for the year ended March 31 2019
Your Directors have pleasure in presenting the Forty Sixth Annual Report of yourCompany together with the Audited Balance Sheet as at March 31 2019 the Statement ofProfit & Loss for the year ended that date and the Auditors' Report thereon.
The profit after tax for the year under review is at Rs.19.08 Crores as againstRs.21.03 Crores in the previous year. The financial results for the year 2018-19 ascompared with the previous year are summarized as under :
| ||2018-19 ||2017-18 |
| ||(Rs. in crores) ||(Rs. in crores) |
|Profit Before Tax and Depreciation ||33.82 ||36.93 |
|Less:Depreciationfortheyear ||5.86 ||5.77 |
|Profit Before Tax ||27.96 ||31.16 |
|Provision for tax including || || |
|Deferred tax ||8.88 ||10.13 |
|Profit after Tax ||19.08 ||21.03 |
|Other Comprehensive Income (OCI) ||(0.07) ||- |
|Add : Surplus in P&L Account || || |
|brought forward ||13.69 ||18.94 |
|Sub - Total ||32.70 ||39.97 |
|Your Directors recommend the following appropriations : || || |
|Less : APPROPRIATION || || |
|General Reserve ||12.00 ||15.00 |
|Proposed Dividend ||7.50 ||9.38 |
|Tax on proposed dividend ||1.54 ||1.90 |
|Other Comprehensive Income (OCI) ||(0.07) ||- |
|Surplus in P&L A/c carried forward ||11.73 ||13.69 |
|Total ||32.70 ||39.97 |
REVIEW OF PERFORMANCE DRY CELL BATTERIES
The Dry Cell Battery Industry as a whole was affected due to import of poor qualitybatteries from China digitalization of gadgets etc. In terms of battery category wisesale of "D" size continues to drop year on year over 19% "AA" by 2%and "AAA" varities continues to be fastest growing category of batteries inIndia. Your Company's production quantity had increased from 521 million pieces to 525million pieces. The sales quantity decreased from 542 million pieces to 538 millionpieces. In terms of value your Company had registered a turnover of Rs.316.94 crores asagainst Rs.275.80 crores in the previous year.
The sales volume of flashlight and other lighting products had increased from 26.07lakhs pieces to 78.04 lakhs pieces as compared to the previous year. In LED productcategory (bulbs fixtures tube lights and other electrical products etc. ) your companyexpects to grab sizable market share in coming years which will improve both top andbottom line of the financials of the company.
Your Directors recommends a dividend of Rs.20/-per share (200%) for the year 2018-19.This Dividend if approved will be paid to the Shareholders whose names appear on theRegister of Members as on 23rd September 2019. The company intends to pay thedividend on 3rd October 2019.
The Company has not accepted any deposits from the public.
CREDIT RATING OF SECURITIES
|S.No Name of the Agency 1. CRISIL Limited ||Type of Instrument Long term Rating Short term ||Amount Rs.70.00 Crs (enhanced from Rs.36.68 ||Rating A/Stable (Reaffirmed) A1 |
| ||Rating || ||(Reaffirmed) |
During the Financial Year 2018-19 there are no changes in the rating.
SUBSIDIARIES CONSOLIDATED FINANCIAL STATEMENTS
Your Directors have pleasure in attaching the consolidated financial statementspursuant to section 129(3) of the Companies Act 2013 and SEBI (LODR) Regulations 2015. Theconsolidated financial statement have been prepared by the company in accordance with theAccounting Standards prescribed by the ICAI in this regard. The Audited ConsolidatedFinancial Statements together with Auditor's Report form part of the Annual Report. TheAuditor's Report does not contain any qualification reservation or adverse remarks.
Your Company's subsidiary M/s. Kineco Ltd. registered a consolidated turnover for theyear 2018-19 amounts to Rs.126.28 crores as against Rs.118.48 crores in the previous year2017-18. Total comprehensive income for the year amounts to Rs.10.16 crores as againstRs.13.00 crores in the previous year. The total comprehensive income attributable toowners of the company for the year amouns to Rs.4.42 crores as against Rs.8.32 crores inthe previous year.
Pursuant to the provisions of Section 129(3) of the Act read with Rule 5 of theCompanies (Accounts) Rules 2014 a statement containing salient features of the financialstatements of the Company's subsidiaries Associates and Joint Ventures in Form AOC-1 isattached to the financial statements of the Company. Pursuant to the provisions of Section136 of the Act the financial statements of the Company consolidated financial statementsalong with relevant documents and separate audited financial statements in respect of thesubsidiaries are available on the website of the Company.
MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT
Management's Discussion and Analysis Report for the year under review as stipulatedunder SEBI (LODR) Regulations 2015 is presented in a separate section forming part of theAnnual Report.
