Your Directors have pleasure in presenting their Twenty Seventh AnnualReport of your Company together with the Audited Accounts for the year ended 31st March2019.
Your Company's performance during the year as compared with thatduring the previous year is summarized below: (र in Lakhs)
|Particulars ||2018-19$ ||2017-18$ |
|Manufacturing Sales ||60616 ||67120 |
|Add: Other Income ||2504 ||3385 |
|Total Income ||63210 ||70505 |
|Less: || || |
|(i) Materials & Manufacturing Expenses ||33510 ||36108 |
|(ii) Value Addition Cost ||17025 ||16520 |
|Profit before DepreciationAmortization ||12585 ||17877 |
|Less: || || |
|Depreciation & Amortization Expenses ||3993 ||3791 |
|Profit before Tax ||8593 ||14086 |
$Restated financial information under IndAS 103 Refer note givenelsewhere in Directors' Report
Your Company's revenues for the year stood at 60616 Lakhs as against67120 Lakhs for previous year. Operating Profit before Depreciation & Amortizationamounted to 12585 Lakhs as against 17877 Lakhs for previous year. Profit before Taxamounted to 8593 Lakhs as against 14086 Lakhs for previous year.
During the year under review Chinese automotive industry witnessedslowdown in the second half triggering all Global OEMs & Tier-1s to pull backestimates in China resulting in pruning down the pipeline for tight inventory controls.Besides this all global OEMs & Tier-1s pulled back volumes and inventories in othergeographies as well. Your Company experienced a turnaround in the volume of the newprograms by the end of the financial year. Your Company has taken initiatives coveringrange of activities including lean manufacturing streams tight control on expensesconnecting the supply-chain partners focus on customers to maintain business efficiency.
Pursuant to the Shareholders approval (other than Promoter &Promoter Group) by way of Postal Ballot on September 202018 your Company acquiredthe export division of Agile Electric Sub Assembly Private Limited - [AESPL] (HoldingCompany) for a consideration of 13562 Lakhs as a "going concern" ("SlumpSale") along with all assets liabilities and employees with effect from 01stOctober 2018.
Upon acquisition of Export Division of AESPL the Board of Directorsapproved cancellation of ongoing process of amalgamation of AESPL with the Company as themajority of desired benefits have already been achieved.
Your Company had adopted the Dividend Distribution Policy and the samewas hosted on the website of the Company at:http://www.igarashimotors.com/uploads/investor/pdf/14788383387IMIL-Dividend_Distribution_Policy.pdf
In line with the said Policy your Directors are pleased to recommend adividend of 4.90/- per Equity Share on Face value of 10/- each for the year ended March31 2019.
The Board has not recommended any transfer to general reserve from theprofits of the year under review.
TRANSFER OF UNPAID & UNCLAIMED DIVIDEND AND UNCLAIMED SHARES TOINVESTOR EDUCATION AND PROTECTION FUND (IEPF')
During the year there are no unclaimed dividends and unclaimed shareswhich have to be transferred to Investor Education and Protection Fund (IEPF')by the Company.
The Reserves at the end of the year 31st March 2019 is at 39811 Lakhsas against the Total Reserves of 36816 Lakhs as at 31st March 2018.
No material changes or commitments have occurred between the end of theFinancial Year and the date of this Report which affect the financial statements of theCompany in respect of the reporting year.
INDIAN ACCOUNTING STANDARDS
Pursuant to The Companies (Indian Accounting Standards) Rules 2015your Company has to comply with Indian Accounting Standards (IndAS) from April 01 2017.Accordingly the financial statements of the Company for the financial year 2018-19 havebeen prepared as per IndAS.
Pursuant to the Acquisition of Export Division of Agile Electric SubAssembly Private Limited the said acquisition was considered as a Business Combinationinvolving entities or businesses under a common control under IndAS 103 "BusinessCombinations". Consequently the financial information for all the previousperiods/year have been restated in the Audited Financials to include financials of theacquired Export Division as if the acquisition occurred from April 012017.
DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES
Your Company has no Subsidiary/ Associate / Joint Venture Companies ason March 31 2019. Form AOC-1 enclosed to this report.
