Your Directors have pleasure in presenting their report together with the auditedfinancial statements for the financial year ended March 31 2016.
| || ||Rs. million |
|Parameters ||2015-16 ||2014-15 |
|Net revenue ||46907 ||42113 |
|Other income ||457 ||423 |
|Total income ||47364 ||42536 |
|Operating profit (EBIDTA) ||8424 ||7241 |
|Profit before tax (PBT) ||7222 ||6099 |
|Profit after tax (PAT) ||4894 ||4109 |
|Surplus brought forward ||13917 ||10960 |
|Amount available for appropriation ||18812 ||15068 |
|Appropriations: || || |
|Transfer to General Reserve ||489 ||411 |
|Dividend on equity capital || || |
|Interim Dividend paid/Proposed dividend ||726 ||617 |
|Corporate dividend tax ||148 ||123 |
|Surplus carried forward to balance sheet ||17449 ||13917 |
The Company continued its record of clocking highest ever turnover and profitfor the financial year 2015-16.
Total revenue (net of excise duty) for the year was Rs. 46.91 billion as againstRs. 42.11 billion in the previous year registering a growth of 11%.
The operating profit(Earnings Before Depreciation Interest Tax andAmortisation-EBIDTA) for the year stood at Rs. 8424 million (previous year Rs. 7241million) representing 17.96% of net revenue.
The Profit Before Tax (PBT) and Profit After Tax (PAT) for the year was at Rs.7222 million and Rs. 4894 million as against Rs. 6099 million and Rs. 4109 million ofthe previous financial year respectively.
The profit after tax has registered an impressive 19% growth.
Industrial battery business
The Companys industrial battery business registered double digit growth over theprevious financial year in a challenging and competitive market conditions. Theindustrial battery business improved the overall performance by virtue of its"preferred supplier status" with all major customers efficient after salesservice customer relationship management and consistent product performance of itsflagship brands PowerStack Quanta and QRS Series batteries.
The Company has progressively started providing total solutions to customers enablingit to forge strategic alliances.
Automotive battery business
The Companys automotive battery business reported double digit revenue growthsupported by volume increase of 24% in both four-wheeler and two-wheeler batteries overthe previous financial year.
During the year the Company commenced supplies from the new four-wheeler batteryplant consolidating its position in this space. In four-wheeler OEM space the companygrew the business by 15% inspite of just 4% increase in automobile production. In theaftermarket segment the companys brands grew at a healthy pace of 30% infour-wheelers and 23% in two-wheeler batteries. The volume growth in both four-wheeler andtwo-wheeler aftermarket business continued during the year due to strong preference forCompanys products supported by complete product offering strengthening of brandsAmaron and PowerZone TM expansion of channel and leveragingcustomer relationships.
The volume of inverter batteries which includes both flat witnessed a good growth of14% over previous year.
The volume from export business grew significantly at 33% over previous year. The brandand products of the company have started gaining recognition in overseas marketsresulting in increased business. The focused market strategy of the Company paid offleading to higher penetration and business increase. The Company also expanded thedistributors network to newer countries.
The new four-wheeler battery plant at Nunegundlapalle Village Chittoor District withcapacity of 2.25 million units per annum started supplying during the year taking thetotal capacity of the four-wheeler automotive battery plant to 8.25 million units perannum. During the year we also commenced supplies from the new Tubular plant.
In view of the anticipated growth in demand for two-wheeler battery the Board revieweda proposal for expansion of two-wheeler battery capacity to be implemented in four phasesstaggered over a period of four years which would on completion take the capacity fromexisting 11 million units p.a to 25 million units p.a. The Board approved the setting upof necessary infrastructure for the entire expansion and first phase comprising of 3 lineswhich would take the capacity to 15 million units p.a.
The Board had already approved the expansion of four-wheeler battery capacity from 8.25million units p.a to 11 million units p.a.
The networth as at March 31 2016 improved to Rs. 21016.42 million with the additionof Rs. 4020.71 million to the reserves and surplus during the year. There is no interestbearing debt as of March 31 2016. CRISIL rated the Companys long-term bank loanfacilities at CRISIL AA+/Stable and on the short-term bank facilities atCRISIL A1+.