DIRECTORS' RESPONSIBILITY STATEMENT
Your Directors state that: a) in the preparation of the annual accounts for the yearended March 31 2019 the applicable accounting standards read with requirements set outunder Schedule III to the Act have been followed and there are no material departuresfrom the same; b) they have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31 2019 andof the profit of the Company for the year ended on that date; c) they have taken properand sufficient care for the maintenance of adequate accounting records in accordance withthe provisions of the Companies Act 2013 for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; d) they have prepared theannual accounts on a going concern' basis; e) they have laid down internal financialcontrols to be followed by the Company and that such internal financial controls areadequate and are operating effectively; and f) they have devised proper systems to ensurecompliance with the provisions of all applicable laws and that such systems are adequateand operating effectively.
A separate report on Corporate Governance along with Auditors' Certificate on itscompliance is attached as Annexure - "B" to this report.
RELATED PARTY TRANSACTIONS
As per the requirements of the Companies Act 2013 and SEBI (LODR) Regulation 2015your Company has formulated a Policy on Related Party Transactions which is also availableon Company's website at www.nippobatteries.com.
The Policy intends to ensure that proper reporting approval and disclosure processesare in place for all transactions between the Company and Related Parties. This Policyspecifically deals with the review and approval of Material Related Party Transactionskeeping in mind the potential or actual conflicts of interest that may arise because ofentering into these transactions.
All Related Party Transactions are placed before the Audit Committee as well as Boardfor review and approval. Prior omnibus approval is obtained for Related Party Transactionson a quarterly basis for transactions which are of repetitive nature and/ or entered inthe Ordinary Course of Business and are at Arm's Length.
There were no contract / arrangement / transactions entered in to during the year endedMarch 31 2019 which were not at arm's length basis. All the material related partytransitions exceeding ten percent of the Annual Standalone / Consolidated turnover as perthe last audited financial statement / other related party transactions were enteredduring the year by the company are disclosed in accordance with section 134 (3) (h) of theCompanies Act 2013 in form AOC 2 as per Annexure - "C" of this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE:
The CSR committee comprises Mr.N.Ramesh Rajan Chairman Mr. S.Obul Reddy and Mr.P.Aditya Reddy as other members.
The Board has laid out the Company's policy on corporate social responsibility (CSR)and the CSR activities of the Company are carried out as per the instructions of thecommittee. The Committee also monitors the implementation of the framework of the CSRPolicy and recommending the amount to be spent on CSR activities. During the year theCompany has spent 2% of its average net profits for the three immediately precedingfinancial years on CSR activities.
The financial data / Annual Report pertaining to the Company's CSR activities for thefinancial year 2018-2019 is presented in the prescribed format in Annexure-"D"tothe Board Report.
The CSR Policy is available on our website www.nippobatteries.com.
The Board has constituted a Risk Management Committee which has been entrusted with theresponsibility to assist the Board in overseeing that all the risks that the organizationfaces such as strategic financial credit market legal regulatory reputational andother risks have been identified and assessed and there is an adequate risk managementinfrastructure in place capable of addressing those risks. The Company regularly updatesto committee on the principal risks and uncertainties that can impact its ability toachieve its strategic objectives.
In accordance with the Articles of Association of the Company Mr. P. Dwaraknath Reddywill retire by rotation at this ensuing Annual General Meeting. He being eligible offerhimself for re-appointment. In accordance with the Articles of Association of the CompanyMr. R.P. Khaitan will retire by rotation at this ensuing Annual General Meeting. He beingeligible offer himself for re-appointment.
In accordance with the Articles of Association of the Company Mr. P. Aditya Reddy willretire by rotation at this ensuing Annual General Meeting. He being eligible offerhimself for re-appointment. In accordance with the Articles of Association of the CompanyMr.S. Obul Reddy will retire by rotation at this ensuing Annual General Meeting. He beingeligible offer himself for re-appointment. The Company has received declarations from allthe Independent Directors of the Company confirming that they meet with the criteria ofindependence as prescribed both under sub-section (6) of Section 149 of the Companies Act2013 and SEBI (LODR) Regulations 2015.
Information about all the Directors proposed to be re-appointed is furnished in theExplanatory Statement under Section 102 of the Companies Act 2013 under the heading"Information about the Directors proposed to be re-appointed" attached to theNotice of the ensuing Annual General Meeting for your consideration.
