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The Directors have pleasure in presenting their Twenty Sixth Annual Report of your Company, together with the Audited Accounts for the year ended 31st March 2018.
Your Company’s performance during the year as compared with that during the previous year is summarized below: (Rs, in Lakhs)
Add: Other Income
(i) Cost of Materials Consumed & Changes in inventory
(ii) Value Addition Cost
Profit before Depreciation, Amortization
Depreciation & Amortization Expenses
Profit before Tax
*Figures for the financial years beginning from FY 2016-17 are in line with Ind AS OPERATIONS
Your Company''s Revenues for the year stood at Rs, 45,844.18 Lakhs as against Rs, 51,644.27 Lakhs for previous year. Operating Profit before Depreciation & Amortization amounted to Rs, 12,677.65 Lakhs as against Rs, 13,561.41 Lakhs for previous year. Profit before Tax amounted to Rs, 10,211.70 Lakhs as against Rs, 11,358.33 Lakhs for previous year. During the year, your Company acquired additional space of four plots on lease from MEPZ-SEZ for setting up of manufacturing lines and warehouse & logistics operations.
Your Company had adopted the Dividend Distribution Policy and the same was hosted on the website of the Company at: http://www.igarashimotors.com/uploads/investor/pdf/14788383387IMIL-Dividend_Distribution Policy.pdf.
In line with the said Policy, your Directors are pleased to recommend a dividend of Rs, 6/- per Equity Share on Face value of Rs, 10/- each for the year ended March 31, 2018.
The Board has not recommended any transfer to general reserve from the profits of the year under review.
TRANSFER OF UNPAID AND UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND (‘IEPF’)
the year, there are no unclaimed dividends which have to transfer to IEPF by the Company.
The Reserves at the end of the year 31st March, 2018 is at '' 38,045.85 Lakhs as against the Total Reserves of '' 33,455.92 Lakhs as at 31st March 2017.
No material changes or commitments have occurred between the end of the Financial Year and the date of this Report which affect the financial statements of the Company in respect of the reporting year.
INDIAN ACCOUNTING STANDARDS
Pursuant to The Companies (Indian Accounting Standards) Rules, 2015, your Company has to comply with Indian Accounting Standards (IndAS) from April 01, 2017. Accordingly, the financial statements of the Company for the financial year 2017-18 have been prepared as per IndAS.
On April 28, 2017, Mr. P Mukund and Igarashi Motors Sales Pvt Ltd. (‘IMSPL’) collectively acquired 34.04% stake in Agile Electric Sub Assembly Private Limited [AESPL] (Holding Company). Consequently, Mr. P Mukund along with Persons Acting in Concert viz., AESPL and IMSPL issued Open Offer for acquiring 7,958,196 equity shares (26.00%) at a price of '' 809.96/- per share to the shareholders of the Company. AESPL acquired 649,955 equity shares tendered in open offer for a consideration of '' 526,437,551.80/- on April 17, 2018. Consequently, the Promoters & Promoter Group holding increased to 77.12% from 75.00%. Your promoters are taking adequate steps to maintain minimum public shareholding within the permitted time frame under relevant SEBI Regulations.
On May 27, 2017, the Board of Directors of the Company, has approved the Scheme of Arrangement (“Scheme”), under the provisions of the Companies Act, 2013 providing amalgamation of Agile Electric Sub Assembly Private Limited (‘AESPL’) with the Company. The Board of Directors also approved issue of bonus equity shares only to the public shareholders of the Company pursuant to the Scheme in the interest of the public shareholders and to ensure compliance of minimum public shareholding post the merger. The Scheme is subject to approval of shareholders, the National Company Law Tribunal and other regulatory and necessary approvals. The record date for the issue of bonus shares, which will be an integral part of the Merger Scheme, will be fixed only post the necessary approvals are obtained. Further, based on the inputs received from NSE in determining the ‘relevant date’ for valuation, the Board of Directors have approved, the revised share exchange ratio of 35 fully paid up equity shares of the face value of Rs, 10/- each of the Target Company to be issued for every 128 equity shares of Rs, 10/- each held by the equity shareholders of AESPL in their meeting held on August 02, 2017. On May 09, 2018, NSE and BSE have issued observation letters informing No Objection to file draft Scheme with National Company Law Tribunal (‘NCLT’). Your Company is taking steps to submit application with NCLT for approval.