During the year under review the gross fixed assets including capital work in progressincreased by Rs. 5068.96 million (net of deletions of Rs. 677.84 million) and are at Rs.20345.96 million (previous year Rs. 15277 million). The entire additions were fundedthrough internal accruals. The earnings per share of Rs. 1/- each for the financial year2015-16 grew by 19% at Rs. 28.65/- as against Rs. 24.05/- for the previous financial yearwhile the book value per share as at March 31 2016 was at Rs. 123.04/- as against Rs.99.50/- as at March 31 2015.
The Company paid an interim dividend of Rs. 4.25 per equity share of Rs. 1/-each (425%) for the financial year 2015-16. The interim dividend (excluding corporatedividend tax) aggregated to Rs. 725.95 million a pay-out of 14.83% of the profit aftertax of the Company for the financial year 2015-16.
As the pay-out is in line with the dividend policy of the Company i.e. Dividend Payout(excluding corporate dividend tax) upto 15% of the profit after tax of the Company. TheBoard has not recommended final for the financial year 2015-16.
Transfer to reserves
Your directors have proposed to transfer a sum of Rs. 489.44 million to the generalreserve out of the profits earned by the Company. An amount of Rs. 17448.73million is proposed to be retained as surplus in the statement of Profit and Loss.
Directors and Key Managerial Personnel
Pursuant to the provisions of Section 149 of the Companies Act 2013 Mr. NagarjunValluripalli Mr. N Sri Vishnu Raju Mr. T R Narayanaswamy Mr. Raymond J Brown and Ms.Bhairavi Tushar Jani were appointed as an Independent Directors of the Company. They havesubmitted a declaration that each of them meet the criteria of independence as provided inSection 149(6) of the Act and there has been no change in the circumstances which mayaffect their status as an Independent Director during the year.
In accordance with the provisions of Section 152 of the Companies Act 2013 Dr.Ramachandra N Galla Chairman (DIN : 00133761) is liable to retire by rotation at theensuing annual general meeting and being eligible offer himself for re-appointment.
Mr. Bruce Ronning Jr. (DIN: 06938974) resigned from the Board with effect from February1 2016 and Mr. Raphael John Shemanski (DIN: 07462586) was appointed as an AdditionalDirector on the Board with effect from March 19 2016 who hold office upto the date ofthe ensuing annual general meeting.
The Board wishes to place on record their sincere appreciation for the valuableservices rendered by Mr. Bruce A Ronning Jr. during his tenure as a director of theCompany.
The Company has received a notice in writing under Section 160 of the Act proposing theappointment of Mr. Raphael John Shemanski as a Director. The resolutions seeking yourapproval for the re-appointment of Dr. Ramachandra N Galla Chairman and appointment ofMr. Raphael John Shemanski as a Director are included in the notice of the ensuing annualgeneral meeting along with brief details about them.
Pursuant to the provisions of Section 203 of the Act Mr. Jayadev Galla Vice Chairmanand Managing Director Mr. S V Raghavendra Chief Financial Officer and Mr. M R RajaramCompany Secretary are the key managerial personnel of the Company.
M/s. Brahmayya & Co. Chartered Accountants and M/s. Deloitte Haskins & SellsLLP Chartered Accountants were appointed as the joint statutory auditors at the AnnualGeneral Meeting held on August 14 2015 for a term of five (5) years from the conclusionof the 30th annual general meeting till the conclusion of 35th annual generalmeeting. As required under the provisions of Section 139 of the Act a resolution for theannual ratification of their appointment is being placed before the shareholders for theirapproval. In this regard the Company has received a certificate from the auditors to theeffect that if their appointment is ratified it would be in accordance with theprovisions of Section 141 of the Act. The Auditors report does not contain anyqualification reservation or adverse remark.
As per Section 148 of the Companies Act 2013 read with the Companies (Cost Records andAudit) Rules as amended from time to time the cost records are required to be audited.Based on the recommendation of Audit Committee your Board has appointed M/s. Sagar &Associates Cost Accountants Hyderabad as cost auditors for the financial year 2016-17.Necessary resolution for ratification of their remuneration is being placed before theshareholders for their approval.
