto parts division . The total turnover of the Company was Rs. 965.91 crores, registering an overall growth of 16% over the previous year.

On a stand-alone basis, the revenue from operations for the financial year 2016-17 was Rs. 1,003.31 crores, which is higher by 17% over the last year (Rs. 860.91 crores].

The profit before tax of the Company was Rs. 23.67 crores, representing 2% of the turnover. Earnings per share for the year 2016-17 was Rs. 17.39 as against Rs. 12.77 in the previous year.

There was no material change or commitment, 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 of Rane Holdings Limited (RHL / Holding company]. The Company does not have any associate or joint venture.

Overseas Subsidiaries

Rane Precision Die Casting Inc. (RPDC) USA, is engaged in the business of manufacturing high pressure aluminium die casting for automotive applications like steering and compressor related die casting components. During the financial year 2016-17, RPDC recorded a turnover of Rs. 205.77 crores from its operations.

This investment is held through Rane (Madras] International Holdings B.V., The Netherlands, a Wholly Owned Subsidiary of the Company (''''RMIH'''' / ''''WOS''''], incorporated to hold strategic overseas investments of the Company. The WOS has invested USD 2.97 million into the equity capital of RPDC.

As on March 31, 2017, the Company had issued corporate guarantee to EXIM Bank for USD 8 Million and USD 4.8 Million against the lending of EXIM Bank to RPDC and RMIH respectively.

1.2. Appropriation

During the year 2016-17, the board of directors declared an interim dividend of 20% (i.e., Rs. 2.00 per equity share of Rs. 10/- each, fully paid-up] and the same was paid on February 10, 2017 to all the eligible shareholders whose name appeared in the register of members of the Company as on February 3, 2017, being the Record Date fixed for this purpose. The board of directors of the Company at the meeting held on May 16, 2017 have considered and recommended a final dividend of 40% [i.e., Rs. 4/- per equity share of Rs. 10/- each fully paid-up) for approval of the shareholders at the ensuing 13th AGM to be held on August 24, 2017.

The profit available for appropriation is Rs. 25.33 crores. The Board of directors has declared an interim dividend on the Cumulative Preference Shares at the rate of 6.74% per annum for the year 2016-17.

The total dividend amount inclusive of distribution tax and cess surcharge thereon would be Rs. 8.27 crores. The final dividend, if declared by the shareholders, will be paid on August 31, 2017 to all the eligible shareholders whose name appears in the register of members of the Company as on August 17, 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., steering and suspension systems, linkage products, steering gear products and aluminium alloy based high pressure die-casting products. A detailed analysis on the performance of the industry, the Company, internal control systems, risk management are enumerated in the Management Discussion and Analysis report forming part of this report and annexed as ''''Annexure A''''.

1.4 Consolidated Financial Statements

The Consolidated financial statements of the Company are prepared based on the financial statements of the subsidiary companies viz., Rane [Madras) International Holdings B.V, The Netherlands, Wholly Owned Subsidiary [''''RMIH'''' / ''''WOS'''') and Rane Precision Die Casting Inc., USA, Step Down Subsidiary [''''RPDC''''/ ''''SDS''''). The Company has followed the methodology prescribed under applicable accounting standard for consolidation of financial statements of the subsidiary companies i.e., each line item of income, expenditure, assets and liabilities have been consolidated one hundred percent. On consolidation, the assets and liabilities of foreign subsidiaries are translated into INR at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at exchange rates prevailing at the dates of the transactions.

In terms of Section 136 of the Companies Act, 2013 the Company has not attached the financial statements of the subsidiary companies. However, the salient features of financial statement of the subsidiary companies are disclosed in this annual report. The Company undertakes to make available a soft or hard copy of the financial statement of the subsidiary companies to investors, as may be required by them, seeking such information at any point of time on demand. The annual financial statements of the subsidiary companies have been posted in the website of the Company viz. www. ranegroup.com and also kept open for inspection by any investor at the registered office of the Company. The consolidated financial statement presented by the Company, which form part of this annual report, include financial results of the WOS and SDS.

2. Board of Directors

2.1 Composition

The composition of the board of Directors of the Company is furnished in the Corporate Governance Report annexed to this report, as ''''Annexure G''''.

During the year, Mr. Pradip Kumar Bishnoi [DIN: 00732640), was co-opted to the board as an additional director [in the category of ''''non-executive and Independent Director'''') with the effect from October 24, 2016, based on the recommendations of Nomination and Remuneration Committee, effective October 24, 2016, till the conclusion of the ensuing Annual General Meeting. The appointment of Mr. P.K. Bishnoy is subject to the approval of shareholders at the ensuing 13th AGM in the first term, effective from October 24, 2016 till the conclusion of 17th AGM, whichever is earlier.

