Report of the Board of Directors Your Directors take the pleasure in presenting the Forty Fourth Annual Report together with the financial statements for the year ended March 31, 2016 1. State of Company’s Affairs 1.1 Financial Performance Key performance indicators, operational performance and balance sheet summary are furnished in page no. 4 of this annual report. The net sales and operating revenue of the Company is at Rs. 349.60 crores as against Rs. 395.18 crores in the previous year. The company incurred a net loss of Rs. 17.66 crores as against a net profit of Rs. 31.46 crores 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 company of Rane Holdings Limited (RHL / Holding company). The Company does not have any subsidiary, associate or joint venture. 1.2. Appropriation Considering the losses incurred by the Company and the need to conserve resources, your directors have not recommended any dividend for the year ended March 31, 2016. 1.3. Management Discussion & Analysis Your Company is engaged in the manufacturing and marketing of auto components for transportation industry viz., engine valves, valve guide, tappet, pistons, seat inserts and stem seals. 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'. 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. The terms and conditions of appointment of independent directors have been disclosed on the website of the Company and available at <http://rane.co.in/pdf/investors/> revl/revltermsid.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. L Lakshman (DIN : 00012554), 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, two separate meetings of Independent Directors were held. In the said meetings, 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. Also in the meeting of Independent directors, the performance of the non-independent directors, the board as a whole and the performance of the chairperson of the Company were reviewed taking into account the views of 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 clause 49 of the listing agreement as applicable at that time. 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. 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://rane.co.in/raneenginevalve/revlinvestors.html> 3.3 Key Managerial Personnel Mr. L Ganesh, Chairman & Managing Director (MD) and Mr. B Suresh Kumar, General Manager - Finance & Chief Financial Officer (CFO), hold the office of Key Managerial Personnel, respectively, within the meaning of Section 2(51) of the Companies Act, 2013 Mr. V Subramani, Secretary, resigned from the services effective February 10, 2016. Based on the recommendations of the Nomination and Remuneration Committee and Board of directors at their respective meetings held on May 19, 2016 approved the appointment of Mr. P Guhanantham as Secretary. 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 Clause 49 of the listing agreement / 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. Brahmayya & Co. were appointed as Statutory Auditors at the forty second Annual General Meeting (AGM) held on July 24, 2014, for a period of three years i.e., until the conclusion of the forty fifth AGM. Their appointment is however, subject to ratification by members at every AGM. The Company has received a letter from Brahmayya consenting to the re-appointment and confirmation to the effect that their appointment, would be within the prescribed limits and that do not suffer from any disqualification under Section 141 of the Companies Act, 2013 and the rules made thereunder. Brahmayya have also submitted the peer review certificate issued to them by The Institute of Chartered Accountants of India. The statutory auditors report to the members for the year ended March 31, 2016 does not contain any qualification, reservation, adverse remark or disclaimers. 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. 4.3 Cost Auditors Pursuant to section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the Board of directors at their meeting held on May 22, 2015 have appointed M/s. Jayaram & Associates, Cost Accountants, as the cost auditors of the Company for the financial year 2015-16 as per the recommendations of the Audit Committee. In terms of Section 148(3) of the Companies Act, 2013 remuneration fixed by the board, based on the recommendation of the audit committee is required to be ratified by the members at the AGM. The notice convening the ensuing AGM includes the proposal for ratification of the remuneration payable to the cost auditors. 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 pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules, thereunder. The report on the Secretarial Audit carried out for the year 2015-16 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 Servicies, 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, confirm: i that in the preparation of the financial statements for the financial year 2015-16, the applicable accounting standards had been followed and there were no material departures; ii that 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 loss of the Company for the year under review; iii that 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 that they had prepared the financial statements for the financial year on a 'going concern' basis; v that 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 that 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 as also the Board 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://> rane.co.in/pdf/policies/revlrpt.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 were in line with the CSR Policy and recommendations of the CSR Committee comprising of Mr. L Lakshman, Committee Chairman, Mr. L Ganesh, Chairman & Managing Director and Mr. S Krishna Kumar, an independent director, as members. The Annual Report on CSR activities carried out during the year 2015-16 is annexed as 'Annexure D'. The CSR policy of the Company is available in the Company's website (<http://www.rane.co.in/pdf/policies/revlcsr.pdf>) 8. Fixed Deposits The deposit outstanding as on March 31, 2016 amounted to Rs.1.47 crores. All deposits that matured during the year were repaid. The Company has not defaulted in repayment of any fixed deposits or any interest thereon. 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. Based on the application made by the Company in terms of Section 74 (2) Company Law Board (CLB) vide its order dated September 16, 2015 allowing the Company to repay the deposits on their respective maturity dates in accordance with the terms of acceptance of such deposits or March 31, 2017, whichever is earlier. 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 here with as 'Annexure F'. 11. Corporate Governance Report Your Company has complied with the corporate governance requirements as stipulated under clause 49 of the listing agreement / Regulation 34 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) During the year, the application for renewal for Consent For Operations (CFO) under the pollution control regulations in one of the manufacturing plants located in the State of Telangana has been returned by the regulatory authority citing that industries located in the specified area were not issued CFO in pursuance of G.O.Ms.No.111 dated 08.03.1996. The company has examined the matter and taken appropriate action to present its case that it is neither a polluting nor a potentially polluting industry, before the pollution control authorities. The board is conscious of the need for long term sustainability of the environment and ensures compliance with government policy, laws and regulations relating to environment. The board will continue in its endeavour to pursue this matter in accordance with this principle and in the interest of all the stakeholders. The board is of the opinion that this does not impact the going concern status of the Company and its future operations. There was no other 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 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 HARISH LAKSHMAN Vice-Chairman L GANESH Chairman & Managing Director Chennai May 19, 2016 |