Your Directors have pleasure in presenting their Forty Seventh Annual Report togetherwith the accounts for the year ended March 31 2019 and other prescribed particulars:
1. State of Companys affairs
1.1 Financial Performance
The financial highlights for the year under review are as follows:
(? in crores)
|Particulars ||2018-19 ||2017-18 |
|Sales and Operating Revenues ||422.63 ||383.41 |
|Other Income ||2.23 ||1.76 |
|Profit / (Loss) Before Tax (PBT) ||(20.49) ||(21.13) |
|Provision for tax : || || |
|Current (Net of MAT Credit) ||- ||- |
|Deferred ||(6.92) ||(4.04) |
|Tax of earlier years ||- ||(0.03) |
|Profit / (Loss) After Tax (PAT) ||(13.57) ||(17.06) |
|Surplus brought forward ||(0.03) ||46.58 |
|Transfer to General Reserve ||- ||(27.54) |
|Dividend of FY 2016-17 paid ||- ||(2.02) |
|Other Comprehensive Income (net) ||(0.10) ||0.01 |
|Total Comprehensive Income ||(13.67) ||(17.05) |
|Amount available for appropriation ||(13.70) ||(0.03) |
Key performance indicators operational performance and balance sheet summary arefurnished in page nos. 4 & 5 of this annual report.
The net sales and operating revenue of the Company for the year 2018-19 was Rs. 422.63crores as against ? 383.41 crores (including Excise duty of ? 8.17 crores) for theprevious year.
The Company incurred a net loss of ? 13.57 crores as against of net loss of ? 17.06crores in the previous year. Earnings per share for the year 2018-19 was ? (20.20) asagainst ? (25.40) in the previous year
There was no material change or commitments affecting the financial position of theCompany between the end of the financial year of the Company and date of the report otherthan those disclosed in the financial statements section of this annual report. There wasno change in nature of business during the year. The Company continues to be a subsidiaryof Rane Holdings Limited (RHL / Holding Company). The Company does not have any associateor joint venture.
The net deficit for the financial year 2018-19 stood at ? 13.70 Crores after adjustinga deficit of ? 0.03 Crores brought forward from the previous financial year andadjustments of Other Comprehensive Income (net loss) to the tune of ? 0.10 crores.
Considering the financial position of the Company during the financial year the Boarddecided not to declare /recommend any dividend for the year 2018-19.
1.3 Management Discussion & Analysis
The business of your Company is manufacturing and marketing of auto components fortransportation industry viz. engine valves valve guide and tappet. The analysis on theperformance of the industry the Company internal control systems risk management arepresented in the Management Discussion and Analysis report forming part of this report andprovided in Annexure A.
2. Board of Directors
The Corporate Governance Report given in Annexure D contains thecomposition of the Board of Directors of the Company.
There is no change in the composition of Board of Directors with reference to theprevious year.
The terms and conditions of appointment of Independent Directors have been disclosed onthe website of the Company and available at http://ranegroup.com/revl_investors/terms-conditions-appointment-id/ All the Directors have affirmed compliance withthe Code of Conduct of the Company. The Independent Directors have affirmed that theysatisfy the criteria laid down under section 149(6) of the Companies Act 2013 (Act) andRegulation 25 and other applicable regulations of SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015 (SEBI LODR) as amended from time to time. The Board ofDirectors at its first meeting of the FY 2018-19 has taken on record the declarations andconfirmations submitted by the Independent Directors.
During the year the Board had not appointed any person as an Alternate Director for anIndependent Director on the Board.
The Company has obtained a certificate from a Company secretary in practice that noneof the Directors on the Board of the Company has been debarred or disqualified from beingappointed or continuing as Directors of Companies by the SEBI / Ministry of CorporateAffairs or any such statutory authority.
2.2 Retirement by rotation
Mr. Harish Lakshman (DIN: 00012602) is retiring by rotation at the ensuing 47th AGM.Being eligible he offers himself for re-appointment. The proposal for reappointment ofMr. Harish Lakshman as a Director is included in the notice convening the 47th AGM.
2.3 Board Meetings
The schedule of meetings of the Board of Directors and Committees of the Board iscirculated to the Directors in advance. During the year six (6) Board Meetingswere convened and held the details of which are given in the Corporate Governance Report.The gap between two consecutive meetings of the Board of Directors was less than 120 days.
2.4 Meeting of Independent Directors
A meeting of Independent Directors was held to assess the quality quantity andtimeliness of flow of information between the management and the Board. The IndependentDirectors expressed that the current flow of information and contents were good toeffectively perform their duties. They also reviewed the performance of thenon-Independent Directors and the Board as a whole and the performance of the Chairpersonof the Company taking into account the views of other Non-Executive Directors.
