TO THE SHAREHOLDERS
Your Directors are pleased to present the 62nd Annual Report togetherwith Standalone and Consolidated Audited Accounts for the year ended 31st March2016.
(Rs in Lakhs)
|Particulars ||31.03.2016 ||31.03.2015 |
|Profit before tax ||3786.82 ||4351.37 |
|Less: Provision for taxation (including deferred tax) ||1116.14 ||1250.90 |
|Profit after Tax ||2670.68 ||3100.47 |
|Add : Balance in P&L Account brought forward from previous year ||1172.98 ||1372.83 |
|Add : Retained earnings on Account of Depreciation (Net) ||0.00 ||0.33 |
|Profit available for appropriation ||3843.66 ||4473.63 |
|Appropriations || || |
|Transfer to General Reserve ||1700.00 ||1900.00 |
|Dividend || || |
|- Special (Diamond Jubilee) ||0.00 ||332.78 |
|- Interim Dividend ||207.99 ||831.96 |
|- 2nd Interim Dividend ||540.77 ||0.00 |
|Dividend Tax (including surcharge for Special and interim dividends) ||152.43 ||235.91 |
|Surplus Balance in Profit & Loss Account ||1242.47 ||1172.98 |
Dividend and transfer to General Reserves
The Board of Directors during November 2015 declared an Interim Dividend of Rs.2.50 perequity share and further declared a Second Interim Dividend of Rs.6.50 per equity share inMarch 2016 for the financial year 2015-16 on the paid up share capital of Rs.831.96 lakhs.The dividends together with dividend tax of Rs.152.43 lakhs absorb a sum of Rs.901.19lakhs. The Board of Directors propose to treat the said dividends as the total dividendfor the year.
The Company proposes to transfer an amount of Rs. 1700.00 lakhs to the GeneralReserves. An amount of Rs. 1242.47 lakhs is proposed to be retained in the Statement ofProfit and Loss.
Management Discussion and Analysis Report
We had in 2015-16 sluggish demand for spare parts with your Company witnessing a 2%drop in sales. On the commercial vehicle end upgradation of power train specificationshave increased replacement cycle for engine gearbox and axle parts. Increased focus ofvehicle manufacturers to market spare parts through vehicle dealerships have curtailedsales levels of these parts from us. Relative stability of commodity prices haveencouraged lower stock holding at our parts dealers.
Vigorous steps are being taken by your Company to grow the business in this difficultmarket. 5 new outlets have been opened and sales commenced in two new product lines earlyin the year under review. While the margins dropped in the first half it was possible tomaintain better margins in the second half. We are hopeful that this trend will continuein 2016-17.
Non-operating income at Rs 7.44 crores is lower compared to the year 2014-15 wherenon-operating income was Rs 9.53 crores.
The Indian economy is expected to grow above 7% in 2016-17 driven by services sectorgrowth and impetus given by the Government of India for investments in infrastructure. Theprediction of an above normal monsoon is likely to increase agricultural output and likelygrowth in demand for consumer goods in rural areas.
Your Company also plans to open more outlets in this fiscal year 2016-17 to havegreater access to the markets.
Internal Control Systems
The Company has an effective and adequate Internal Control System commensurate with thesize of the business. The scope of the Internal Audit function is defined in the InternalAudit Plan. Additional staff have been added to the internal audit team in line withincrease in number of branch outlets. During the year under review your Company appointedan Independent Chartered Accountant for audit of Internal Financial Controls overFinancial Reporting.
The Internal Audit Department monitors and evaluates the efficacy and adequacy of theinternal control systems of the Company. The Internal Audit Team ensures compliance withsystems and procedures through their regular visits to all branches
The Internal Audit Reports are reviewed by the Internal Auditor Senior Management andAudit Committee periodically. Based on the reports corrective action as required areundertaken.
Consolidated Financial Statements
In accordance with the provisions of Sections 129(3) of the Companies Act 2013 theConsolidated Financial Statements drawn up in accordance with the applicable AccountingStandards form part of the Annual Report
A statement containing the salient features of the financial statement of the AssociateCompany in Form AOC - 1 is provided in Annexure "A" forming part of this report.
Information as per Sec 134 (3) (f) - Events subsequent to the date of financialstatements
There have been no material changes and commitments affecting the financial position ofthe Company between 31.03.2016 and the date of the report.
Significant and Material Orders Passed by the Regulators or Courts
There are no significant material orders passed by the Regulators / Courts whichimpacts the going concern status of the Company and its future operations. There are nomaterial changes and commitments if any affecting the financial position of the Companywhich have occurred between the end of the financial year of the Company to which thefinancial statements relate to and the date of the report
a) Fixed Deposits
Your Company has not accepted any public deposits during the year 2015-16.
b) Particulars of Loans Guarantees or Investments
The company has not given any loans or guarantees covered under the provisions ofsection 186 of the Companies Act 2013. The details of the investments made by company isgiven in the notes to the financial statements.
