Your Directors have pleasure in presenting the Twenty Sixth Annual Report together withthe Audited Financial Statements for the year ended March 31 2017 and the Auditor sReport thereon.
| ||2016-2017 ||2015-2016 |
| || ||(Rs in Lakhs) |
|Profit before Finance charges Depreciation and Tax ||1541.03 ||1572.38 |
|Finance Charges ||996.32 ||852.35 |
|Depreciation ||801.09 ||695.37 |
|Profit / (Loss) before Tax ||(256.38) ||24.66 |
|Provision for Taxation (Net) ||(111.64) ||3.31 |
|Profit / (Loss) After Tax ||(144.74) ||21.35 |
|Other Comprehensive Income ||(34.25) ||(15.29) |
|Total Comprehensive Income ||(178.99) ||6.06 |
Your Directors do not recommend any Dividend for the year ended March 31 2017.
REVIEW OF BUSINESS OPERATIONS
In continuation of the revival in economy recorded during the year 2015-16 the yearunder review 2016-17 also witnessed a satisfactory growth for the automobile industry.However the company faced many challenges during the year mainly arising out of theeffects of demonetization in November-16 and Vardha storm in Chennai. The company was ableto meet the challenges successfully due to dedicated efforts from all the employees andwas in a position to develop new high quality and cost competitive products for thedomestic as well as the export markets.
As a result your Company has recorded a sale of Rs.190.05 crores 44.32 % growth overthe previous year. The growth was mainly driven by exports. In order to keep up with thegrowing demand your Company has invested heavily in capital equipment during the last fewyears. The high cost of capital has resulted in increased finance cost and drop in profitlevels. The capital equipments are all commissioned with the least delay resulting inhigher volumes of business and improved absorption of overheads. The successful completionof the rights issue of Rs.50 crores has also helped the company in repayment of high costloans reduction in finance cost and improvement in potential profitability for thefuture. The benefits of reduction in interest cost and increase in volumes is beingprogressively realized as evident in the results achieved during the last quarter of theyear.
Your Company ended the year with a loss of Rs. 144.74 lakhs against a marginal profitafter tax of Rs.21.35 lakhs for the previous year.
As already mentioned during the year under review your Company had successfullyoffered Rights Shares and the Shareholders have reposed their confidence on the Company byoversubscribing to the Shares. Majority of the borrowings were repaid out of the issueproceeds.
The Indian Auto Industry is one of the largest and most competitive in the world. Indiais also a prominent auto exporter and has strong export growth for the near future.Several initiatives by the Government of India and major automobile players in the Indianmarket are expected to make India a leader by 2020. The Government of India encouragesforeign investments in the auto sector and allows 100% FDI under the automatic route. YourCompany has carefully understood the environment and is trying to convert all thechallenges into opportunities.
Your Company has already enhanced its capacities & capabilities and is well poisedto meet the challenges and achieve healthy rates of growth in sales and profitability inthe coming years.
In accordance with the provisions of the Companies Act 2013 Dr R Mahadevan (DIN00001690) retires by rotation and is eligible for reappointment.
All the Independent Directors of the Company have affirmed that they meet the criteriafor independence as provided in Section 149(6) of the Companies Act 2013. Formal AnnualEvaluation of Directors was done as per the requirements of the Companies Act 2013.
COMPANY S POLICY RELATING TO DIRECTORS APPOINTMENT PAYMENT OF REMUNERATION ANDDISCHARGE OF THEIR DUTIES
The provisions of Section 178(1) relating to constitution of Nomination andRemuneration Committee are applicable to the Company and hence the Company has devised apolicy relating to appointment of Directors payment of managerial remuneration Directorsqualifications positive attributes independence of Directors and other related mattersas provided under Section 178(3) of the Companies Act 2013. The said policy is posted inthe website of the Company.
In accordance with the requirements of the Companies Act 2013 and SEBI (LODR)Regulations 2015 the Board of Directors of the Company has framed all applicablepolicies.
The above policies where mandated are up-loaded on the Company s website under theweb-link http:// www.iprings.com.