3. Board and Management
3.1 Board Evaluation
During the year the Board carried out an annual evaluation of its performance as wellas of the working of its Committees and individual Directors including Chairman andManaging Director of the Board. This exercise was carried out through a structuredquestionnaire prepared separately for the Board Committees Chairman and individualDirectors as per the criteria laid down by Nomination and Remuneration Committee. TheChairmans performance evaluation was also reviewed by Independent Directors at aseparate meeting during the year.
The evaluation methodology questionnaire and process were judiciously formulatedtaking into consideration following parameters of the Boards functioning
a) Board structure and processes: Composition appointment process diversity approachtowards risk assessment monitoring mechanism for any related party transactions ethicalstandards and fairness in decision makings
b) Meetings and discussions: Adequacy relevance of information follow up actionsdiscussions and debate especially on critical and dissenting views if any.
c) Board Information and functioning: Adequacy of time for strategic discussionsintegrity of accounting and financial reporting systems and feedback of IndependentDirectors.
d) Board committee effectiveness: clarity of charter laid down effectiveness ofreports of the Committees its mandates and working procedures its transparency andindependency and contributions towards recommendations made to the Board.
The individual Directors evaluation were carried out with an unbiased approachthrough peer evaluation focussing on following areas:
a) Group dynamics i.e. exhibiting positive behaviours framing of constructivecontents and staying engaged while expressing honest opinions.
b) Competency attributes like having sufficient understanding and knowledge of theCompany and operating sector and fulfilling functions assigned to them by the Board andgoverning laws ; and
c) Commitment in terms of exercising own judgement voicing Independent opinions andresponsibility towards the Company and its success.
The outcome of the evaluation is also considered by the Nomination and RemunerationCommittee while considering re-appointments of Directors on the Board and appointment invarious Committees.
The Board acknowledged the key areas of improvement emerging through this exercise andthe Chairman discussed with the other Board members during the meetings the action plansincluding the need for revisiting the Board meeting schedule to allow sufficient time fordiscussions on matters of strategic importance and scheduling Directors visits tothe manufacturing facilities and facilitating interaction with the business and functionalheads.
Certain strategic discussions at the Board and committee meetings brought to the forewere around long-term strategy in terms of industry trends technology developmentsmeasures to enhance productivity innovation and competitiveness and sustainable businessmodels.
Discussions on initiatives taken across the Rane group on areas like Human Resourcedevelopment especially in the context of talent acquisition & management successionplanning employee engagement leadership development at senior management level andInformation and Technology challenges were given extensive time and focus by the Board.
3.2. Familiarisation program for Independent Directors
The familiarisation program for Independent Directors and details of familiarisationprogram for Independent Directors has been put up on the website and available athttp://ranegroup.com/revl_investors/revl-familiarisation-programme-for-independent-directors/
3.3. Key Managerial Personnel
Mr. L Ganesh Chairman & Managing Director (MD) Mr. V K VijayaraghavanVice President Finance & Chief Financial Officer (CFO) Mr. Kalidoss SSecretary hold the office of Key Managerial Personnel respectively within the meaning ofSection 2 (51) of the Companies Act 2013. During the year there was no change in the KeyManagerial Personnel (KMP).
3.4. Remuneration policy
The policy on appointment and remuneration of Directors Key Managerial Personnel (KMP)and Senior Management Personnel (SMP) laid down by the Nomination and RemunerationCommittee (NRC) of the Board is available on the website of the Company athttp://ranegroup.com/revl_investors/policy-on-appointment-remuneration-of-directors-kmp-smp/.
The details of remuneration paid / payable to the Directors during the financial year2018-19 is furnished in the Corporate Governance report annexed to this report of theBoard.
4.1 Audit Committee
The terms of reference and meetings of the Audit Committee are disclosed in theCorporate Governance Report section of the Annual Report. The Audit Committee of the Boardacts in accordance with the above terms of reference which is in compliance with theprovisions of Section 177 of the Companies Act 2013 (Act) and Regulation 18 of SEBI LODRand other applicable provision of SEBI LODR as amended from time to time.
4.2. Statutory Auditors
M/s. Varma & Varma Chartered Accountants (Varma & Varma) were appointed asStatutory Auditors at the 45th Annual General Meeting (AGM) held on August 21 2017 for aperiod of five consecutive years commencing from the conclusion of 45th AGM till theconclusion of the 50th AGM.
M/s Varma & Varma has confirmed that they do not suffer from any disqualificationunder Section 141 of the Companies Act 2013 and the rules made thereunder. Varma &Varma has also submitted the peer review certificate issued to them by The Institute ofChartered Accountants of India.
M/s Varma & Varma has not reported any matter under Section 143(12) of theCompanies Act 2013 requiring disclosure under Section 134(3)(ca) of the Companies Act2013.