Mr. Harish Lakshman [DIN: 00012602) was elected as Vice-Chairman of the company at the meeting of board of directors, held on May 16, 2017, to guide and advice the Company on business and policy matters along with the Chairman.

Dr. Tridibesh Mukherjee [DIN: 00004777) Mr. M Lakshminarayan [DIN: 00064750) and Ms. Anita Ramachandran [DIN: 00118188) Independent Directors, hold the office of Independent Directors upto the conclusion of the ensuing 13th AGM, pursuant to their appointment in first term, made by the shareholders at the 10th AGM held on July 31, 2014, for a period of three years.

Dr Tridibesh Mukherjee, Independent Director, in view of his attaining the age of retirement as per policy of the Company in the current financial year, has expressed his intention not to seek re-election at the ensuing 13th AGM. The board places on record its appreciation for his valuable contributions to the organization during his tenure.

Based on the performance evaluation, the Nomination and Remuneration Committee at its meeting held on May 16, 2017, recommended to the board the re-appointment of Mr M Lakshminarayan and Ms Anita Ramachandran as Independent Directors, in the second term, for a period of 5 years viz., from the conclusion of the ensuing 13th AGM till the conclusion of 18th AGM or August 23, 2022, whichever is earlier. The notice convening the 13th AGM 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/rml/rmltermsid.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 13th Annual General Meeting [AGM), Mr.Harish Lakshman, Director [DIN 00012602), retires by rotation and being eligible, offers himself for re-appointment. The notice convening the 13th 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 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) are 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 of the Board.

3.2 Familiarization program for independent directors

The familiarization program for independent directors and details of familiarization programmes to independent directors are available at http://ranegroup.com/ranemadras/rmlinvestors.html

3.3 Key Managerial Personnel

Mr. S Parthasarathy, Chief Executive Officer (CEO), Ms J Radha, Chief Financial Officer (CFO) and Ms. S Subha Shree, Secretary, hold the office of Key Managerial Personnel, respectively 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. Audit

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. Deloitte Haskins & Sells (DHS) were appointed as Statutory Auditors at the tenth Annual General Meeting (AGM) held on July 31, 2014, for a period of three years i.e., until the conclusion of the ensuing 13th 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 there under, the Audit Committee at its meeting held on May 16, 2017 has reviewed the proposal to re-appoint DHS as Statutory Auditors of the Company for a second term of five consecutive years commencing from the conclusion of 13th AGM 2017 until the conclusion of 18th AGM (2022) and recommended the same to the board for proposing it to the shareholders at the ensuing 13th AGM.

The Company has received a letter from DHS consenting to the reappointment 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 there under. DHS have also submitted the peer review certificate issued to them by The Institute of Chartered Accountants of India. The notice of the ensuing 13th AGM contains necessary resolution in this regard. Members may consider appointing DHS as Statutory Auditors of the Company as per the provisions of the Companies Act, 2013 till the conclusion of the 18th 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 disclose under section 134(3)(ca) of the Companies Act, 2013.

The statutory auditor''''s report(s) 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. Therefore, the board did not appoint cost auditor to conduct cost audit for the year 2016-17.

4.4 Secretarial Auditors

The Company has appointed M/s. S Krishnamurthy & Co., a firm of 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 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/rmlrpt.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 a 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 viz., : (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 Ms. Anita Ramachandran, an independent director, as its 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://ranegroup.com/pdf/policies/rmlcsr.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) 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 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 Harish Lakshman L Ganesh

May 16, 2017 Vice-Chairman Chairman

CIN: U67190WB2003PTC096617. Trading in Commodities is done through our Group Company Dynamic Commodities Pvt. Ltd. The company is also engaged in Proprietory Trading apart from Client Business.

Disclaimer: There is no guarantee of profits or no exceptions from losses. The investment advice provided are solely the personal views of the research team. You are advised to rely on your own judgment while making investment / Trading decisions. Past performance is not an indicator of future returns. Investment is subject to market risks. You should read and understand the Risk Disclosure Documents before trading/Investing.

Disclosure: We, Dynamic Equities Private Limited are also engaged in Proprietory Trading apart from Client Business. In case of any complaints/grievances, clients may write to us at compliance@dynamiclevels.com

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