Pursuant to Section 204 of the Companies Act 2013 read with the Companies (Appointmentand Remuneration of Managerial Personnel) Rules 2014 the Company had appointedR.Sridharan & Associates Company Secretaries to undertake the secretarial audit ofthe Company for the financial year 2015-16. The Secretarial Audit Report in Form MR-3received from them is annexed herewith as Annexure I. The Secretarial Audit Report doesnot contain any qualification reservation or adverse remark.
The report on corporate governance for the year ended March 31 2016 pursuant toRegulation 34 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations2015 is annexed hereto as Annexure II. The certificate conditions of corporate governanceis attached to the report on corporate governance.
Management discussion and analysis
Management discussion and analysis report highlighting the performance and prospectsof the Companys business forms part of this annual report.
Directors responsibility statement
Pursuant to Section 134(3)(c) and 134(5) of the Companies Act 2013 the Board ofDirectors of the Company confirm to the best of their knowledge and belief that in thepreparation of the statement of profit and loss for the financial year ended March 312016 and the balance sheet as at that date ("financial statements"):
1. applicable accounting standards have been followed;
2. appropriate accounting policies have been selected and applied consistently and suchjudgements and estimates that are reasonable and prudent have been made so as to give atrue and fair view of the state of affairs of the Company as at the end of the financialyear and of the profit of the Company for that period;
3. proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities. Toensure this the Company has established internal control systems consistent with itssize and nature of operations subject to the inherent limitations that should berecognised in weighing the assurance provided by any such system of internal controls.These systems are reviewed and updated on an on-going basis. Periodic internal audits areconducted to provide reasonable assurance of compliance with these systems. The auditcommittee meets at regular intervals to review the internal audit function;
4. financial statements havebeen prepared on a going concern basis;
5. proper internal financial controls are in place and that such internal financialcontrols were adequate and were operating effectively;
6. systems to ensure compliance with the provisions of all applicable laws are in placeand were adequate and operating effectively.
Information and Disclosures under the Companies Act 2013 Extract of Annual Return
The extract of Annual Return pursuant to Section 134(3)(a) and Section 92(3) of theCompanies Act 2013 (Act) in the prescribed form MGT-9 is annexed herewith asAnnexure III
Number of Meetings of the Board
During the year five meetings of the Board of the Directors of the Company wereconvened and held in accordance with the provisions of the Companies Act 2013. Thedate(s) of the Board Meeting attendance by the directors are given in the CorporateGovernance Report forming part of this annual report. from practicing company secretaryregarding the compliance of
Committees of the Board
In compliance with the provisions of Sections 135 177 178 of the Companies Act 2013the Board constituted Corporate Social Responsibility Committee Audit CommitteeNomination and Remuneration Committee and Share Transfer and Stakeholders RelationshipCommittee (Committees). The details of composition of the Committees their meeting andattendance of the members are given in the Corporate Governance Report forming part ofthis annual report.
Corporate Social Responsibility (CSR)
The brief outline of the CSR Policy of the Company and the initiatives undertaken bythe Company on CSR activities during the year are given in Annexure IV to this report inthe format prescribed in Companies (Corporate Social Responsibility Policy) Rules 2014.The said policy is available on the Companys website at http://www.amararaja.co.in/policies/ARBL-Corporate-Social-Responsibility-Policy.pdf
Nomination and Remuneration Policy
The Board has on the recommendation of Nomination and Remuneration Committee framed apolicy for selection and appointment of Directors Senior Management Personnel and theirremuneration. The Nomination and Remuneration Policy adopted by the Board is available onthe Companys website athttps://amararaja.co.in/policies/ARBL%20%20Nomination%20and%20 Remuneration%20Policy.pdf
Evaluation of the Board
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 of SEBI(Listing Obligations and Disclosure Requirements) Regulations 2015 the Board had carriedout an annual evaluation of its own performance the Directors individually and of thecommittees of the Board.