Board & Audit Committee
The details regarding number of board meetings held during the financial year andcomposition of Audit Committee are furnished in Corporate Governance Report.
All Directors and Senior Management Personnel have affirmed compliance with the Code ofConduct approved and adopted by the Board of Directors.
The Independent Directors of the Company have given a declaration as required underSection 149 (6) of the Companies Act 2013.
Sri Ananth Ramanujam Director retires by rotation at the ensuing Annual GeneralMeeting and being eligible offers himself for re-appointment.
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 (10) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board hascarried out an annual performance evaluation of its own performance the directorsindividually as well as the evaluation of the working of its Audit Committee.
Pursuant to the provisions of the Companies Act 2013 and Regulation 25 (3) & (4)of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 aSeparate Meeting of Independent Directors was held during the year in which theIndependent Directors evaluated the performance of the non-independent Directors theBoard as a whole and the Chairman of the Company. The criteria for evaluation is attachedvide Annexure "B".
The Company has a program to familiarise Independent Directors with regard to theirroles rights responsibilities in the Company nature of the industry in which theCompany operates the business model of the Company etc. and the same is available on thewebsite of the Company at www.impal.net/investor.htm.
The Remuneration policy of the company is attached vide Annexure "C". TheNomination & Remuneration Committee followed the policy for selection and appointmentof Directors Senior Management and their remuneration.
Key Managerial Personnel
The following persons are the Key Managerial Personnel of the Company under Section 203of the Companies Act 2013.
1. Sri N Krishnan - Managing Director
2. Sri S Ramasubramanian - Chief Financial Officer
3. Sri S Kalyanaraman - Company Secretary & Compliance Officer
Vigil Mechanism/Whistle Blower Policy
The Company has a vigil mechanism policy in place to deal with instance of fraud andmismanagement if any and the same is also posted on the website of the Company atwww.impal.net/investor.htm.
Related Party Transactions
All Related Party Transactions that were entered into during the financial year were inthe ordinary course of business at arms length. Due to change in the constitution ofa Related party entity with which the company has been contracting with such contractwith that related party amounted to a Material Related Party transaction in terms ofRegulation 23 of SEBI (Listing Obligations & Disclosure Requirements) Regulations2015. In terms of the above regulations the company during the year had sought theapproval of shareholders by an Ordinary Resolution through Postal Ballot in March 2016.The shareholders voted in favour of the resolution. Out of the total votes polled 98.96%voted in favour of the resolution. The results of the postal ballot and e-voting isavailable in the website of the Company at www.impal.net/investor.htm
Since the said contract is in ordinary course of business at arms length it isnot a Related Party transaction in terms of Section 188 of the Companies Act 2013 andhence disclosure in form AOC-2 is not required.
There are no materially significant related party transactions made by the Company withPromoters Directors Key Managerial Personnel or other Designated persons which may havea 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 approval of the Audit Committee is obtained on a quarterly basis forthe transactions which are predictive and repetitive in nature. The transactions enteredinto pursuant to the approval are audited and a statement giving details of all relatedparty transactions is placed before the Audit Committee and the Board of Directors fortheir approval on a quarterly basis. The policy on Related Party Transactions as approvedby the Board is uploaded on the Companys Website.www.impal.net/investor.htm.
Corporate Social Responsibility
As part of its initiatives under Corporate Social Responsibility (CSR) the Company hascontributed to various projects in the areas of Health Education Livelihood Adoption ofVillage Schools Empowering Women etc. These projects are in accordance with Schedule VIIof the Companies Act 2013. The CSR Committee frames the CSR policy monitors and executethe CSR activities. The Committee defines the parameters and observes them for effectivedischarge of the social responsibility of your Company. The Board has further approved theCSR Policy of the Company to provide a guideline for CSR activities of the Company.
The Company has spent Rs. 50.30 lakhs towards CSR during the year. The constitution ofthe CSR Committee and the report as required under the Companies Act 2013 are provided asAnnexures "D" & "D1" to this Report.
The Auditors M/s Sundaram & Srinivasan Chartered Accountants Chennai retire atthe ensuing Annual General Meeting and have confirmed their eligibility and willingness toaccept office if reappointed. A certificate under Section 141 of the Companies Act 2013has been received from them.
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 hasappointed M/s. Damodaran & Associates a firm of Company Secretaries in Practice toundertake the Secretarial Audit of the Company. The Report of the Secretarial Auditor isattached vide Annexure "E".
Comments on Auditors report
There are no qualifications reservations or adverse remarks or disclaimers made by theStatutory Auditors and Company Secretary in Practice in their reports respectively. TheStatutory Auditors have not reported any incident of fraud to the Audit Committee of theCompany in the year under review.