All documents including draft scheme, valuation report and Observation letters have been put up on the website of the Company at the link: http://www.igarashimotors.com/investor-list.php?invescatid=26.
DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES
Your Company has no Subsidiary/ Associate Companies as on March 31, 2018. As such report under Form AOC-1 is annexed hereto.
Your Company holding 9.20% stake in Bosch Electrical Drives India Private Limited.
During the year under review, your Company has not invited or accepted any deposits from the public under Section 76 of the Companies Act, 2013 and Rules made there under.
EMPLOYEE STOCK OPTION SCHEME
Your Company has launched Employees Stock Option Plan i.e., Employees Stock Option Scheme, 2017 (‘ESOP Scheme’) as per the Securities and Exchange Board of India (Share Based Employee Benefits) Regulations, 2014 (“SEBI SBEB Regulations”). During the year under review, your Company has not issued Stock Options to the employees. The disclosure required under said Regulations is forming part of Annual report.
Your Company’s Paid-up equity share capital is Rs, 3,060.84 Lakhs as on March 31, 2018. There is no change in Share Capital during the year under review.
During the year, Mr. Akhil Awasthi resigned from the Directorship from August 30, 2017. During his tenure, your Board has from time to time benefited from the experience of Mr. Akhil Awasthi. Your Directors wish to place on record their sincere appreciation of the valuable contribution of Mr. Akhil Awasthi.
The shareholders at the 25th Annual General Meeting (''AGM'') Re-appointed Mr. Hemant M Nerurkar and Mr. S Radhakrishnan as Non-Executive Independent Directors to hold office for three consecutive years for a term up to July 29, 2020, not liable to retire by rotation. Mr. K K Nohria, Non-Executive Independent Director has been appointed for three year period to hold office up to July 22,2018 and not liable to retire by rotation.
The Board of Directors at the recommendation of Nomination and Remuneration Committee, at their meeting held on May 22,2018 approved appointment of Mr. K K Nohria as Additional Director effective from July 23,2018 who shall hold office up to the date of ensuing AGM. As per Regulation 17(1A) SEBI (Listing Obligations And Disclosure Requirements) (Amendment) Regulations,2018, your Board of Director recommend appointment of Mr. K K Nohria by way of a Special Resolution to the Shareholders at the ensuing 26th AGM.
Mr. Keiichi Igarashi, Director retires by rotation at forthcoming Annual General Meeting and being eligible, offers him for re-appointment. The brief resume and other details as required under the Listing Regulations are provided in the Notice of the 26th AGM of the Company.
The details about the above two Directors are given in the Notice of the ensuing Annual General Meeting being sent to the shareholders along with the Annual Report.
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(7) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (‘Listing Regulations’).
The details of familiarization programmes to Independent Directors is put up on the website of the Company at the link: http://www.igarashimotors.com/investor-list.php?invescatid=23
EVALUATION OF THE BOARD’S PERFORMANCE
Your Company has devised a Policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the non-executive directors and executive directors. Pursuant to the provisions of Companies Act, 2013 and Regulation 25 of the Listing Regulations, the Board has carried out annual performance evaluation of its own performance, the directors individually including Independent Directors as well the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholder Committee. Each Board member completed a questionnaire providing feedback on the functioning and overall engagement of the Board and its committees on various parameters such as the composition, execution of specific duties, quality, quantity and timelines of flow of information, deliberations at the meeting etc.,. Besides this, one-on-one meeting of the individual directors with the Chairman of the Board was also conducted as a part of self-appraisal and peer group evaluation. The Directors were also asked to provide their valuable feedback and suggestions about the overall functioning of the Board and its committees.
NUMBER OF MEETINGS OF THE BOARD
During the year, Five Board Meetings were held on 11th May 2017, 27th May 2017, 02nd August 2017, 09th November 2017 and 05th February 2018. The Company’s last Annual General Meeting was held on 02nd August 2017. The particulars of Directors, their attendance during the financial year 2017-2018 has been disclosed in the Corporate Governance Report forming part of this Annual Report.