Your Company is holding 9.20% stake in Bosch Electrical Drives IndiaPrivate Limited (BEDPL). Your Company is an investment partner of Robert Bosch since thejoint venture agreement was terminated automatically due to fall in shareholding in BEDPLbelow the threshold limit.
Your Company's investment in BEDPL has gone down and appropriateimpairment has been provided.
During the year under review your Company has not invited or acceptedany deposits from the public under Section 76 of the Companies Act 2013 and Rules madethere under.
EMPLOYEE STOCK OPTION SCHEME
At 25th Annual General Meeting held on August 022017 the Shareholdersapproved Employee Stock Option Scheme (The Igarashi Motors Employees Stock OptionScheme 2017'). Pursuant to the approval the Board has been authorised to offerissue and allot stock options to eligible employees of the Company and its Holding Company(AESPL) under ESOP 2017. The maximum number of shares under the ESOP 2017 shall not exceed600000 equity shares. Out of this during the year under review your Company had granted507600 (468700 to the employees of Company and 38900 to the employees of HoldingCompany) Stock Options. The following summary of grants made during the year underreview :-
|Grantee ||No. of options granted |
|Mr. R Chandrasekaran CFO (KMP) ||25000 |
|Mr. P Dinakara Babu Company Secretary (KMP) ||9000 |
|Eligible Employees other than KMP (including Holding Company) ||473600 |
|Total ||507600 |
The relevant disclosures pursuant to Rule 12 (9) of the Companies(Share Capital and Debentures) Rules 2014 and Regulation 14 of SEBI (Share Based EmployeeBenefits) Regulations 2014 is forming part of Annual report. Your Company has received acertificate from the Statutory Auditors of the Company that ESOP Scheme 2017 has beenimplemented in accordance with Regulation 13 of the SEBI (Share Based Employee Benefits)Regulations 2014 and the resolution(s) passed by the Members of the Company. Thecertificate would be placed at the ensuing AGM for inspection by Members of the Company.
SHARE CAPITAL- BONUS SHARES
Upon completion of Open offer on April 17 2018 your Company'sPromoters & Promoter Group Shareholding increased from 75% to 77.12%. In order to meetminimum public shareholding norms your company has allotted 866604 equity shares (2.75%)having value of 10/- (Rupees Ten) per share as fully paid bonus to the holders of theequity shares to the exception of the Promoter and promoter group of the company in theproportion of 25 (Twenty Five) equity share for every 202 (Two Hundred Two) existingequity shares. Consequently the issued
Subscribed and Paidup Equity Shares has increased from 3060.84 Lakhsdivided into 30608444 Equity of 10 each to 3147.50 Lakhs divided into 31475048Equity Shares of 10 Each on September 292018. Your Company had distributed cashequivalent to 5639 fractional Bonus shares to eligible shareholders.
Your Company's Paid-up equity share capital to 3147.50 Lakhs as onMarch 31 2019.
During the year Mr. K K Nohria (DIN : 00060015) was appointed asDirector (Non- Executive & Non- Independent) of the Company whose period of officeliable to determination by retirement by rotation Such appointment was made based onNomination & Remuneration Committee recommendation and the Board approved at itsmeeting held on May 22 2018 and also by the shareholders at 26th Annual General Meetingheld on September 142018 by passing a Special Resolution as required under SEBI ListingRegulations for appointment of person who is having age of Seventy Five years or more.
Mr. Hemant M Nerurkar and Mr. S Radhakrishnan as Non-ExecutiveIndependent Directors are not liable to retire by rotation.
RETIREMENT BY ROTATION
Mrs. Eva Maria Rosa Schork (DIN: 07159550) Director retires by rotationat forthcoming 27th Annual General Meeting and being eligible offers herself forre-appointment. The brief resume and other details as required under the ListingRegulations are provided in the Notice of the 27th Annual General Meeting of the Company.
RE-APPOINTMENT OF MANAGING DIRECTOR
On March 292019 the Board of Directors based on recommendation ofNomination and Remuneration Committee approved re-appointment and remuneration of Mr. PMukund for a period of 5 years effective from April 012019 subject to the approval ofshareholders. The terms and conditions of re-appointment forms part of Notice of ensuing27th Annual General Meeting.