DIRECTORS RESPONSIBILITY STATEMENT
In accordance with the provisions of Section 134(5) of the Companies Act 2013 theBoard hereby submits its responsibility statement: in the preparation of the annualaccounts the applicable accounting standards had been followed along with properexplanation relating to material departures; the Directors had selected such accountingpolicies and applied them consistently and made judgments and estimates that arereasonable and prudent so as to give a true and fair view of the state of affairs of theCompany at the end of the financial year and of the loss of the Company for that period;the Directors had taken proper and sufficient care for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and for preventing and detecting fraud and otherirregularities; the Directors had prepared the annual accounts on a going concern basis;the Directors had laid down internal financial controls to be followed by the Company andthat such internal financial controls are adequate and were operating effectively; &the Directors had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
RISK MANAGEMENT POLICY
The Company has an adequate Risk Management Policy commensurating with its size andoperations. The risk management includes identifying types of risks and its assessmentrisk handling and monitoring and reporting.
A Certificate from the Auditors of the Company regarding compliance of conditions ofCorporate Governance as stipulated under LODR is attached to this report.
Pursuant to Regulations of Chapter IV of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 a separate section on Corporate Governance is included inthe Annual Report. A Management Discussion and Analysis Report forms part of thisDirectors Report. All the mandatory requirements under the Code of Corporate Governancehave been complied with.
Messrs. R.G.N Price & Co. Chartered Accountants (Firm Registration No.002785S)retire from the conclusion of this Annual General Meeting and Messrs. M S Krishnaswami& Rajan Chartered Accountants (Firm Registration No.001554S) are being appointed asthe Statutory Auditors of the Company for a period of 5 years from the conclusion of the26th Annual General Meeting till the conclusion of 31st AnnualGeneral Meeting.
M/s. S K R and Company LLP Chartered Accountants (LLP Registration No. AAB-9330) isthe Internal Auditor of the Company with effect from April 01 2017.
In terms of Notification dated 31st December 2014 issued by the Ministry ofCorporate Affairs Cost Audit is applicable to the Company with effect from April 012015. M/s. Raman & Associates Cost Auditors Chennai are the Cost Auditors of theCompany.
M/s. LK & Associates Practicing Company Secretaries Chennai are the SecretarialAuditors of the Company. A Secretarial Audit Report as required under Section 204 of theCompanies Act 2013 for the year under review is given in the Annexure forming part ofthis Report.
During the Financial year ended March 31 2017 your Company has successfully completedcapital raising by way of further issue of equity shares to the eligible existingshareholders on Rights Basis raising Rs.50 crores by issuing 5633718 Equity Shares ofRs.10/- each at an Issue Price of Rs.88.75/- per equity share including a premium ofRs.78.75 per Rights Equity Share. The issue was oversubscribed by 1.26 times. YourDirectors wish to thank the Shareholders for the confidence reposed on the Company and itsDirectors. Post allotment of Equity Shares as aforesaid the Issued Subscribed and Paidup Capital of your Company stands at Rs.126758650/- comprising of 12675865 EquityShares of Rs.10/- each as on March 31 2017.
USE OF PROCEEDS
The proceeds raised through the Rights Issue were used for the purposes of Repayment ofcertain Loans and General Corporate Purposes as mentioned in the Letter of Offer datedJanuary 12 2017.
EXTRACTS OF ANNUAL RETURN
The extract of Annual Return pursuant to the provisions of Section 92 read with Rule 12of the Companies (Management and Administration) Rules 2014 is given in Form No. MGT-9forming part of this Report.
RELATED PARTY TRANSACTIONS
All related party transactions that were entered into during the financial year were onarm s length basis and were in the ordinary course of the business. There are nomaterially significant related party transactions made by the Company with Promoters KeyManagerial Personnel or other designated persons which may have potential conflict withinterest of the Company at large. The details of the transactions with related parties aregiven in the financial statements.
PARTICULARS OF EMPLOYEES
The disclosures pertaining to remuneration and other details as required under Section197(12) of the Companies Act 2013 read with Rule 5(1)(2) & (3) of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 are provided in theAnnexure forming part of the Annual Report.
Having regard to the provisions of Section 136(1) read with and its relevant proviso ofthe Companies Act 2013 the Annual Report excluding the aforesaid information is beingsent to the members of the Company. The said information is available for inspection atthe Registered Office of the Company during working hours and any member is interested inobtaining such information may write to the Company Secretary and the same will befurnished free of cost.