For details of the Committees of the Board, please refer to the Corporate Governance Report.
DIRECTORS’ RESPONSIBILITY STATEMENT
In compliance of Section 134 (5) of the Companies Act, 2013 your directors, on the basis of information made available to them, confirm the following:
a) I n the preparation of the annual accounts for the financial year ended March 31,2018, the applicable Accounting Standards have been followed with explanation relating to material departures, if any;
b) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company as at March 31, 2018 and of the profit of the Company for that period;
c) Proper care has been taken for maintenance of adequate accounting for safe-guarding the assets of the Company and detecting fraud and other irregularities;
d) They have laid down Internal Financial Controls to be followed by the Company and the Audit Committee of the Board of Directors shall ensure that the internal control is adequate and robust;
e) The annual accounts are prepared on a going concern basis;
f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
DEMATERIALISATION OF SHARES
99.25% of the Company’s paid up Equity Share Capital is in dematerialized form as on March 31, 2018 and balance 0.75% is in physical form. The Company’s Registrars are Cameo Corporate Services Limited, No.1, Subramaniam Building, Club House Road, Chennai 600 002.
During the year under view, CARE has given credit ratings of CARE A for long term debt, CARE A1 for short term debt.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION
The information required to be furnished pursuant to Section 134(3) (m) of the Companies Act, 2013, is appended hereto and forms part of this Report.
PARTICULARS OF LOANS & INVESTMENTS BY COMPANY
Details of loans and investments by the Company, to other body corporate or persons are given in notes to the financial statements.
RELATED PARTY TRANSACTIONS
All the related party transactions entered during the year were in ordinary course of business and on arm’s length basis. Your Company obtained shareholders’ approval for material related party transactions though such transactions being entered during ordinary course of business and on arm’s length basis as required under Listing Regulations. Your Company’s Policy on Related Party Transactions which can be accessed through web link : http://www.igarashimotors.com/investor-list.php?invescatid.
Your Company presents a statement of all related party transactions before the Audit Committee. Details of such transactions are given in the accompanying financial statements. Disclosure of Related Party transaction is annexed with the report as per the format prescribed.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment and Non-discrimination at Work Place in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013.
All employees (permanent, contractual, temporary, trainees) are covered under this policy. Your Company has conducted 16 training programs to the Employees by the External Trainer during the year ended March 31,2018. An Internal Complaints Committee (ICC) was set up to redress complaints received regarding sexual harassment and discrimination at work place.
During the year ended March 31, 2018, the ICC has received no complaints pertaining to sexual harassment / discrimination at work place.
KEY MANAGERIAL PERSONNEL
Pursuant to Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company are Mr. P Mukund, Manging Director, Mr. R Chandrasekaran, Chief Financial Officer and Mr. P Dinakara Babu, Company Secretary. During the year, there has been no change in the Key Managerial Personnel.
M/s. B S R & Co. LLP, Chartered Accountants (Firm Registration No. 101248W/W-100022), were appointed by the Shareholders at the 25th Annual General Meeting held on August 02,2017 as Statutory Auditors for a term of five consecutive years to hold office until conclusion of 30th Annual General Meeting. As per the provisions of Section 139 of the Companies Act, 2013, the appointment of Auditors is required to be ratified by Members at every Annual General Meeting.
In accordance with the Companies Amendment Act, 2017, enforced on 7th May, 2018 by the Ministry of Corporate Affairs, the appointment of Statutory Auditors is not required to be ratified at every Annual General Meeting. Accordingly, the 26th AGM Notice does not carry any resolution on ratification of appointment of Statutory Auditors.
No qualification, adverse remarks or disclaimer made by the Statutory Auditors with regard to the financial statements for the financial year 2017-18.
The Statutory Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Companies Act, 2013.
SECRETARIAL AUDITOR & SECRETARIAL AUDIT REPORT
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. C Prabhakar, Partner, BP & Associates, Company Secretaries (Membership No. A 30433; Certificate of Practice No. 11033) to undertake the Secretarial Audit of the Company.
The Secretarial Audit Report is given in Annexure to this Report. The Report does not contain any qualification.