All Independent Directors have given declarations that they meet thecriteria of independence as laid down under Section 149(7) of the Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (ListingRegulations').
Further the brief profiles of above directors are given in along withthe resolutions of re-appointments are forming part of Notice of the ensuing 27th AnnualGeneral Meeting being sent to the shareholders along with the Annual Report.
The Nomination and Remuneration Committee and the Board of Directorsrecommend re-appointment of Mrs. Eva Maria Rosa Schork as Director and Mr. P Mukundas Managing Director for your approval.
The details of familiarization programmes to Independent Directors isput up on the website of the Company at the link:http://www.igarashimotors.com/investor-list.php?invescatid=23.
EVALUATION OF THE BOARD'S PERFORMANCE
Your Company has devised a policy for performance evaluation ofIndependent Directors Board Committees and other individual Directors which includecriteria for performance evaluation of the non-executive directors and executivedirectors. Pursuant to the provisions of Companies Act 2013 and Regulation 25 of theListing Regulations the Board has carried out annual performance evaluation of its ownperformance the directors individually as well the evaluation of the working of itsAudit Nomination & Remuneration and Stakeholder Relationship Committee. Each Boardmember completed a questionnaire providing feedback on the functioning and overallengagement of the Board and its committees on various parameters such as the compositionexecution of specific duties quality quantity and timelines of flow of informationdeliberations at the meeting etc.. Besides this one on-one meeting of theindividual directors with the Chairman of the Board was also conducted as a part ofself-appraisal and peer group evaluation. The Directors were also asked to provide theirvaluable feedback and suggestions about the over all functioning of the Board and itscommittees.
NUMBER OF MEETINGS OF THE BOARD
During the year Six Board Meetings were held on 22nd May 2018 08thAugust 2018 14th September 2018 09th November 2018 13th February 2019 and 29thMarch 2019. The Company's last Annual General Meeting was held on 14th September2018. The particulars of Directors their attendance during the financial year 2018-2019have been disclosed in the Corporate Governance Report forming part of this Annual Report.
For details of the Committees of the Board please refer to theCorporate Governance Report.
DIRECTORS' RESPONSIBILITY STATEMENT
In compliance of Section 134 (5) of the Companies Act 2013 yourdirectors on the basis of information made available to them confirm the following: a)In the preparation of the annual accounts for the financial year ended March 312019 theapplicable Accounting Standards have been followed with explanation relating to materialdepartures if any; b) They have selected such accounting policies and applied themconsistently and made judgments and estimates that are reasonable and prudent so as togive true and fair view of the state of affairs of the Company as at March 31 2019 and ofthe profit of the Company for that period; c) Proper care has been taken for maintenanceof adequate accounting for safe guarding the assets of the Company and detecting fraud andother irregularities; d) They have laid down Internal Financial Controls to be followed bythe Company and the Audit Committee of the Board of Directors shall ensure that theinternal control is adequate and robust; e) The annual accounts are prepared on a goingconcern basis; f) They have devised proper systems to ensure compliance with theprovisions of all applicable laws and that such systems were adequate and operatingeffectively.
DEMATERIALISATION OF SHARES
99.25% of the Company's paid up Equity Share Capital is indematerialized form as on March 31 2019 and balance 0.75% is in physical form. YourCompany has already sent three reminders to all concerned shareholders advising them toconvert physical shares into demat form. The Company's Registrars are Cameo CorporateServices Limited No.1 Subramaniam Building Club House Road Chennai 600 002.
During the year CARE has given credit ratings of CARE A+ for long termdebt CARE A1+ for short term debt.
CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION
The information required to be furnished pursuant to Section 134(3) (m)of the Companies Act 2013 is appended hereto and forms part of this Report.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of expenditure and earnings in foreign currency are givenas an annexure to this Report.
PARTICULARS OF LOANS & INVESTMENTS BY COMPANY
Details of loans and investments by the Company to other bodycorporate or persons are given in notes to the financial statements.