The statutory auditors report to the members for the year ended March 31 2019 does notcontain any qualification reservation adverse remark or disclaimer.
4.3. Cost Audit & Maintenance of Cost Records
Pursuant to section 148 of the Companies Act 2013 read with the Companies (CostRecords and Audit) Rules 2014 the Board of Directors at their meeting held on July 232018 had appointed M/s. Jayaram & Associates Cost Accountants represented by MrR Jayaraman (Membership no. 26103) as cost auditors of the Company for the financial year2018-19 as per the recommendations of the Audit Committee after obtaining necessarycertificate under Section 141 of the Act conveying his eligibility for re-appointment. Interms of Section 148(3) of the Companies Act 2013 remuneration fixed by the Board basedon the recommendation of the Audit Committee is required to be ratified by the members atthe AGM as per the requirement of Section 148(3) of the Act. The notice convening theensuing AGM includes the proposal for ratification of the remuneration payable to the costauditors.
The Company maintains all such accounts and records as specified by the CentralGovernment under section 148 (1) of the Companies Act 2013.
4.4 Secretarial Auditors
M/s. S Krishnamurthy & Co. a firm of Company Secretaries in practice are theSecretarial Auditors of the Company. The Secretarial Audit report given in AnnexureB was taken on record by the Board of Directors at its meeting held on May 212019. The secretarial audit report does not contain any qualification reservationadverse remark or disclaimer.
The Annual Secretarial Compliance report (hereinafter referred to as compliancereport) for FY 2018-19 issued by M/s. S Krishnamurthy & Co. the secretarialauditors of the Company have confirmed compliance with securities law applicable to theCompany and the same has been taken on record by the Board of Directors at their meetingheld on May 21 2019. The compliance report does not contain any qualificationreservation adverse remark or disclaimer and the Board has approved filing of the samewith the stock exchanges.
4.5. Internal Auditors
M/s. Capri Assurance and Advisory Servicies a firm of independent assurance serviceprofessionals continues to be the Internal Auditors of the Company. Their scope of workincludes review of processes for safeguarding the assets of the Company review ofoperational efficiency effectiveness of systems and processes and assessing the internalcontrol strengths in all areas. Internal Auditors findings are discussed with the processowners and suitable corrective actions taken as per the directions of Audit Committee on aregular basis to improve efficiency in operations. The internal auditors report directlyto the Audit Committee and the Audit Committee while reviewing their performance scopefunctioning periodicity and methodology for conducting the internal audit has taken intoconsideration their confirmation to the effect that their infrastructure viz internalaudit structure staffing and seniority of the officials proposed to be deployed etc.which are adequate and commensurate to the scope functioning periodicity and methodologyfor conducting the internal audit.
For FY 2018-19 the Audit Committee has taken on record their certification to theeffect that:
i. They have evaluated the internal control systems and risk management systems andreviewed the risk management systems and managements process of identification andmitigation of risks and controls;
ii. There were no significant findings requiring follow-up thereon and there were nomatters of suspected fraud or irregularity or a failure of internal control systems ofmaterial nature requiring investigation or reporting to the Audit Committee/ Board;
iii. Internal control systems of the Company for financial reporting are adequate andare operating effectively throughout the year;
iv. There were no deficiencies in the design or operation of internal controls;
v. There were no significant changes in the internal control over financial reportingduring the year under review;
vi. There were no instances of fraud or involvement therein of management or anemployee having a significant role in the entitys internal control system overfinancial reporting and 12 Driven by determination. Progressing with optimism. vii. TheCompany has a proper system for ensuring compliance with all applicable laws and the sameis adequate and working effectively.
5. Directors Responsibility Statement
In terms of Section 134(3)(c) read with section 134(5) of the Companies Act 2013 theDirectors to the best of their knowledge and belief based on the information andexplanations obtained by them confirm that:
a) in the preparation of the annual accounts the applicable accounting standards hadbeen followed and there were no material departures;
b) they had selected such accounting policies and applied them consistently and madejudgements and estimates that were reasonable and prudent so as to give a true and fairview of the state of affairs of the Company at the end of the financial year and of theprofit of the Company for the year under review;
c) they had taken proper and sufficient care for the maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding the assets of theCompany preventing and detecting fraud and other irregularities;
d) they had prepared the financial statements for the financial year on a goingconcern basis;
e) they had laid down internal financial controls to be followed by the Company andsuch internal financial controls were adequate and were operating effectively; and
f) they had devised proper systems to ensure compliance with the provisions of allapplicable 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 onan arms length basis and were in the ordinary course of business. There are nomaterially significant related party transactions made by the Company with Related Partieswhich 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 Boardfor approval. Prior omnibus approval of the Audit Committee is obtained for thetransactions which are foreseen and repetitive in nature. The transactions entered intopursuant to the omnibus approval so granted are reviewed by the Audit Committee on aquarterly basis. The Company has put in place proper system for identification andmonitoring of such transactions. The policy on Related Party Transactions as approved bythe Board is uploaded on the Companys websitehttp://ranegroup.com/revl_investors/revl-policy-on-related-party-transaction/.
