Your Directors are pleased to present the 63rd Annual Report together withStandalone and Consolidated Audited Accounts for the year ended 31st March 2017.
| || || |
(Rs in Lakhs)
|Particulars ||31.03.2017 ||31.03.2016 |
|Profit before tax ||4042.48 ||3786.82 |
|Less: Provision for taxation (including deferred tax) ||1309.96 ||1116.14 |
|Profit after Tax ||2732.52 ||2670.68 |
|Add : Balance in P&L Account brought forward from previous year ||1242.48 ||1172.98 |
|Profit available for appropriation ||3975.00 ||3843.66 |
|Appropriations || || |
|Transfer to General Reserve ||1800.00 ||1700.00 |
|Dividend || || |
|- Interim Dividend ||415.98 ||748.76 |
|Dividend Tax (including surcharge for Interim Dividend) ||84.68 ||152.43 |
|Surplus Balance in Profit & Loss Account ||1674.34 ||1242.47 |
Dividend and transfer to General Reserves
The Board of Directors during February 2017 paid an Interim Dividend of Rs.5.00 perequity share. Your Directors are pleased to recommend a final dividend of Rs. 6.00 perequity share which together with the interim dividend aggregates to a total dividend ofRs.11.00 per equity share on the paid up share capital of Rs.831.96 lakhs for the year2016-17. The dividends including the proposed final dividend together with dividend taxof Rs.186.30 lakhs absorb a sum of Rs.1101.45 lakhs. The Company proposes to transfer anamount of Rs.1800 lakhs to the General Reserves. An amount of Rs.1674.34 lakhs is proposedto be retained in the Statement of Profit and Loss.
Management Discussion and Analysis Report
After two years of stagnant demand for spare parts your Company witnessed a salesincrease of 3.5% for the year under review.
Demonetization affected our sales in November December and January. Better productmix better margins and additional product lines enabled the Company to increase itsoperating income by 13.08%. PBT increased by 6.75% from Rs 37.87 crores to Rs 40.42crores. However most of the non-operating income this year is taxable resulting in ahigher tax on other income.
Your Directors are pleased to inform that the process of acquiring 76% stake in theequity of CAPL Motor Parts Private Ltd a spare parts distribution company in Ahmedabad isin progress. We expect this to be completed soon.
We see continued effort from the vehicle manufacturers to have most of the spare partschanneled through them to the vehicle dealerships. In addition vehicle manufacturersthrough their dealership channels are now able to give longer term warranty for bothpassenger cars and commercial vehicles. This change is limiting our growth especially inthe power train segment viz. engine gear box axles etc. We continue to look foradditional spare parts lines to give us growth in the passenger cars and commercialvehicles segment.
Expected introduction of GST from 1st July 2017 may have an adverse effect on sales inthe first half of 2017-18 as the trade learns to adjust to the new indirect tax regime.Medium to long term GST is expected to be beneficial to the organized sector of spareparts distribution trade.
Your Company will likely open few more branches to improve availability of parts toareas where growth in transport activity is expected.
Internal Control Systems
The Company has an established and adequate Internal Control System with appropriatepolicies and procedures covering all areas of operations commensurate with the size of thebusiness. The Internal Audit team through its regular visit to branches evaluates theadequacy of internal control systems. The Internal Auditor Senior Management and AuditCommittee regularly review the internal audit findings as well as the effectiveness of theinternal control measures. Based on the reports appropriate and suitable action asrequired are undertaken. During the year under review an Independent Chartered Accountantconducted an audit of the Internal
Financial Controls over Financial Reporting.
The Internal Audit Department monitors and evaluatestheefficacyand adequacy of theinternal control systems of the Company.
Additionally the company has reviewed the security assurance of the IT systems throughan independent external professional.
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. financialAstatement of the AssociateCompany in containingthesalientfeaturesofthe 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 31.03.2017 and the date of the report.
Significant and Material Orders Passed by the Regulators or Courts material orderspassed by the Regulators / Courts which impacts the go Thereare nosignificant ing concernstatus of the Company and its future operations. There are no material changes andcommitments if any affecting the financial position of the Company which have occurredbetween the end of the financial year of the Company to which the financial statementsrelate to and the date the report.
Finance a) Fixed Deposits
Your Company has not accepted any public deposits during the year 2016-17. 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 the Companyare given 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.