A structured questionnaire was prepared after taking into consideration inputs receivedfrom the Directors covering aspects of the Boards functioning such as adequacy ofthe composition of the Board and its committees execution and performance of specificduties obligations and governance.
A separate exercise was carried out to evaluate the performance of Individual Directorsincluding the Chairman of the Board. The Directors performance was evaluated on parameterssuch as level of engagement and contribution in safeguarding the interest of the Companyetc.
The performance of every Director was evaluated by the Nomination and RemunerationCommittee. The performance evaluation of the Independent Directors was carried out by theentire Board. Further the performance evaluation of the Chairman and the Non IndependentDirectors was carried out by the Independent Directors
Mr. Raphael John Shemanski additional director did not participate in the evaluationprocess or being evaluated as he was appointed at the end of financial year 2015-16.
Familiarisation Programme for Directors
In addition to giving a formal appointment letter to newly appointed Directors on theBoard a handbook covering the role function duties and responsibilities and the detailsof the compliance requirements expected from the Directors under the Companies Act 2013and relevant Regulations of SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 were given and explained to the new Directors.
The newly appointed Directors are given induction and orientation with respect toCompanys Vision Core purpose Core Values and business operations. In additiondetailed presentations are made by Senior Management Personnel on business environmentperformance of the Company at every Board Meeting.
The above initiatives help the Directors to understand the Company its business andthe regulatory framework in which the Company operates and enables the Directors tofulfill their role/responsibility. The details of the familiarisation programme isavailable on the Companys website www.amararaja.co.in.
Particulars of loans guarantees and investments
The Company has not given any loans guarantees or security in connection with loans ormade any investments falling within the ambit of Section 186 of the Companies Act 2013.
Transactions with the Related Parties
All related party transactions that were entered into during the financial year were onarms length basis and were in the ordinary course of business.
During the financial year 2015-16 there were no materially significant transactionswith the related parties which might be deemed to have had a potential material conflictwith the interest of the Company at large.
In line with the provisions of Section 177 of the Companies Act 2013 read with theCompanies (Meetings of the Board and its Powers) Rules 2014 omnibus approval for theestimated value of transactions with the related parties for the financial year ahead isobtained from the Audit Committee. The transactions with the related parties are routineand repetitive in nature.
The summary statement of transactions entered into with the related parties pursuant tothe omnibus approval so granted are reviewed and approved by the Audit Committee and theBoard of Directors on a quarterly basis. The summary statements are supported by anindependent audit report certifying that the transactions are at an arms lengthbasis and in the ordinary course of business.
The members at the annual general meeting held on August 14 2015 approved andauthorised the Board to enter into transactions with Mangal Industries Limited (MIL) uptoa cumulative value of transactions of Rs. 600 crores in each financial year. During thefinancial year 2015-16 the transactions with MIL amounted to Rs. 520.13 crores (includingdividend paid) a material transaction under the Regulation 23 of the SEBI(ListingObligations and Disclosure Requirements) Regulations 2015 ("Regulations") andthe policy adopted by the Company under the said Regulations.
The Form AOC- 2 pursuant to Section 134 (3)(h) of the Companies Act 2013 read withRule 8(2) of the Companies (Accounts) Rules 2014 is set out as Annexure V to this Report.
The Company has put in place adequate system of internal controls commensurate with itssize and the nature of its operations. The Companys internal control system coversthe following aspects:
Financial propriety of business transactions.
Safeguarding the assets of the Company.
Compliance with prevalent statues regulations management authorisationpolicies and procedures.
The Audit Committee of the board periodically reviews audit plans observations andrecommendations of the internal and external auditors with reference to the significantcontrols and keeps the board of directors informed of its observations if any from timeto time.
During the year the risk assessment parameters were reviewed and modified. The auditcommittee reviewed the element of risks and the steps taken to mitigate the risks. In theopinion of the Board there are no major elements of risk which has the potential ofthreatening the existence of the Company.