INTERNAL COMPLAINTS COMMITTEE
Your Company has put in place a policy for prevention prohibition and redressalagainst sexual harassment of women at the Workplace to protect women employees and enablethem to report sexual harassment at the workplace. An Internal Complaints Committee headedby a woman employee has also been constituted for this purpose. No complaints werereceived during the year.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGO
The information pertaining to conservation of energy technology absorption foreignexchange earnings and outgo as required under Section 134 (3)(m) of the Companies Act2013 read with Rule 8 (3) of The Companies (Accounts) Rules 2014 is given in the Annexureforming part of this Report.
PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS MADE UNDER SECTION 186 OF THE COMPANIESACT 2013
The company has not given any loans or guarantees covered under the provisions ofSection 186 of the Companies Act 2013. The details of the investments made by Company aregiven in the financial statements.
Your Directors wish to place on record their appreciation of the Technical Assistanceand also the support extended by M/s Nippon Piston Ring Co. Ltd. Japan and M/s. IndiaPistons Limited Chennai respectively.
Your Directors also wish to place on record their appreciation of the contribution madeby the employees at all levels.
| ||For and on behalf of the Board |
|Chennai ||N Venkataramani (DIN 00001639) |
|May 25 2017 ||Chairman |
Annexure to the Directors Report for the year ended 31st March 2017
Information pertaining to Conservation of Energy Technology Absorption and ForeignExchangeEarnings and Outgo as required under the Companies Act 2013 read with Companies(Accounts) Rules 2014
I. CONSERVATION OF ENERGY
Various energy conserving/saving measures at all points of manufacturing arecontinuously being implemented.
A. POWER & FUEL CONSUMPTION
|Electricity: || || |
| ||2016-2017 ||2015-2016 |
|(a) Purchased : || || |
|Units in Lakhs ||87.31 ||67.28 |
|Total Amount (Rs in Lakhs) ||584.23 ||508.33 |
|Rate / Unit - Rs ||6.69 ||7.56 |
|(b) Own Generation : || || |
|Through Diesel Generator || || |
|Units in Lakhs ||5.58 ||2.68 |
|Units per litre of Diesel ||2.67 ||2.55 |
|Cost / Unit - Rs ||22.98 ||22.60 |
B. CONSUMPTION PER UNIT OF PRODUCTION (ELECTRICITY)
|Products ||Standards if any ||2016 2017 ||2015 2016 |
|Piston Rings ||No Standards ||0.20 kwh / ring ||0.24 kwh / ring |
|Differential Gears ||No Standards ||0.67 kwh / comp ||0.83 kwh / comp |
|Pole Wheels & || || || |
|Transmission || || || |
|Components || || || |
II. TECHNOLOGY ABSORPTION AND INNOVATION RESEARCH & DEVELOPMENT:
|1. Specific areas in which R&D is carried out by the company: ||Continuous Research is being undertaken in the following areas: |
| ||Piston Rings: |
| ||Developed bigger diameter rings like 128 etc for Top & Oil Ring. |
| ||Developed Piston Ring for smaller diameter thru wire and bar route. Trials under progress. |
| ||Developed Ring Pack for SUV range of vehicles in Diesel segment. |
| ||Developed preformed steel wire design for process improvement and Quality improvements |
| ||Orbital Cold Forming: |
| ||Developed hypoid gears for truck application through Orbital Cold |
| ||Forming process. |
| ||Developed Torus profile bevel pinion and differential gears with a groove in the Spline. |
| ||Developed Interspace broach for differential gear |
II. TECHNOLOGY ABSORPTION AND INNOVATION RESEARCH & DEVELOPMENT:
|2. Benefits derived as a result of the above R&D: ||Piston Rings: |
| ||Development of bigger diameter rings like 128 etc for Top & Oil Ring has given an entry into export market. |
| ||Development of Ringpack for SUV range of vehicles in Diesel segment is under testing and evaluation at NPR. This has given us entry into Toyato. |
| ||Customer audit completed and it is in HVPT STAGE. |
| ||Development of preform steel wire design has improved the quality levels in supplies of 2W rings & passenger car applications. |
| ||Orbital Cold Forming: |
| ||Hypoid gear is under testing and evaluation at the customer end. |
| ||Development of Torus profile bevel pinion and differential gear with a groove in the Spline has resulted in leap bound entry to General Motors by Dana and inturn exports for IPRL. |
| ||Development of interspace broach for differential gear has given an entry for supply of transmission gears to Force Motors . |
|3. Future Plan of Action: ||Piston Rings: |
| ||Development of smaller diameter rings (10 to 20 mm) for Turbo Charger Engine. |
| ||Development of bigger diameter rings (150 and above) for Top ring. |
