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Rane Madras Ltd.

BSE: 532661 | NSE: RML |

Represents Equity.Intra - day transactions are permissible and normal trading is done in this category
Series: EQ | ISIN: INE050H01012 | SECTOR: Auto Ancillaries

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217.30 16.20 (8.06%)
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30-Day
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Annual Report

For Year :
2019 2017 2016 2015 2014 2013 2012 2011 2010

Director’s Report

Report of the Board of Directors

The Directors have pleasure in presenting their Fifteenth Annual Report together with the accounts for the year ended March 31, 2019 and other prescribed particulars:

1. State of Company’s affairs

1.1 Financial Performance

The standalone financial highlights for the year under review are as follows:

(Rs. in Crores)

Particulars

2018-19

2017-18

Sales and Operating Revenues (net of Excise duty)

1370.25

1213.95

Other Income

10.57

5.64

Profit Before Tax (PBT)

70.36

60.18

Provision for tax :

Current

25.23

18.33

Deferred

(2.11)

0.04

MAT Credit availed

-

-

Profit After Tax (PAT)

47.24

41.81

Total Comprehensive Income

46.10

41.82

Surplus brought forward

46.51

24.78

Amount transferred to Capital Redemption Reserve (CRR)

-

8.23

Amount transferred to General Reserve

32.36

-

Amount available for appropriation

60.86

57.85

Key performance indicators, operational performance and balance sheet highlights are furnished on page nos 4 and 5 of this Annual Report.

The total stand-alone turnover of the company was Rs. 1370.25 Crores, which is a growth of 13% over the previous year. The revenue from steering and linkage products was Rs. 1154.95 Crores, a growth of 15 % over the previous year. The revenue from die casting business was Rs. 120.09 Crores, which is 5% decline from the previous year. The auto parts division of the Company registered a turnover of Rs. 52.29 Crores as against the turnover of Rs. 40.69 Crores recorded during the previous year.

The Company netted a profit before tax of Rs. 70.36 Crores, which is 5% of the turnover. This resulted in earnings per share as Rs. 40.38 for FY 2018-19 as against Rs. 37.61 for FY 2017-18.

There was no material change or commitments, affecting the financial position of the Company between the end of the financial year of the Company and date of the report other than those disclosed in the financial statements section of this annual report. There was no change in the nature of business during the year. The Company continues to be a subsidiary of Rane Holdings Limited (RHL / Holding company). The Company does not have any associate or joint venture.

1.2. Overseas Subsidiaries

Rane Precision Die Casting Inc. (RPDC), USA, is a step down subsidiary of the Company. This investment is held through Rane (Madras) International Holdings, B.V., The Netherlands, a Wholly Owned Subsidiary of the Company (‘RMIH’ / ‘WOS’). RPDC is engaged in the business of manufacturing high pressure aluminium die casting for automotive applications like steering and compressor related die casting components. During FY 2018-19, RPDC earned a revenue of Rs. 184.36 Crores from its operations.

During FY 2018-19, the Company invested Euro 1.76 million in the preference share capital of RMIH, towards making onward investments in RPDC and for meeting its own operating expenses. The total investment in the equity capital of RPDC through RMIH as on March 31, 2019 is USD 10 million. As on March 31, 2019, the Company had issued corporate guarantee to EXIM Bank for US$ 2.1 Million and US$ 4.8 Million against the lending of EXIM Bank to RPDC and RMIH, respectively

As on March 31, 2019, a loan of Rs. 44.70 Crores is outstanding for repayment to the Company by RMIH.

1.3. Changes in Share Capital

1.3.1. Conversion of warrants into equity shares

On December 28, 2018, the Company had allotted 3,65,630 equity shares having a face value of Rs. 10/- each to Rane Holdings Limited, Promoter / Promoter Group, (RHL), consequent to conversion of warrants by RHL upon payment of the balance amount of Rs. 14.99 Crores, being the warrant exercise price. The equity shares arising on conversion rank pari-passu with the existing shares of the Company and are also listed and permitted to be traded on the stock exchanges viz., Bombay Stock Exchange Limited and National Stock Exchange of India Limited, effective January 22, 2019.

