The Directors have pleasure in presenting their 51st Annual Report along with theaudited accounts of the Company for the year ended 31st March 2015.
Net sales of the company increased by 6.4% during the year from Rs. 11697 Million toRs.12444 Million. Gross Profit for the year after all interest charges but beforedepreciation and taxes declined by 12.9% over the last year from Rs. 2012 Million to Rs.1753 Million. Profit after tax for the year is Rs. 573 Million against Rs. 697 Millionlast year.
The summarized standalone and consolidated results of the Company are as under:
| ||Financial Year ended |
|Particulars ||Standalone ||Consolidated |
| ||31/03/2015 ||31/03/2014 ||31/03/2015 ||31/03/2014 |
|Total Income ||12615.86 ||11792.65 ||12615.90 ||11792.69 |
|Profit/(loss) before Interest Depreciation & Tax (EBITDA) ||2073.43 ||2388.17 ||2073.45 ||2388.20 |
|Gross Profit ||1753.01 ||2011.52 ||1753.03 ||2011.55 |
|Depreciation ||960.42 ||1005.63 ||960.42 ||1005.63 |
|Profit Before Tax ||792.59 ||1005.89 ||792.61 ||1005.92 |
|Income Tax (including for earlier years) ||219.43 ||309.36 ||219.43 ||309.37 |
|Net Profit After Tax ||573.16 ||696.53 ||573.18 ||696.55 |
The Directors in their meeting of 16.05.2015 have recommended that equityshareholders be paid dividend of Rs. 3.50 per share for the year inclusive of Rs. 1.50per share already paid; the equity dividend alongwith dividend tax would absorb Rs. 94.1Million against Rs. 91.6 Million last year and an amount of Rs. 472.7 Million betransferred to General Reserve Account.
The company registered growth of 11.8% in sales to OEMs. However sales in theAftermarket were impacted on account of disruption of work at Pathredi Plant. As a resultonly a moderate increase of 6.4% in overall sales of the Company could be achieved.
However the decline in profits over last year was disproportionately higher in viewof loss of production at Pathredi and expenses incurred towards recruitment and trainingof new personnel and implementation of multiple confidence building measures to achievedurable harmony.
The Management has taken several short-term and long-term measures to strengthen thepyramid of trust with the workmen at Pathredi Plant resulting in stabilizing ofoperations and achieving normal levels of production towards the third quarter of thefiscal year. These confidence building initiatives are continuing.
Continuous demand from customers for price reduction despite increase in cost of rawmaterials increase in competition and increase in power tariff also impacted the profitsof the company. The impact was partially mitigated through cost reduction and productivityimprovement.
Enforcement of stricter emission norms and continuous demand for improved fuelefficiency from OEMs requires most modern and superior technology. With a full - fledgedTech Center in place and strong support from our technology partners the Company is wellpoised to retain its leadership in market by offering latest technology products andcost-effective solution to OEMs and winning new business. The Tech Centre is beingfurther strengthened to stay ahead of competition.
The company achieved exports of Rs. 2156 Million which was 2% lower than last year.Exports remain an important cornerstone in company's strategy for sustainable growth andto pro-actively acquire deeper understanding of the technology quality and serviceexpectations of global OEMs operating in advanced automobile markets. We are activelyworking with our collaborators to jointly service OEMs in export markets and prospectsfor exports in the current year are good.
There was no operation in subsidiary company M/s SPR International Auto ExportsLimited during the year. Annual accounts of subsidiary company are available on company'swebsite and shall also be kept for inspection by any member in the Head office andRegistered office. Hard copy of Annual Accounts of subsidiary company would also be madeavailable to members seeking such information.
In accordance with the Accounting Standard (AS - 21) on consolidated financialstatements the consolidated financial statements are attached which form part of theAnnual Report.
The Directors confirm that: -
1. in the preparation of the annual accounts the applicable Accounting Standardsissued by The Institute of Chartered Accountants of India and requirements of CompaniesAct have been followed and there are no material departures from the same.
2. appropriate accounting policies have been selected and applied consistently andhave made judgments 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 31st March 2015 and of the profitof the Company for the same year.
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.
4. the annual accounts have been prepared on a going concern basis.
5. internal financial controls are followed by the company and are adequate andoperating effectively.
6. proper and adequate systems have been devised to ensure compliance with provisionsof all applicable laws and such systems are adequate and operating effectively.
There are no disqualifications reservations or adverse remarks or disclaimers in theAuditors' and Secretarial Auditor's Report.
No orders were passed by the Regulators or Courts or Tribunals which could impact goingconcern status and company's operations in future.
The Company has appointed M/s Pricewaterhouse Coopers as its Internal Auditors. TheInternal Control System is commensurate with the size scale and complexity of company'soperations. The Internal Auditors report to the Chairman of Audit Committee.