| ||Development of new low friction coating (DLC Resin Coating Tetrahedral amorphous Carbon Composite coating etc) for meeting Euro V and VI norms. |
| ||Development of step land oil ring 2mm thickness for diesel segment. |
| ||Development of GN PVD side rails. |
| ||Development of rings with close tolerance specification for critical parameters like Closed gap tanload and width. |
| ||Orbital Cold Forming: |
| ||Development of lower EDL teeth height differential gears. |
| ||Die life improvement for all the runner parts. |
| ||Improvement in heat treatment process to minimise the distortion levels. |
|4. Expenditure on R&D: ||Capital ||Rs Nil |
| ||Revenue ||Rs 3198676/- |
| ||Total ||Rs 3198676/- |
| ||Total R & D Expenditure ||0.17% |
| ||as a % of Total Turnover || |
III. FOREIGN EXCHANGE EARNINGS AND OUTGO
|(i) Activities relating to Exports ||Exploring further opportunities for export of Transmission Components |
|(ii) Total Foreign Exchange used and earned || |
|Foreign Exchange earned ||Rs 418701511/- |
|Foreign Exchange outgo ||Rs 227602812/- |
AUDITORS CERTIFICATE REGARDING COMPLIANCE OF CONDITIONS OF CORPORATE GOVERNANCE
To the Members of IP Rings Ltd Chennai.
We have reviewed the compliance conditions of Corporate Governance by IP Rings Ltd. (the Company ) for the year ended 31st March 2017 as per the relevant provisionsof Securities and Exchange Board of India (Listing Obligations and DisclosureRequirements) Regulations 2015 ( Listing Regulations ).
The compliance of conditions of the Corporate Governance is the responsibility of theManagement. Our examination was limited to the procedures and implementation thereofadopted by the Company for ensuring the compliance of the conditions of the CorporateGovernance. It is neither an audit nor an expression of opinion on the financialstatements of the Company.
In our opinion and to the best of our information and according to the explanationsgiven to us the Company has substantially complied with the conditions of CorporateGovernance as stipulated in the above-mentioned Listing Regulations.
We further state that our examination of such compliance is neither an assurance as tothe future viability of the Company nor of the efficiency or effectiveness with which themanagement has conducted the affairs of the Company.
| ||For R G N Price & Co. |
| ||Chartered Accountants |
| ||Firm Regn No. 002785S |
| ||Mahesh Krishnan |
|Chennai ||Partner |
|May 25 2017 ||Membership No. 206520 |
DECLARATION BY CHIEF EXECUTIVE OFFICER (CEO) ON COMPANY S CODE OF CONDUCT:
This is to confirm that the Company has adopted a Code of Conduct for its Board Membersand Senior Management Personnel. This Code is available on the Company s Website.
I confirm that the Company has in respect of the financial year ended March 31 2017received from the Board Members and Senior Management Personnel a Declaration ofCompliance with the Code of Conduct as applicable to them.
|Chennai ||A Venkataramani (DIN 00277816) |
|May 25 2017 ||Managing Director |
The Members IP Rings Limited
D 11-12 Industrial Estate Maraimalai Nagar Kancheepuram District 603209.
Our report of even date is to be read along with this letter.
1. Maintenance of secretarial record is the responsibility of the management of thecompany. Our responsibility is to express an opinion on these secretarial records based onour audit.
2. We have followed the audit practices and processes as were appropriate to obtainreasonable assurance about the correctness of the contents of the Secretarial records. Theverification was done on test basis to ensure that correct facts are reflected insecretarial records. We believe that the processes and practices we followed provide areasonable basis for our opinion.
3. We have not verified the correctness and appropriateness of financial records andBooks of Accounts of the company.
4. Wherever required we have obtained the Management representation about thecompliance of laws rules and regulations and happening of events etc.
5. The compliance of the provisions of Corporate and other applicable laws rulesregulations standards is the responsibility of management. Our examination was limited tothe verification of procedures on test basis.
6. The Secretarial Audit report is neither an assurance as to the future viability ofthe company nor of the efficacy or effectiveness with which the management has conductedthe affairs of the company.
| ||For L K & Associates |
| ||Company Secretaries |
|Place: CHENNAI ||LALITHA KANNAN |
|Date : 08.05.2017 ||C.P. 1894 |