1.4. Appropriation

The Board of Directors declared and paid an interim dividend at the rate of 40% (i.e., Rs. 4.00 per equity share of Rs. 10/- each, fully paid-up) on February 08, 2019 to all the eligible shareholders whose name appeared in the register of members of the Company as on February 01, 2019, being the Record Date fixed for this purpose.

An amount of Rs. 60.86 Crores of the profit is available for appropriation. The Board Directors of the Company, at its meeting held on May 23, 2019, have considered and has recommended a final dividend of 45% (i.e., Rs. 4.50/- per equity share of Rs. 10/- each fully paid-up) for approval by the shareholders at the ensuing 15th Annual General Meeting (AGM) scheduled to be held on July 24, 2019.

The total final dividend amount paid/payable on equity shares for FY 2018-19 including the distribution tax thereon would be Rs. 12.27 Crores. On declaration of the final dividend by the shareholders, it will be paid on July 29, 2019 to all the eligible shareholders whose name appears in the register of members of the Company as on July 17, 2019, being the Record Date fixed for this purpose.

The Board has retained Rs. 44.60 Crores as surplus in the Statement of Profit and Loss account after transferring Rs. 32.36 Crores to the General Reserves.

1.5. Management Discussion & Analysis

The business of your Company is manufacturing and marketing of auto components for transportation industry viz., steering and suspension systems, linkage products, steering gear products and aluminium alloy based high pressure die-casting products. An analysis on the performance of the industry, the Company, internal control systems, risk management are presented in the Management Discussion and Analysis report annexed as ‘Annexure A’ forming part of this report.

1.6. Consolidated Financial Statements

The consolidated financial statements of the Company are prepared based on the financial statements of the subsidiary companies viz., Rane (Madras) International Holdings B.V, The Netherlands, Wholly Owned Subsidiary (‘RMIH’ / ‘WOS’) and Rane Precision Die Casting Inc., USA, Step Down Subsidiary (‘RPDC’/ ‘SDS’). The Company has followed the methodology prescribed under applicable accounting standards for consolidation of financial statements of the subsidiary companies i.e., each line item of income, expenditure, assets and liabilities have been consolidated one hundred percent. On consolidation, the assets and liabilities of foreign subsidiaries are translated into INR at the rate of exchange prevailing at the reporting date and their statements of profit or loss are translated at average of daily exchange rates prevailing during the year.

The financial statements of the subsidiary companies are not attached in terms of the provisions of Section 136 of the Companies Act, 2013. However the salient features of financial statement of these subsidiary companies are disclosed in this annual report. The Company undertakes to make available a soft or hard copy of the financial statement of the subsidiary companies to members, as may be required by them, on demand. The annual financial statements of the subsidiary companies have been posted on the website of the Company viz. www.ranegroup.com and also kept open for inspection by any member at the registered office of the Company. The consolidated financial statement presented by the Company, which forms part of this annual report, include financial results of the WOS and SDS.

2. Board of Directors

2.1. Composition

The Corporate Governance Report given in ‘Annexure E’ to this report contains the composition of the Board of Directors of the Company.

There is no change in the composition of Board of Directors with reference to the previous year. The terms and conditions of appointment of Independent Directors have been disclosed on the website of the Company at http://ranegroup.com/rml_investors/ terms-conditions-appointment-id/.

All the 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 Regulation 25 and other applicable regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR), as amended from time to time. The Board of Directors at its first meeting of the FY 2018-19 has taken on record the declarations and confirmations submitted by the Independent Directors. During the year the Board had not appointed any person as an Alternate Director for an Independent director on the Board.