Extract of Annual Return
As required under Section 92(3) of the Companies Act 2013 and Rule 12(1) of theCompanies (Management and Administration) Rules 2014 an extract of the Annual Return inForm MGT-9 is attached as a part of this report vide Annexure "F".
Information as per Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of TheCompanies (Accounts) Rules 2014
Your Company has no activity relating to conservation of energy or technologyabsorption. During 2015-2016 the Company did not have any foreign exchange earnings oroutgo.
Particulars of Employees
There is no employee particulars of whom are to be furnished under Section 197 readwith Rule 5 (2). The information required under Section 197(12) read with Rule 5 of TheCompanies (Appointment and Remuneration of Managerial Personnel) Rules 2014 are givenhereunder:
i & ii The ratio of remuneration of each director to the median remuneration of theemployees of the company for the financial year:
The ratio of average remuneration of Non-Whole Time Directors with that of the medianremuneration of the employees for the financial year is 0.40 times and that of theManaging Director (inclusive of his Commission) is 82 times.
(iii) Percentage increase in median remuneration of employees in the financial year -8%
(iv) The number of permanent employees on the rolls of the Company as on 31st March2016 is 635.
(v) Explanation on the relationship between average increase in remuneration andCompany performance:
The Companys Profit Before Tax for the year under review has decreased by 12.98%. The average increase in remuneration of employees was 11.76% on their gross earnings.
(vi) Comparison of the remuneration of the Key Managerial Personnel against theperformance of the Company.
|Name ||Designation ||CTC (Rs. In Lakhs) ||% Increase in CTC ||PBT (Rs In Lakhs) ||% decrease in PBT |
|Sri N Krishnan ||Managing Director ||14185* ||020 || || |
|Sri S Ramasubramanian ||cfo ||3936 ||708 ||378682 ||1298 |
|Sri S Kalyanaraman ||Company Secretary ||1129 ||752 || || |
*Includes commission of 1.5% on Net profit.
(vii) Variations in the market capitalization of the Company price earnings ratio asat the closing date of the current financial year and previous financial year andpercentage increase or decrease in the market quotations of the shares of the company incomparison to the rate at which the company came out with the last public offer:
|Date ||Issued Capital (Shares) ||Closing Market Price ||EPS ||PE Ratio ||Market Capitalisation |
|31032015 ||8319575 ||66060 ||3727 ||1772 ||54959 crs |
|31032016 ||8319575 ||67255 ||3210 ||2095 ||55953 crs |
|Increase/Decrease ||Nil ||1195 || || ||994 crs |
|%Increase /Decrease || ||181% || || ||181% |
(viii) Average percentile increase already made in the salaries of employees other thanthe managerial personnel in the last financial year and its comparison with the percentileincrease in the managerial remuneration and justification thereof and point out if thereare any exceptional circumstances for increase in the managerial remuneration:
Percentage increase in median remuneration of employees in the financial year - 8 % foremployees other than KMPs and 5% for KMPs in totality.
(ix) Comparison of the remuneration for each of the Key Managerial Personnel againstperformance of the Company: - Refer Point - (vi)
(x) The Key parameters for any variable component of remuneration availed by theDirectors: Commission within the ceiling of 1% of the net profits of the Company asapproved by the shareholders.
(xi) The ratio of the remuneration of the highest paid director to that of theemployees who are not directors but receive remuneration in excess of the highest paiddirector during the year;
Not Applicable ; and
(xii) Affirmation that the remuneration is as per the remuneration policy of thecompany:
Directors responsibility statement
As required under Section 134(5) of the Companies Act 2013 your Directors state that:
i) in the preparation of the annual accounts the applicable accounting standards hadbeen followed along with proper explanation relating to material departures;
ii) the Directors have selected such accounting policies and applied them consistentlyand made judgements and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at the end of the financial year ended31st March 2016 and the profit of the Company for that year;
iii) the Directors have taken proper and sufficient care for the maintenance ofadequate accounting records in accordance with the provisions of the Companies Act 2013for safeguarding the assets of the Company and for preventing and detecting fraud andother irregularities;
iv) the Directors have prepared the annual accounts on a going concern basis and;
v) the Directors have laid down adequate internal financial controls to be followed bythe Company and that such internal financial controls are adequate and were operatingeffectively;
vi) the Directors have devised proper systems to ensure compliance with the provisionsof all applicable laws and such systems are adequate and are operating effectively.
A detailed report on corporate governance together with a certificate from theStatutory Auditors in compliance with Regulation 34 (3) read with Schedule V of SEBI(Listing Obligation and Disclosure Requirements) Regulations 2015 is attached formingpart of this report.
Your Directors thank all the suppliers and dealers for their continued support andco-operation during the year under review. They also wish to thank State Bank of India forits support and assistance.
Your Directors place on record their appreciation for the commitment initiative andexcellent contribution of all the staff and executives of the Company.
| ||On behalf of the Board of Directors |
|Chennai ||S Ram |
|30th May 2016 ||Chairman |