None of the Directors or Key Managerial Personnel or Senior Management Personnel hasany material financial and commercial transactions where they have personal interestwhich may have potential conflict with interest of the Company at large.
7. Corporate Social Responsibility (CSR)
The Rane Groups vision on Corporate Social Responsibility (CSR) is: "Tobe socially and environmentally responsive organization committed to improve quality oflife within and outside". The CSR activities of Rane Group focus on four specificareas 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 andrecommendations of the CSR Committee comprising of Mr. L Lakshman Committee Chairman Mr.L Ganesh Chairman & Managing Director and Mr. S Krishna Kumar an IndependentDirector as members. The CSR policy of the Company is posted on our website http://ranegroup.com/revl_investors/corporate-social-responsibility-policy/. In view of theinadequacy of profits / loss during the immediately preceding three financial years theCompany was not required to spend towards CSR activities during FY 2018-19 as per Section135 of the Companies Act 2013 read with rules thereunder and therefore the CSR committeedid not recommend any amount towards CSR activities for the year under review.
8. Energy Conservation Technology Absorption and Foreign Exchange Earnings andOutgo
The Annexure C to this report contains the information onconservation of energy technology absorption and foreign exchange earnings and outgo asrequired under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014.
9. 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 ofDirectors Key Managerial Personnel (KMP) and Employees of the Company are provided in thefull version of the Annual Report. The full version of the Annual Report is available forinspection by the members at the registered office during business hours on a working dayof the Company up to the date of the ensuing Annual General Meeting. The full annualreport including the aforesaid information is being sent electronically to all thosemembers who have registered their e-mail address and is available on the Companyswebsite www.ranegroup.com.
10. Corporate Governance Report
Your Company is a leader in compliance with the corporate governance norms under theSEBI regulations. The Corporate Governance report and the certificate issued by theStatutory Auditors are available in Annexure D to this report.
11. Other Disclosures
a) Details of loan guarantees and investments if any under the provisions of Section186 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 ManagementDiscussion and Analysis annexed to the Directors Report.
c) The Consent for Operations (CFO) under the pollution control regulations in one ofthe manufacturing plants located in the State of Telangana has been obtained vide consentorder dated July 16 2018. There was no significant material order passed by theRegulators / Courts which would impact the going concern status of the Company and itsfuture operations.
d) The policies approved and adopted by the Board have been made available on theCorporate Governance section of the Investor page on the website of the Company viz.www.ranegroup.com.
e) The extract of the Annual Return under Section 92(3) of the Companies Act 2013 inform MGT-9 is available on the website of the Company at www. ranegroup.com and in AnnexureE to this report.
f) The Company has complied with the applicable secretarial standards viz. SS-1 onmeetings of Board of Directors and SS-2 on General Meetings issued by Institute of CompanySecretaries of India as per section 118(10) of the Companies Act 2013.
g) The Company does not accept any deposit falling under the provisions of section 73of the Companies Act 2013 and the rules framed thereunder.
h) The Company has established a formal vigil mechanism named Rane Whistle BlowerPolicy for reporting improper or unethical practices or actions which are violativeof the code of conduct of the Company.
i) The Company believes that women should be able to do their work in a safe andrespectful environment that encourages maximum productivity. The Company has a zerotolerance towards sexual harassment. The Company has adopted a policy on prevention ofsexual harassment of women at work place and put in place proper dissemination mechanismacross the Company. The Company has complied with the provisions relating to theconstitution of Internal Complaints Committee under the Sexual Harassment of Women atWorkplace (Prevention Prohibition and Redressal) Act 2013. During the period thedetails of complaints received / resolved or pending are as under in accordance withprovisions of the Companies Act 2013 as amended from time to time.
No. of complaints received during the financial year Nil
No. of complaints disposed during the financial year Nil
No. of complaints pending as of end of the financial year Nil
There was no complaints reported during the year under review through this mechanism.
j) Electronic copies of the Annual report and the notice convening the 47th AnnualGeneral meeting (AGM) would be sent to the members whose email address are registered withthe Company or their respective Depository Participants. For members who have notregistered their email address physical copies of the Notice and Annual Report would besent in the permitted mode.
| ||For and on behalf of the Board |
|Harish Lakshman ||L Ganesh |
|Vice-Chairman ||Chairman & Managing Director |
|DIN: 00012602 ||DIN: 00012583 |
|Chennai || |
|May 21 2019 || |