The Company has obtained a certificate from a Company Secretary in practice that none of the Directors on the Board of the Company has been debarred or disqualified from being appointed or continuing as Directors of companies by the SEBI/Ministry of Corporate Affairs or any such statutory authority.

2.2. Retirement by rotation

Mr. Harish Lakshman, Director (DIN: 00012602) is retiring by rotation at the ensuing 1 5th AGM. Being eligible, he offers himself for re-appointment. The proposal for re-appointment of Mr. Harish Lakshman as a Director is included in the notice convening the 15th AGM.

2.3. Board Meetings

The schedule of meetings of the Board of Directors and Committees of the Board is circulated to the Directors in advance. During the year, five (5) Board Meetings were 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 and timeliness of flow of information between the management and the Board. The Independent Directors expressed that the current flow of information and contents were good to effectively perform their duties. They also reviewed the performance of the non-Independent Directors and the Board as a whole and the performance of the Chairperson of 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 well as of the working of its Committees and individual Directors, including Chairman. This exercise was carried out through a structured questionnaire prepared separately for the Board, Committees, Chairman and individual Directors, as per the criteria laid down by Nomination and Remuneration Committee. The Chairman’s performance evaluation was also reviewed by Independent Directors at a separate meeting during the year.

The evaluation methodology, questionnaire and process were judiciously formulated taking into consideration the following parameters of the Board’s functioning:

a) Board structure and processes: Composition, appointment process, diversity, approach towards risk assessment, monitoring mechanism for any related party transactions, ethical standards and fairness in decision making.

b) Meetings and discussions: Adequacy, relevance of information, follow up actions, discussions and debate especially on critical and dissenting views, if any.

c) Board Information and functioning: Adequacy of time for strategic discussions, integrity of accounting and financial reporting systems and feedback of Independent Directors.

d) Board committee effectiveness: clarity of charter laid down, effectiveness of reports of the Committees, its mandates and working procedures, its transparency and independency and contributions towards recommendations made to the Board.

The individual Directors’ evaluation was carried out with an unbiased approach through peer evaluation focussing on following areas:

a) Group dynamics i.e., exhibiting positive behaviours, framing of constructive contents and staying engaged while expressing honest opinions.

b) Competency attributes like having sufficient understanding and knowledge of the Company and operating sector and fulfilling functions assigned to them by the Board and governing laws ; and

c) Commitment in terms of exercising own judgement, voicing independent opinions and responsibility towards the Company and its success.

The outcome of the evaluation is also considered by the Nomination and Remuneration Committee while considering re-appointments of Directors on the Board and appointment in various Committees.

The Board acknowledged the key areas of improvement emerging through this exercise and the Chairman discussed with the other Board members during the meetings, the action plans including the need for revisiting the Board meeting schedule to allow sufficient time for discussions on matters of strategic importance and scheduling Directors’ visits to the manufacturing facilities and facilitating interaction with the business and functional heads.

Certain strategic discussions at the Board and committee meetings brought to the fore were around long-term strategy in terms of industry trends, technology developments, measures to enhance productivity, innovation and competitiveness and sustainable business models.

Discussions on initiatives taken across the Rane group on areas like Human Resource development especially in the context of talent acquisition & management, succession planning, employee engagement, leadership development at Senior Management level and Information 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 familiarization programmes to independent Directors are available at http://ranegroup.com/rml_investors/familiarisation-programme-for-independent-directors/

3.3. Key Managerial Personnel

Mr. S Parthasarathy, Chief Executive Officer (CEO), Ms. J Radha, Chief Financial Officer (CFO) and Ms. S Subha Shree, Company Secretary, hold the office of Key Managerial Personnel, respectively within the meaning of Section 2(51) of the Companies Act, 2013. During the year there was no change in the Key Managerial Personnel (KMP).