Your Board of Directors have re-appointed Sri N Krishnan as Managing Director for afurther period of 5 years with effect from 5th July 2017. Sri S Ram Director retires byrotation at the ensuing Annual General Meeting and being eligible offers himself forre-appointment.
Pursuant to the provisions of the Companies Act 2013 and Regulation 17 (10) of theSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and in terms ofthe guidance note on Board's evaluation issued by the Securities and Exchange Board ofIndia the Board has carried out an annual performance evaluation of its own performancethe directors individually as well as the evaluation of the working of its AuditCommittee.
Pursuant to the provisions of the Companies Act 2013 and Regulation 25 (3)&(4) ofthe SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 a SeparateMeeting of Independent Directors was held during the year in which the IndependentDirectors evaluated the performance of the non-independent Directors the Board as a wholeand the Chairman of the Company. The criteria for evaluation is attached vide 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 arm's length. During the year under review transactionentered into with a Related Party amounted to a Material Related Party transaction interms of Regulation 23 of SEBI (Listing Obligations & Disclosure Requirements)Regulations 2015. The shareholders in March 2016 gave approval to the Company forentering in to such transactions on a year on year basis. Since the said contract is inordinary course of business at arm's length it is not a Related Party transaction interms of Section 188 of the Companies Act 2013 and hence disclosure in form AOC-2 is notrequired.
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 PartyTransactions are placed before the Audit Committee as also the Board for approval. Priorapproval of the Audit Committee is obtained on a quarterly basis for the transactionswhich are predictive and repetitive in nature. The transactions entered into pursuant tothe approval are audited and a statement giving details of all related party transactionsis placed before the Audit Committee and the Board of Directors for their approval on aquarterly basis. The policy on Related Party Transactions as approved by the Board isuploaded on the Company's 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 executesthe CSR activities. The Committee defines 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. TheCompany has spent Rs. 76.90 lakhs 2.03% of the net profits of the Company towards CSRactivities during the year. The constitution of the CSR Committee and the report asrequired under the Companies Act 2013 are provided as Annexures "D" &"D1" to this Report.
Pursuant to the provisions of Section 139 of the Companies Act 2013 new Auditorshave to be appointed by the Company. The Audit Committee and the Board recommendsappointing M/s Brahmayya & Co Chartered Accountants Chennai as the Auditors of theCompany and the new Audit Firm have alsoconfirmedtheireligibilityandwillingnesstoacceptofficeif appointed. A certificate undersection 141 of the Companies Act 2013 has been received from them. Accordingly thesubject for appointment of new Auditors forms part of the Notice of the ensuing AnnualGeneral Meeting.
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 qualificationsreservations or adverse remarks or disclaimers made by theStatutory Auditors and the Secretarial Auditor 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 2016-2017 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 medianremuneration of the employees of the company for the financial year: The ratio of averageremuneration of Non-Whole Time Directors with that of the median remuneration of theemployees for the financialyear is 0.40 times and that of the Managing Director (inclusiveof Commission) is at 78 times. iii) Percentage increase in median remuneration ofemployees in the financial year - 7.5 %. iv) The number of permanent employees on therolls of the Company as on 31st March 2017 is 683 v) Average percentile increase alreadymade in the salaries of employees other than the managerial personnel in the lastfinancialyear and its comparison with the percentile increase in the managerialremuneration and justification thereof and point out if there are any exceptionalcircumstances for increase in the managerial remuneration: Percentage increase in medianremuneration of staff cost in the financial year - 7.5 % for staffs and 5 % for ManagerialPersonnel. of the company: (vi) Affirmationthattheremunerationis as perthe The Companyaffirms that remuneration is as per the remuneration policy of the Company.
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 had beenfollowed 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 2017 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 by theCompany 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 togetherwith certificatefrom 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 |
|26th May 2017 ||Chairman |
FORM NO. AOC - 1
(Pursuant to first proviso to sub-section (3) of section 129 read with rule 5 ofCompanies (Accounts)
Statement containing salient features of the financial statement ofsubsidiaries/associate companies/ joint ventures
Part "A": Subsidiaries
(Information in respect of each subsidiary to be presented with amounts in Rs )
|1. Sl. No. || |
|2. Name of the subsidiary || |
|3. Reporting period for the subsidiary concerned if different from the holding || |
|company's reporting period || |
|4. Reporting currency and Exchange rate as on the last date of the relevant || |
|Financial year in the case of foreign subsidiaries. || |
|5. Share capital || |
|6. Reserves & surplus || |
|7. Total assets || |
|8. Total Liabilities || |
| ||Not Applicable |
|9. Investments || |
|10. Turnover || |
|11. Profit before taxation || |
|12. Provision for taxation || |
|13. Profit after taxation || |
|14. Proposed Dividend || |
|15. % of shareholding || |
Notes: The following information shall be furnished at the end of the statement:
1. Names of subsidiaries which are yet to commence operations
2. Names of subsidiaries which have been liquidated or sold during the year.
Part "B": Associates and Joint Ventures
Statement pursuant to Section 129 (3) of the Companies Act 2013 related to AssociateCompanies and Joint Ventures
|Name of Associates/Joint Ventures ||Transenergy Limited |
|1. Latest audited Balance Sheet Date ||31.03.2017* |
|2. Shares of Associate/Joint Ventures held by the company on the year end || |
|No of shares held ||100000 |
|Amount of Investment in Associates/Joint Venture ||Rs 163.75 lakhs |
|Nominal Value Rs.100/- per share || |
|Extend of Holding % ||35.26% of equity shares |
|3. Description of how there is significant influence ||Holding more than twenty percent of the paid up share capital |
|4. Reason why the associate/joint venture is not consolidated ||N A |
|5. Net worth attributable to Shareholding as per latest audited Balance Sheet (unaudited -31.03.2017) ||Rs.288.57 lakhs |
|6. Profit / Loss for the year || |
|i. Considered in Consolidation ||Rs.14.22 lakhs |
|ii. Not Considered in Consolidation ||Rs.27.97 lakhs |
1. Names of associates or joint ventures which are yet to commence operations NotApplicable
2. Names of associates or joint ventures which have been liquidated or sold during theyear - Not
|N KRISHNAN ||S PRASAD ||As per our attached Report of even date |
|Managing Director ||Director ||For SUNDARAM & SRINIVASAN |
| || ||Chartered Accountants |
|S RAMASUBRAMANIAN ||S KALYANARAMAN ||Firm Registration Number : 004207S |
|Chief Financial Officer ||Secretary || |
| || ||M PADHMANABHAN |
|Chennai || ||Partner |
|26th May 2017 || ||Membership No: F13291 |
ANNEXURE "B" CRITERIA FOR EVALUATION
Criteria for evaluation of the Board and Non-Independent Directors at a separatemeeting of Independent Directors:
1. Composition of the Board and availability of multi-disciplinary skills whether theBoard comprises of Directors with sufficient qualifications and experience indiversefieldsto make IMPAL a versatile institution.
2. Commitment to good Corporate Governance Practices a) Whether the company practiceshigh ethical and moral standards. b) Whether the company is fair and transparent in allits dealing with the stake holders.
3. Adherence to Regulatory Compliance
Whether the Company adheres to the various Government regulations both State andCentral in time.
4. Track record of financial performance Whether the Company has been consistentlyrecordingsatisfactoryandprofitablefinancialperformance year over year adding toshareholder value.
Whether the Company is transparent in all its disclosures on financial data.
5. Grievance redressal mechanism
Whether a proper system is in place to attend to the complaints/grievances from theshareholders depositors customers employees and others quickly and fairly.
6. Existence of integrated Risk Management System
Whether the Company has an integrated risk management system to cover the businessrisks.
7. Use of Modern Technology
Whether the Company has an Integrated IT strategy and whether there is any system forperiodical technology upgradation covering both hardware and software.
8. Commitment to CSR
Whether the Company is committed to social causes and CSR and whether there is systemto identify finance and monitor such social activities.