Mr. M. Subramaniam Chief Financial Officer of the Company resigned from the post ofCFO continues to act as president of the company effective from closing business hoursof 31st March
2019. The Board of Directors wishes to place on record their appreciation of servicerendered by Mr. M. Subramaniam.
Pursuant to approval by the Audit Committee and recommendation by the Nomination andRemuneration Committee Mr. C.R. Sivaramakrishnan has been appointed as the ChiefFinancial Officer and KMP of the Company with effect from 01stApril 2019 aqualified Chartered Accountant having more than 28 years of experience in the areas ofcorporate finance strategy conceptualizing implementing and projectimplementation etc. The term of appointment is as per the service conditions applicableto the employees of the Company.
PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND DIRECTORS
As per Companies Act 2013 and SEBI (LODR) Regulations 2015 mandates that the Boardshall monitor and review the Board evaluation framework and a formal annual evaluationneeds to be made by the Board of its own performance and that of its committees andindividual directors. Schedule IV of the Companies Act 2013 states that the performanceevaluation of independent directors shall be done by the entire Board of Directorsexcluding the director being evaluated.The Board subsequently evaluated its ownperformance the working of its Committees and Independent Directors without participationof the relevant Director(s).
TRAINING OF INDEPENDENT DIRECTORS
To familiarize the strategy operations and functions of our Company the executivedirectors make presentations / orientation programme to non executive independentdirectors about the company's strategy operations product and service offeringsmarkets organization structure finance human resources production facilities andquality and risk management. The appointment letters of
Independent Directors has been placed on the Company's website atwww.nippobatteries.com.
MEETING OF INDEPENDENT DIRECTORS
The Independent Directors of the Company had met during the year on 12thFebruary 2019 to review the performance of non- Independent Directors and the Board as awhole review the performance of the Chairperson of the Company and had accessed thequality quantity and timeliness of flow of information between the company management andthe Board.
MEETINGS OF THE BOARD
Six meetings of the Board of directors were held during the year. The details of whichare given in the Corporate Governance Report. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013.
COMMITTEES OF THE BOARD
The Board of Directors have the following Committees:
1. Audit Committee
2. Nomination and Remuneration Committee
3. Stakeholders' Relationship Committee
4. Corporate Social Responsibility Committee.
5. Risk Management committee
The details of the Committees along with their composition number of meetings andattendance at the meetings are provided in the Corporate Governance Report.
Your Directors wish to place on record their appreciation for the dedication and hardwork put in by the employees at all levels for the overall growth of your Company.Relations with the employees at Factory Head office / Depots and other Branches werecordial during the year. In terms of the provisions of Section 197(12) of the CompaniesAct 2013 read with Rules 5(2) and 5 (3) of the Companies (Appointment and
Remuneration of Managerial Personnel) Rules 2014 the information required in respectof employees of the Company will be provided upon request. As per section 136 (1) of theCompanies Act 2013 the report and accounts are being sent to the members and othersentitled thereto. Any member interested in inspecting or obtaining copy of the statementof particulars of employees being forms part of the Report may contact the CompanySecretary at Registered Office during working hours and any member interested in obtainingsuch information may write to the company secretary and the same will be furnished onrequest.
REMUNERATION POLICY OF THE COMPANY
The Company's policy on directors' appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate Governancereport which forms part of the Board's Report. The objective of the Remuneration Policyis to attract motivate and retain qualified and expert individuals that the Company needsin order to achieve its strategic and operational objectives.
PARTICULARS OF LOAN GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013
The particulars of loans guarantees and investments under section 186 of the Act readwith the Companies (Meetings of Board and its powers) Rules 2014 for the financial year2018-19 are given in the notes to the financial statements.
M/s G. Balu Associates (Firm Registration No. 000376S) have been appointed as theStatutory Auditors of the Company for a period of 5 years to hold office from theconclusion of Forty Fourth Annual General Meeting till the conclusion of the Forty NinthAnnual General Meeting of the Company. Further the Auditors has confirmed theireligibility under Section 144 of the Companies Act 2013 and the rules made there under.The Auditor's Report alongwith Notes to Accounts is self-explanatory and therefore doesnot call for any further explanations / comments. The Auditor's Report does not containany qualifications reservation and or adverse remarks.
In terms of Section 148 of the Companies Act 2013 read with Companies (Cost recordsand audits) Rules 2014 the Company has appointed Mr. P. Raju Iyer Practicing CostAccountant as the Cost Auditor of the Company for conducting the audit of cost records ofthe Company for the financial year ending 31st March 2020 subject toratification of remuneration payable to him by the members of the Company at the ensuingAnnual General Meeting of the Company. The Company hereby confirms that maintenance ofCost Accounts and Records as specified by the Central Government under Section 148 (1) ofthe Companies Act 2013.