The Internal Audit team monitors and evaluates the efficacy and adequacy of internalcontrol system in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on their reports thecorrective actions in respective areas are taken to strengthen the controls andsignificant audit observations and corrective actions thereon are presented to the AuditCommittee.
Cost Audit Report of the Company for the year ended 31st March 2014 duly audited byM/s Chandra Wadhwa & Co. Cost Accountants New Delhi was submitted to the Ministryof Corporate Affairs Government of India on 2nd September 2014 before the due date of27th September 2014.
Company's equity shares were listed on Delhi Stock Exchange'. SEBI vide itsorder dated 19.11.2014 has withdrawn recognition of Delhi Stock Exchange'.Accordingly Company's shares cease to be listed and will be moved to Dissemination Boardof Bombay Stock Exchange (BSE) for facilitating dealing in Company's shares.
Company is committed to good corporate governance practice and corporate socialresponsibility. In line with the Company's principles/commitment the followingpolicies/programmes are in place and are available on Company's website viz.www.shrirampistons.com under the link "Investors":
1. Corporate Social Responsibility (CSR) Policy
2. Vigil Mechanism/ Whistle Blower policy
3. Company's policy on dealing with Related party transactions and
4. Familiarization programmes for Independent Directors.
Fixed deposits amounting to Rs. 95.73 Million were accepted during the year anddeposits amounting to Rs. 1.84 Million pertaining to 37 depositors remainedunclaimed/unpaid at the close of the year. During the year there was no default inrepayment of deposits and interest thereon. Deposits accepted by the company are incompliance with requirements of Chapter V of the Companies Act 2013.
Company has not given any loans guarantees or made investments under section 186 ofthe Companies Act 2013.
The Company has entered into contract/arrangements with the related parties in theordinary course of business and on arm's length basis. Thus provisions of Section 188(1)of the Act are not applicable.
Following reports which form an integral part of Directors' report are enclosed: -
1. Report on "CORPORATE GOVERNANCE" - as per annexure I.
2. Report on "MANAGEMENT DISCUSSION AND ANALYSIS" - as per annexure II.
3. Report on "CONSERVATION OF ENERGY" "TECHNOLOGY ABSORPTION" and"FOREIGN EXCHANGE EARNING & OUTGO" as per annexure - III.
4. Data of "EMPLOYEES" as per annexure IV.
5. Extract of "ANNUAL RETURN" as per Annexure V.
6. Report on "CSR ACTIVITIES UNDERTAKEN BY THE COMPANY" as perAnnexure VI.
7. "SECRETARIAL AUDIT REPORT" as per Annexure VII.
8. "NOMINATION AND REMUNERATION POLICY" as per Annexure-VIII.
9. "SALIENT FEATURES OF SUBSIDIARY COMPANY" as per Annexure-IX.
Smt. Meenakshi Dass was appointed as the Wholetime Director' of the company forthe period of five years from 5th May 2009 to 4th May 2014. On conclusion of her termshe opted not to be re-appointed as Wholetime Director' and continue to beassociated with the company as Non-Executive Director'.
Shri Luv D. Shriram was appointed as Wholetime Director' for a period of 5 yearsw.e.f. 5th May 2014 till 4th May 2019.
Shri Tokuo Washio Independent Director resigned from the Board due to personalreasons from the closing hours of 31st March 2015. The directors express their deepappreciation for the valuable guidance and services rendered by Shri Tokuo Washio.
Shri Toru Suzuki was appointed as Independent Director w.e.f. 30.04.2015 in casualvacancy caused due to resignation of Shri Tokuo Washio.
Shri O.P. Khaitan Shri C.Y. Pal Shri Ravinder Narain Shri Inderdeep Singh and ShriToru Suzuki are independent Directors of the Company. These Directors have given thedeclarations to the Board that they meet the criteria of independence as provided underSection 149(6) of the Companies Act 2013.
Shri M. Sekimoto and Shri Hari S. Bhartia Directors retire by rotation and beingeligible offer themselves for re-appointment.
Brief resume and other details of Shri M. Sekimoto Shri Hari S. Bhartia and Shri ToruSuzuki are given in the Notice of the Annual General Meeting'.
Shri Naveen Agarwal was appointed as Chief Financial Officer (CFO) of the companyw.e.f. 1st October 2014 and he ceased to be the CFO consequent to appointment of ShriVinod Raheja as CFO w.e.f. 24th February 2015.
Pursuant to the provisions of the Companies Act 2013 the Board has carried out anannual performance evaluation of its own performance the directors individually as wellas the evaluation of the working of its Committees. The manner in which the evaluation hasbeen carried out has been explained in the Corporate Governance Report.