3.4. Remuneration Policy

The policy on appointment and remuneration of Directors, Key Managerial Personnel (KMP) and Senior Management Personnel (SMP) as laid down by the Nomination and Remuneration Committee (NRC) of the Board is available on the website of the company www.ranegroup.com

In accordance with the said policy and approval obtained from the shareholders at the 14th AGM held on July 25, 2018, a commission of Rs. 1.44 Crores is payable to Mr. L Ganesh, the Chairman for financial year 2018-19. This commission amount does not exceed 2% of the net profits of the Company for FY 2018-19.

In addition to the approval already obtained from shareholders by way of a special resolution under Section 197 of the Companies Act, 2013 and the Rules made thereunder, specific approval of shareholders is sought again, pursuant to the provisions of Regulation 17(6)(ca) of SEBI (Listing Obligations and Disclosure Requirements), Regulations 2015 (SEBI LODR), for payment of commission to Mr L Ganesh for FY 2018-19.

The details of remuneration paid / payable to the Directors during the financial year 2018-19, is furnished in the Corporate Governance report annexed to this report of the Board.

4. Audit

4.1. Audit Committee

The terms of reference and meetings of the Audit Committee are disclosed in the Corporate Governance Report section of the Annual Report. The Audit Committee of the Board acts in accordance with the above terms of reference, which is in compliance with the provisions of Section 177 of the Companies Act, 201 3 and Regulation 1 8 of SEBI LODR and other applicable provision of SEBI LODR, as amended from time to time.

4.2. Statutory Auditors

M/s. Deloitte Haskins & Sells (DHS) were appointed in their second term as Statutory Auditors at the 13th Annual General Meeting (AGM) held on August 24, 2017, for a period of five years i.e., until the conclusion of the 18th AGM (2022).

DHS has confirmed that they do not suffer from any disqualification under Section 141 of the Companies Act, 2013 and the rules made thereunder. DHS have also submitted the peer review certificate issued to them by The Institute of Chartered Accountants of India.

During the year under review, DHS has not reported any matter under Section 143(12) of the Companies

The statutory auditors report to the members for the year ended March 31, 2019 does not contain any qualification, reservation, adverse remark or disclaimer.

4.3. Cost Audit & Maintenance of Cost Records

Appointment of Cost auditor is not applicable to the Company under Companies (Cost Records and Audit) Rules, 2014.

Further, the maintenance of cost records as prescribed under provisions of Sec 148(1) of the Companies Act, 2013 are not applicable for the business activities carried out by the Company.

4.4. Secretarial Auditors

M/s. S Krishnamurthy & Co., a firm of Company Secretaries in practice, are the Secretarial Auditors of the Company. The Secretarial Audit report given in ‘Annexure B’ was taken on record by the Board of Directors at its meeting held on May 23, 2019. The secretarial audit report does not contain any qualification, reservation, adverse remark or disclaimer.

The Annual Secretarial Compliance Report, (hereinafter referred to as ‘compliance report’), for FY 2018-19 issued by M/s. S Krishnamurthy & Co., the Secretarial Auditors of the Company, have confirmed compliance with securities laws applicable to the Company and the same has been taken on record by the Board of Directors at its meeting held on May 23, 2019. The compliance report does not contain any qualification, reservation, adverse remark or disclaimer and the Board has approved filing of the same with the stock exchanges.

4.5. Internal Auditors

M/s. Capri Assurance and Advisory Services, a firm of independent assurance service professionals, continues to be the 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, review of statutory and legal compliances with applicable statutes / laws and assessing the internal control strengths in all these 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. The internal auditors report directly to the Audit Committee and the Audit Committee while reviewing their performance scope, functioning, periodicity and methodology for conducting the internal audit, has taken into consideration their confirmation to the effect that their infrastructure viz internal audit structure, staffing and seniority of the officials proposed to be deployed etc. which are adequate and commensurate to the scope, functioning, periodicity and methodology for conducting the internal audit.