Whistle Blower Policy /Vigil Mechanism
The Company has established a whistle blower policy/vigil mechanism to provide anavenue to raise concerns. The mechanism provides for adequate safeguards againstvictimization of employees who avail of it and also for appointment of an Ombudsperson whowill deal with the complaints received. The policy also lays down the process to befollowed for dealing with the complaints and in exceptional cases also provides fordirect appeal to the Chairperson of the Audit Committee. The Whistle Blower Policyestablished by the Board is available on the Companys website athttp://www.amararaja.co.in/ policies/ARBL-Whistle-Blower-Policy.pdf
Deposits from Public
The Company has not accepted any deposits from the public falling within the ambit ofSection 73 of the Companies Act 2013 and The Companies (Acceptance of Deposit) Rules2014 during the year under review. There are no outstanding deposits as on March 31 2016.
Particulars of Remuneration
The information required pursuant to Section 197(12) of the Act read with Rule 5 of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is annexedhereto as Annexure VI.
A statement showing names and other particulars of the employees drawing remunerationin excess of the limits prescribed under Rule 5(2) of the said rules is also annexed tothe Directors Report. However as per the provisions of Section 136(1) of CompaniesAct 2013 the annual report is being sent to all the members excluding the aforesaidstatement. The statement is available for inspection at the registered officeof theCompany during working hours.
Conservation of energy Technology Absorption and Foreign Exchange Earnings and Outgo
The information on conservation of energy technology absorption foreign exchangeearnings and outgo as per Section 134(3)(m) of the Act read with Rule 8 of The Companies(Accounts) Rules 2014 risk areas and adequacy are annexed of internal hereto asAnnexure VII and forms part of this annual report.
There are no significant which would impact the going concern status of the Company andits future operations.
Awards and Recognitions
Your Company continues to get accolades and awards from its customers and otherprestigious domestic/international forums. Some of the awards and recognitions yourCompany received during the year under review:
Gold award for "Best Infra equipment supplier of the Year 2015-16"from Indus Towers Limited.
"Valued Partner Service Excellence" award for the year 2015from Bharti Infratel Limited.
Received SHIELD award on OVERALL EXCELLENCE from Maruti Suzuki Limited in thefield of QCDM(Quality Cost Delivery and Management) parameters.
Amaron received the prestigious "Superbrand" award fromthe Super Brand Council in the Automotive Battery category.
Amaron adjudged as Indias Most trusted Brand 2015 in the battery segmentby the Indias Most Trusted Brand Awards Council.
Received Warehouse Excellence Gold Award from CII-Institute of Logistics.
Good Performance Award- Private Manufacturing Large category for the year 2015from the The Institute of Cost Accountants of India.
Investor Education and Protection Fund (IEPF)
In terms of Section 205A read with Section 205C of the Companies Act 1956 and thecorresponding provision under the Companies Act 2013 an amount of Rs. 417520/- beingunclaimed dividend pertaining to the financial year 2007-08 was transferred to IEPF onOctober 7 2015.
Health Safety and Environmental protection (HSE)
The Company has complied with all applicable environmental and labour laws. The Companycontinues to be certified under ISO-14001 and OHSAS 18001-2007 for its environmentmanagement systems and occupational health and safety management systems respectively.
Prevention of Sexual Harassment at workplace policy
The company has in place prevention of Sexual Harassment Policy in line with therequirements of the Sexual Harassment of women at the workplace (Prevention Prohibitionand Redressal) Act 2013. Internal Complaints Committee (ICC) has been set up to redresscomplaints received regarding sexual harassment.
All women employees are covered under this policy. During the year 2015-16 nocomplaints were received by the ICC.
During the year under review industrial relations remained cordial and stable. Thedirectors wish to place on record their sincere appreciation for the co-operation receivedfrom employees at all levels.
The Board of Directors takes this opportunity to place on record their appreciation forthe unstinted co-operation commitment and dedication of all the employees of the Companyand the support extended by the channel partners customers vendors business associatesbanks government authorities and all concerned without which it would not have beenpossible to achieve all round growth of the Company. Your Directors also take thisopportunity to thank the joint venture partner Johnson Controls Inc. for their valuableassistance and support. The Directors are thankful to the shareholders for their continuedpatronage.
| ||On behalf of the Board |
|Place: Hanover Germany ||Dr. Ramachandra N Galla |
|Date: May 24 2016 ||Chairman |