The Directors affirm that remuneration paid to all Directors Key Managerial Personneland Senior Management Personnel is as per the remuneration policy framed by Nomination andRemuneration Committee of the Company.
The Directors place on record their appreciation of the support extended to the Companyby the Collaborators the Bankers its business associates and their appreciation of thework of all ranks of Company's personnel during the year.
| ||On behalf of the Board |
|New Delhi ||(PRADEEP DINODIA) |
|May 16 2015 ||CHAIRMAN |
REPORT ON CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNING& OUTGO
[PARTICULARS REQUIRED UNDER THE COMPANIES (ACCOUNTS) RULES 2014]
A. Conservation of Energy
1. Energy Conservation measures taken during the year:
Energy conservation is an environmentally sustainable and economically viable processand has been a priority focus area for the Company. Following measures were taken duringthe year: At Ghaziabad:
i) Reusing of water treated by Effluent Treatment plant
ii) Use of cleaner fuels
iii) Reduction in power distribution losses in Foundry through load balancing ontransformer
i) Optimisation of power used in Aluminium Foundry through better production planning
ii) Interlocking of fume extraction blower of oil fired furnace with furnace controls
iii) Optimized loading of charge trays
iv) Reduction in pressure drop across generation & distribution ends of compressedair infrastructure
v) Installation of Air-Co saver energy conservation unit on continuously running splitair conditioners
vi) Control of compressed air leakages & wastages in Plants on continuous basis
vii) Use of LED flood lights for outdoor open areas
viii) Automatic photo - sensitive based switching on / off of yard lighting in 132 KVHT yard
ix) Adequate insulation of chilled coolant tanks/ hot water tanks / heated vessels
x) Change of pulleys of belt driven blowers of central air conditioning AHU as well asCanteen comfort cooling machine for reduced rpm
2. Steps taken by company to utilize alternate sources of energy:-
i) Replacement of LPG with CNG which is a cleaner fuel
ii) Installation of Solar power roof top system is being considered
iii) Installation of suitable capacity solar PV power plant for 100% preferential usebefore grid / D/G power during daylight hours is being considered
3. Impact of the above measures:
These measures have resulted or will lead to an improvement in energy efficiency andreduction in cost of production.
4. Capital Investment on energy conservation equipments: - Rs. 172.24 Million B.Technology Absorption
1. Efforts in brief made towards technology absorption:-
- Continuous interaction with Collaborators for upgrading design & quality ofproducts manufactured and to enhance technical expertise for in-house design anddevelopment
- Visit of our engineers to Collaborators' plants and visit of Collaborators' engineersto our Plant for transfer of technology and latest production processes as perCollaborators' practice
- Visit of key R&D personnel of collaborators to OEMs for Application Engineeringsupport
2. Benefits derived as a result of the above effort:-
- Product design & quality improvement and cost reduction were achieved throughimproved design/process capability and better utilization of Plant
- Offered latest technology products to meet stricter fuel efficiency and emissionnorms
- Building trust & long term business relation with customers to emerge asmost preferred supplier'
3. Imported technology:-
- Technology is being continuously received from Technical collaborators viz. M/s KSKolbenschmidt GmbH Germany M/s Honda Foundry Japan M/s Riken Corporation Japan andM/s Fuji Oozx Japan under subsisting Technical Collaboration Agreements for manufactureof Pistons Piston Rings and Engine Valves.