As your Company has been operating from MEPZ-Special Economic Zone, appointment of Cost Auditor is exempted under Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014.
EXTRACT OF THE ANNUAL RETURN
Relevant extract of annual return to be filed with the Registrar of Companies for financial year 2017-18 is given in Annexure to this Report.
INTERNAL CONTROL SYSTEMS
The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management.
Internal Audit is carried out in a programmed way and follow up actions were taken for all audit observations. Your Company’s Statutory Auditors have, in their report, confirmed the adequacy of the internal control procedures.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of your Company has constituted a CSR Committee. The CSR Committee comprises of four members and the Chairman of the Committee is an Independent Director. CSR Committee of the Board has developed a CSR Policy. The CSR Committee met three times during the year on May 11, 2017, November 09, 2017 & February 05, 2018.The details of role and functioning of the Committee are given in Annexure to this Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report of the Company for year under review as required under Regulation 17 of Listing Regulations is given as a separate Statement in the Annual Report.
DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY
Your Company has adopted a Risk Management Policy and constituted a Risk Management Committee for monitoring the same. The Company has been addressing various risks impacting the Company which is provided elsewhere in this Annual Report in Management Discussion and Analysis Report.
BUSINESS RESPONSIBILITY REPORT
Your Company is one of the top 500 listed entities (by Market Capitalisation as on March 31, 2017). Thus, Business Responsibility Report, for the financial year ended March 31, 2018 is forming part of this Annual Report and also hosted on the Company’s website at : http://www.igarashimotors.com/investor-list.php?invescatid=17 as required under Regulation 34(2)(f) of SEBI Listing Regulations.
HEALTH AND SAFETY
Health and Safety is reviewed at all meetings of Safety Committee incorporating senior executives and Key Managerial Personnel. The details of health and safety are provided elsewhere in this Annual Report.
APPOINTMENT AND REMUNERATION OF KEY MANAGERIAL PERSONNEL
The information required pursuant to Section 197 read with Rule 5 (1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the statement of particulars Appointment and Remuneration of Key Managerial Personnel is forming part of this Report.
The remuneration paid to all Key Management Personnel was in accordance with remuneration policy adopted by the Company.
STATEMENT ON EMPLOYEE REMUNERATION
The information required pursuant to Section 136(1) read with Section 197 of the Companies Act, 2013, the Report of the Board of Directors is being sent to all the shareholders of the Company excluding statement prescribed under Rule 5(2) and 5(3) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Statement is available for inspection by the Shareholders at the Registered office of the Company during business hours and shall be made available to any shareholder on request.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There have been no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Company’s operations.
Your Company has 604 numbers of permanent employees on the rolls of the Company as on March 31, 2018. The Board of Directors wishes to place on record their sincere appreciation to all the employees of the Company for their dedication, commitment and loyalty to the Company.
A Report on Corporate Governance along with a certificate from the Auditors of the Company regarding compliance of the requirements of Corporate Governance pursuant to Listing Regulations is annexed hereto.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has a vigil mechanism established Whistle Blower Policy, as per the requirement of the Companies Act, 2013 and the Listing Regulations, to enable all employees and the directors to report in good faith any violation of the Policy. The Audit Committee of the Board oversees the functioning of Whistle Blower Policy. Your Company has disclosed the details of Whistle Blower policy on its website: http://www.igarashimotors.com/ investor-list.php?invescatid=18.
Your Company has laid down Succession Policy which can be accessed on the Company’s website: http://www.igarashimotors.com/investor-list.php?invescatid=17.
CODE OF CONDUCT
Your Company has laid down a Code of Conduct Policy which can be accessed on the Company’s website: http://www.igarashimotors.com/investor-list.php?invescatid=18.
The shares of your Company continued to be listed at National Stock Exchange Limited and Bombay Stock Exchange Limited. Listing fee has already been paid for the financial year 2018-19.
The Board places on record its sincere appreciation for the continued support from the relevant Government Authorities, Promoters, Shareholders, Suppliers, Customers and other business associates, for their strong support.
For and on behalf of the Board of Directors
Place : Chennai K K Nohria
Date : May 22,2018 Chairman