As required under Section 204 of the Companies Act 2013 and Rules thereunder the Boardhas appointed M.Damodaran & Associates Practising Company Secretaries as SecretarialAuditor of the company to conduct Secretarial Audit for the financial year 2018-19. TheSecretarial Audit Report for the financial year ended March 31 2019 is annexed herewithmarked as Annexure "F" to this Report. The Secretarial Audit Report doesnot contain any qualification reservation or adverse remark.
WHISTLE BLOWER POLICY/VIGIL MECHANISIM
The Company has adopted a whistle blower policy/ Vigil mechanism that covers directorsand employees of the Company to bring to the attention of the management any issues whichis to be in violation or in conflict with the fundamental business principles of theCompany. The Company is committed to adhere to the highest standards of ethical moral andlegal conduct of business operations and in order to maintain these standards the Companyencourages its employees who have genuine concerns about suspected misconduct to comeforward and express those concerns without fear of punishment or unfair treatment.
No one may take any adverse action against any employee for complaining aboutreporting or participating or assisting in the investigation of a reasonably suspectedviolation of any law this Policy or the Company's Code of Conduct and Ethics.
All the employees have been given access to the Audit Committee. The Company Secretaryis the designated officer for effective implementation of the policy and dealing with thecomplaints registered under the policy.
The Whistle Blower Policy is available on the website of the Companywww.nippobatteries.com.
INTERNAL CONTROL SYSTEM AND INTERNAL FINANCIAL CONTROL AND THEIR ADEQUACY
The Company has a proper and adequate internal control system to ensure that all theassets of the Company are safeguarded and protected against any loss and that all thetransactions are properly authorised and recorded.
The Company has an established Internal Financial Control to cover internal controlsover financial reporting and operating controls etc. The framework is reviewed regularlyby the management and tested by internal audit team and presented to the Audit Committee.Based on the periodical testing the framework is strengthened from time to time toensure adequacy and effectiveness of Internal Financial Controls of the Company.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION FOREIGN EXCHANGE ETC.
Your Company has always been in the forefront of energy conservation. Several measuresto conserve energy and to reduce the costs associated with it have been taken. The detailsregarding conservation of energy foreign exchange technology absorption including R& D efforts as required under Section 134 (3) (m) of the Act read with Rule 8(3) ofthe Companies (Accounts) Rules 2014 are given in Annexure "A" to this Report.The Company has an in-house Research Development Department where the main areas of focusare Energy Conservation Process upgradation and Environment Preservation. The Ministryof Science and Technology Department of Scientific and Industrial Research Government ofIndia has recognized in-house R&D facilities of the Company.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return of the Company is annexed herewith as Annexure "E" to this report.
STATEMENT PURSUANT TO SEBI (LODR) REGULATIONS 2015
The Company's Securities are listed with Bombay Stock Exchange (BSE) and National StockExchange (NSE). The Company has paid the Annual Listing fees to all the Stock Exchanges.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
There are no other significant and material orders passed by the regulators or courtsor tribunals impacting the going concern status of the Company during the year exceptcartelisation of Zinc carbon dry cell battery case pending before Hon. National CompanyLaw Appellate Tribunal New Delhi. (NCLAT)
DISCLOSURE UNDER THE SEXUAL HARASMENT OF WOMAN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The company has in place an anti-sexual Harassment Policy as required under preventionof Sexual Harassment of Woman at workplace (Prohibition Prevention and Redressal) Act2013 and constituted an Internal Complaints Committee (ICC).Your Directors further statesthat during the year under review there were no cases filed pursuant to the SexualHarassment of Woman at Workplace (Prevention Prohibition and Redressal) Act 2013.
TRANSFER TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
As per Section 124(6) of the Act read with the IEPF Rules as amended all the shares inrespect of which dividend has remained unpaid / unclaimed for seven consecutive years ormore have been transferred to IEPF Account.
During the year under review
1. The Company had not issued equity shares with differential voting rights as todividend voting right or otherwise.
2. No fraud has been reported to the Audit committee or to Board by the Auditors of theCompany.
3. There was no change in the share capital and there was a change in the keymanagerial personnel of the Company.
4. The Company is in compliance with the applicable Secretarial Standards issued by theInstitute of Company Secretaries of India.
5. Neither the Managing Director nor the Whole time Directors of the company receiveany remuneration or commission from any of its subsidiaries.
Your Directors thank the Central and State Governments and the Banks for theircontinued help and support.
Your Directors also thank the Authorised Wholesale Dealers Stockiest and Retailers fortheir excellent support under difficult conditions and the Consumers for their continuedpatronage of your Company's products. Your Directors are especially thankful to theesteemed Shareholders for their continued encouragement and support.
| ||For and on behalf of the Board of Directors |
| ||For Indo National Ltd |
| ||N. Ramesh Rajan |
|Place: Chennai ||Chairman |
|Date: 13th August 2019 ||(DIN:01628318) |