For FY 2018-19, the Audit Committee has taken on record their certification to the effect that:

i. They have evaluated the internal control systems and risk management systems and reviewed the risk management systems and management’s process of identification and mitigation of risks and controls;

ii. There were no significant findings requiring follow-up thereon and there were no matters of suspected fraud or irregularity or a failure of internal control systems of material nature requiring investigation or reporting to the Audit Committee/Board;

iii. Internal control systems of the Company for financial reporting are adequate and are 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 reporting during the year under review;

vi. There were no instances of fraud or involvement therein of management or an employee having a significant role in the entity’s internal control system over financial reporting and;

vii. The Company has a proper system for ensuring compliance with all applicable laws and the same is 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, the Directors, to the best of their knowledge and belief, based on the information and explanations obtained by them, confirm that:

a) in the preparation of the annual accounts, the applicable accounting standards had been followed and there were no material departures;

b) they had selected such accounting policies and applied them consistently and made judgements 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 profit of the Company for the year under review;

c) 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;

d) they had prepared the financial statements for the financial year on a ‘going concern’ basis;

e) 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

f) 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. The Company has not entered into any transaction of material nature with any of the promoters, Directors, management or relatives or subsidiaries etc., except for those disclosed in ‘Annexure G’ to this report. 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 and 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 at the link: http://ranegroup.com/rml_investors/ policy-on-related-party-transactions/

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 Rane Group’s vision on Corporate Social Responsibility (CSR) is: “To be a 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 viz.: (a) Education (b) Healthcare (c) Community Development; and (d) Environment.

The CSR activities undertaken by the Company are in line with the CSR Policy and recommendations of the CSR Committee comprising of Mr. L Lakshman, Committee Chairman, Mr. L Ganesh, Director and Ms. Anita Ramachandran, an Independent Director, as its members. The ‘Annexure C’ to this report contains the annual report on CSR activities of the Company for FY 2018-19. The CSR policy of the Company is posted on our website http://ranegroup.com/rml_investors/ corporate-social-responsibility-policy.

8. Energy Conservation, Technology Absorption and Foreign Exchange Earnings and Outgo The ‘Annexure D’ to this report contains the information on conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (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 of Directors, Key Managerial Personnel (KMP) and Employees of the Company are provided in the full version of the Annual Report. The full version of the Annual Report is available for inspection by the members at the registered office during business hours on a working day of the Company up to the date of the ensuing Annual General Meeting. The full annual report including the aforesaid information is being sent electronically to all those members who have registered their e-mail address and is available on the Company’s website www.ranegroup.com.

10. Corporate Governance Report

Your Company is a leader in compliance with the corporate governance norms under the SEBI regulations. The Corporate Governance report and the certificate issued by the Statutory Auditors are available in ‘Annexure E’ to this report.

11. 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) There was no significant / material order passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

d) The policies approved and adopted by the Board have been made available on the Corporate 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, 201 3 in form MGT-9 is available on the website of the Company at www.ranegroup.com and in ‘Annexure F’ to this report.

f) The Company has complied with the applicable secretarial standards viz., SS-1 on meetings of Board of Directors and SS-2 on general meetings issued by Institute of

g) The Company does not accept any deposit falling under the provisions of Section 73 of the Companies Act, 2013 and the rules framed thereunder.

h) 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.

i) 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 dissemination mechanism across the Company. The Company has carried out awareness programmes / sessions on the mechanism established under this policy, across its various locations The Company has complied with the provisions relating to the constitution of Internal Complaints Committee under the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013, comprising of Presiding Officers and members with an appropriate mix of employees and external subject matter experts. During the period, the details of complaints received / resolved or pending are as under in accordance with provisions of the Companies Act, 201 3, 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 at 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 15th Annual General meeting (AGM) would be sent to the members whose email address are registered with the Company or their respective Depository Participants. For members who have not registered their email address, physical copies of the Notice and Annual Report would be sent in the permitted mode.

For and on behalf of the Board

Chennai Harish Lakshman L Ganesh

May 23, 2019 Vice-Chairman Chairman

DIN: 00012602 DIN: 00012583

Director’s Report