Details of technology imported during last three years:
|S. No. ||Details of technology imported ||Year of import ||Whether technology has been fully absorbed ||Reason for non-absorption of technology if any |
|Pistons: || || || |
|1 ||Improved surface Coating ||2012-13 ||Yes || |
|2 ||Improved Piston design ||2012-13 ||Ongoing ||Piston design technology is being continuously upgraded in phased manner. |
|3 ||New Piston alloy ||2014-15 ||Yes || |
|Rings: || || || || |
|1 ||Improvement in Oil Ring design for lower oil consumption ||2012 -13 ||Yes || |
|2 ||Coating to avoid micro welding ||2013-14 ||Yes || |
|Engine Valves: || || || |
|1 ||Triboloy coated engine valves for CNG application ||2012-13 ||Yes || |
|2 ||Engine valve temperature measurement through || || || |
| ||i) Hardness Survey ||2014-15 ||Yes || |
| ||ii) Thermocouples ||2014-15 ||No ||Under implementation |
4. Expenditure on R & D:-
|- Capital/Intangible ||: Rs. 23.10 Million |
|- Recurring ||: Rs. 149.02 Million |
|- Total ||: Rs. 172.12 Million |
- Total R&D expenditure as percentage of total turnover 1.4%
C. Foreign Exchange Earnings & Outgo
- Exports continue to remain focus area for the Company. The company made exports worthRs. 2156 Million in the year as compared to Rs. 2201 Million in the previous year
- We participated in domestic and international auto trade fairs. Response to company'sproducts was very encouraging resulting in several fresh enquiries from customers
- Several initiatives have been taken for long term growth of Company's export toglobal OEMs and in the aftermarket in close coordination with our collaborators
- Development of new markets in Indian sub-continent for export of company's productscommenced during the year. New models have been added to the product range for severalmarkets
- Company is planning further growth of over 20% in 2015-16
|2. Foreign Exchange earned ||- ||Rs. 2156.27 Million |
|Foreign Exchange utilized ||- ||Rs. 1870.36 Million |
ANNEXURE IV TO DIRECTORS' REPORT
DATA OF EMPLOYEES
[UNDER SECTION 197(12) OF THE COMPANIES ACT 2013 READ WITH RULE 5 OF THE COMPANIES(APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL) RULES 2014]
I. PARTICULARS OF EMPLOYEES:
|Name ||Designation/ Duties ||Remuneration ||Qualification ||Experience ||Commence- ment of Employment ||Age ||%age of Equity Shares held ||Last Employment |
| || ||(Rs.) || ||(Years) || ||(Years) || ||Held |
|Naveen Agarwal ||Dy. Executive Director and Alternate Company Secretary ||6832080 ||B. Com(H) LLB ACMA ACS ||36 ||Jun. 96 ||54 ||0.00002 ||Dy. General Manager Jay Engg. Works Ltd. Delhi |
|Meenakshi Dass@# ||Wholetime Director ||1034698 ||Degree in Textile Designing ||26 ||May 09 ||51 ||35.4$ ||Director Pearey Lall & Sons (E.P.) Ltd. Delhi |
|Anil Gadi ||Executive Director ||10849291 ||B.E. PGDM ||38 ||Mar. 06 ||62 ||- ||Managing Director Energiser Lanka Ltd. Srilanka |
|V.K. Jayaswal ||Executive Director ||10896455 ||B. Sc. (Engg.) PGDBM ||37 ||Oct. 08 ||60 ||- ||Director JV Relationship Tata Cummins Ltd. Jamshedpur |
|Devendra Mishra ||Executive Director ||10247074 ||B.E. PGPM ||27 ||Jul. 11 ||50 ||- ||VP-Manufacturing National Engineering Industries Jaipur |
|Luv D. Shriram@*# ||Wholetime Director ||22845268 ||B.Com ||22 ||May 14 ||43 ||29.8$ ||Managing Director Shriram Veritech Solutions Pvt. Ltd. |
|Arun Shukla ||Dy. Executive Director ||6970756 ||B. Tech ||28 ||Aug 09 ||50 ||- ||Uniparts India Ltd. |
|R. Srinivasan * ||Joint Managing Director & Company Secretary ||22967458 ||B.Com(H) LLB FCMA FCS AMP (Harvard) ||42 ||Feb. 74 ||63 ||0.01 ||ET Usha Sales Pvt. Ltd Delhi |
|A.K. Taneja * ||Managing Director & CEO ||29768916 ||B.Tech ||43 ||Apr. 78 ||64 ||0.0002 ||Dy. Mktg. Manager Usha Sales Pvt. Ltd. Delhi |
1. Year of experience include experience prior to joining the Company.
2. All employees are on regular employment.
3. Remuneration includes payment of Salaries allowances expenses on perquisites andcontribution to provident fund gratuity fund superannuation fund & other benefits onpayment basis.
4. @ Smt. Meenakshi Dass is a relative of Shri Luv D. Shriram Director of the company.
5. * Employees on Contract.
6. # Worked for part of the year.
7. $ Smt. Meenakshi Dass (First named shareholder) and Shri Luv D. Shriram (Secondnamed shareholder) jointly hold 14.9% shares of the Company on behalf of Deepak ShriramFamily Benefit Trust. Shri Luv D. Shriram (First named shareholder) and Smt. MeenakshiDass (Second named shareholder) jointly hold 14.9% shares of the Company on behalf ofDeepak Shriram Family Benefit Trust. In addition to this Smt. Meenakshi Dass also holds5.54% shares of the Company in her name.
8. There was no employee who was in receipt of remuneration which in the aggregate isin excess of that drawn by the Managing Director or Whole Time Director and holds byhimself or along with his spouse and dependent children not less than 2% equity shares ofthe company.
II. VARIATIONS IN THE NET WORTH OF THE COMPANY:
Net worth as on 31.03.2015: Rs. 6072.1 Million
Net worth as on 31.03.2014: Rs. 5600 Million