Criteria for evaluation of Chairman at separate meeting of Independent Directors:
1. Leadership qualities
2. Standard of Integrity
3. Understanding of Macro economic Micro economic Industry trends and indepthknowledge of Automotive Industry
4. Public Relations
5. Future Vision and Innovation
Criteria for evaluation of Independent Directors by the entire Board:
1. Qualifications & Experience
2. Standard of Integrity
3. Attendance in Board Meetings/AGM
4. Understanding of Company's business
5. Value addition in Board Meetings
Criteria for evaluation of the Audit Committee by the Board:
1. Qualification & Experience of members
2. Depth of review of financial performance
3. Oversight of Audit & inspection
4. Review of regulatory compliance
5. Fraud monitoring
ANNEXURE "C" REMUNERATION POLICY
India Motor Parts & Accessories Limited (hereinafter referred to as theCompany') has since inception formulated performance based remuneration structures forits employees at all levels so as to provide ample opportunity for inclusive growthsupported with adequate learning. Accordingly the remuneration structure is based on thequalification and skill levels at the time of joining the organisation and reviewed on ayearly basis by way of an assessment of their actual performance through a"Performance Appraisal System". The components forming part of the compensationstructure for each grade are designed to reward performance as well as cost of livingadjustments and location based allowances. Section 178(2) (3) and (4) of the CompaniesAct 2013 read with the applicable rules thereto and Regulation19 of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015 provide that the Nominationand Remuneration Committee (NRC) shall identify persons whoarequalifiedto become Directorsand shall also recommend to the Board a policy relating to the remuneration forDirectors Key Managerial Personnel Senior Management and other employees. Accordinglyon the basis of the recommendation of the NRC the Company has adopted the followingRemuneration Policy which ensures that :
a) the level and composition of remuneration is reasonable and Directors having thequality required to run the company successfully and is comparable to the compensationstructure prevailing in other similar business enterprises.
b) relationship between remuneration and performance is clear and meets appropriateperformance benchmarks; and
c) remuneration to working directors key managerial personnel and senior managementinvolves a balance betweenfixedand incentive pay reflecting short and long termperformance objectives appropriate to the working of the company and its goals. Thefollowing policy shall be hereinafter referred to as "Remuneration Policy of IndiaMotor Parts & Accessories Limited".
a) "Remuneration" means any monetary benefit or its equivalentextended to any person for services rendered by him/her and includes perquisites asdefined under the Income-taxAct 1961.
b) "Key Managerial Personnel"means i) Managing Director; ii)Whole-time Director; iii) Chief Financial Officer; iv) Company Secretary;
c) "Senior Management" defined by the Board of Directors and as maybe modified from time to time means All executives in the grade of Vice President andabove;
d) "Employee" will mean an employee who has been appointed on therolls of India Motor Parts & Accessories Limited (hereinafter referred to as theCompany') and has been issued an appointment order by the Company.
II Board Diversity
It will be the endeavour of the Company to attract people to the Board of our Companyas Directors with varied experience that are appropriate to the business of the Company.
III Remuneration Pattern
The NRC lays down the following remuneration pattern for Non-executive Directors andIndependent Directors Executive Directors Key Managerial Personnel Senior Managementand other employees under the Remuneration Policy:
1. The remuneration payable to Non-Executive Directors and Independent Directors mayconsist of:
(a) Sitting fees for attending the meetings of the Board and sub-committees of theBoard within the limit prescribed under the Companies Act 2013;
(b) Commission for each financial yearwithin the limits specified under the CompaniesAct 2013as may be decided by the Board of Directors;
(c) Reimbursement of expenses for attending meetings of the Board and sub-committees ofthe Board.
2. The remuneration payable to Whole-time Directors who are appointed based onShareholders' approval may consist of:
(a) Salary allowances sitting fees as applicable commission and perquisites;
(b) Commission for each financial year as may be decided by the Board of Directorsbased on the recommendations of the NRC;
(c) Minimum Remuneration in any financial year when the Companyhasno inadequate byway of salary allowances commission and perquisites not exceeding the limits specifiedin Part II of Section II of Schedule V to the Companies Act 2013 or such other limits asmay be prescribed by the Government from time to time as minimum remuneration.
The overall remuneration payable to Directors including Executive Directorsshall bewithin the limits prescribed under Section 197 of the Companies Act 2013 read withSchedule V.
3. The remuneration payable to Key Managerial Personnel Senior Management and otheremployees of the company may consist of: Salary allowances perquisites and variablecomponents reflectingthe short and long term performance objectives appropriate to theworking of the Company.
IV Implementation of the Remuneration Policy
The remuneration payable to Non-executive Directors and Independent Directors shall bedetermined by the Board of Directors.
The Remuneration payable to Executive Directors shall be determined by the NRC aftertaking into account their experience qualification and responsibilities.
The Remuneration Policy of the Company to the extent applicable to Key ManagerialPersonnel other than Executive Directors Senior Management and other employees shall bemonitored by the Managing Director who shall take appropriate steps to ensure that theremuneration is commensurate with their experience qualification responsibilitiescontributions performance and industry standards. The NRC shall take suitable steps toissue guidelines procedures and such other steps as may be considered appropriate fromtime to time for effective implementation of the Remuneration Policy.