RELATED PARTY TRANSACTIONS
All the related party transactions entered during the year were inordinary course of business and on arm's length basis. Your Company obtainedshareholders' approval by way of Postal Ballots on February 102018 and also onSeptember 20 2018 for material related party transactions though such transactions beingentered during ordinary course of business and on arm's length basis as requiredunder Listing Regulations.
Your Company's Policy on Related Party Transactions which can beaccessed through weblink : http://www. igarashimotors.com/investor-list.php?invescatid=18.
Your Company presents a statement of all related party transactionsbefore the Audit Committee. Details of such transactions are given in the accompanyingfinancial statements. Disclosure of Related Party transaction (include details of thetransactions with Promoter/Promoter Group holding is annexed with the report as per FormAOC-2.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
Your Company has in place a Policy on Prevention Prohibition andRedressal of Sexual Harassment and Non-discrimination at Work Place in line withthe requirements of the Sexual Harassment of Women at the Workplace (PreventionProhibition & Redressal) Act 2013.
All employees (permanent contractual temporary trainees) are coveredunder this policy. Your Company had arranged external expert consultant trainings onCompliance of Policy to all the employees and service providers. Your Company alsolaunched awareness campaigns on said Policy.
An Internal Complaints Committee (ICC) was set up to redress complaintsreceived regarding sexual harassment and discrimination at work place.
During the year ended March 31 2019 the ICC has received nocomplaints pertaining to sexual harassment / discrimination at work place.
KEY MANAGERIAL PERSONNEL
Pursuant to Section 203 of the Companies Act 2013 the Key ManagerialPersonnel of the Company are Mr. P Mukund Manging Director Mr. R ChandrasekaranChief Financial Officer and Mr. P Dinakara Babu Company Secretary.
During the year there was change in the Key Managerial PersonnelRe-Appointment of Mr. P Mukund (DIN: 00007788) as Managing Director for a period of 5(Five) years from April 01 2019 to March 312024 on the same terms of previousappointment Based on Nomination and Remuneration Committee recommendation the Boardapproved at its meeting held on March 29 2019 subject to the shareholders approval atthe ensuing 27th Annual General Meeting.
M/s. B S R & Co LL.P Chartered Accountants (Firm Registration No.101248W/W-100022) were appointed by the Shareholders at the 25th Annual General Meetingheld on August 022017 as Statutory Auditors for a term of five consecutive years to holdoffice until conclusion of 30th Annual General Meeting. The appointment is howeversubject to ratification by members at every Annual General Meeting in accordance withSection 139 of the Companies Act 2013 read with applicable rules made thereunder.
Pursuant to the amendment to Section 139 of the Companies Act 2013effective from May 07 2018 ratification by shareholders every year for the appointmentof Statutory Auditors is no longer required and accordingly the Notice of ensuing 27thAnnual General Meeting does not include the proposal for seeking shareholders'approval for ratification of Statutory Auditors appointment.
No qualification adverse remarks or disclaimer made by the StatutoryAuditors with regard to the financial statements for the financial year 2018-19.
The Statutory Auditors of the Company have not reported any fraud asspecified under Section 143(12) of the Companies Act 2013.
There have been no instances of fraud reported by abovementionedAuditors under Section 143(12) of the Act and Rules framed thereunder either to theCompany or to the Central Government during FY 2018-19.
SECRETARIAL AUDITOR SECRETARIAL AUDIT REPORT AND OTHER CERTIFICATES
Pursuant to the provisions of Section 204 of the Companies Act 2013and The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 theCompany has appointed Mr. C Prabhakar Partner BP & Associates Company Secretaries(Membership No. A30433; Certificate of Practice No. 11033) to undertake the secretarialaudit of the Company. Your Company has complied with the Secretarial Standards issued bythe Institute of Company Secretaries of India on Board Meetings and Annual GeneralMeetings.
The Secretarial Audit Report is given in Annexure to this Report. TheReport does not contain any qualification reservation or adverse remark.
Also the Secretarial Audit Report issued under Regulation 24A of SEBIListing Regulations is given in Annexure to this Report.
As required under SEBI Listing Regulations your Company has obtained acertificate from the Practising Company Secretary that none of the Directors of the Boardof the Company have been debarred or disqualified from being appointed or continuing asDirectors by MCA/ Statutory Authorities. The said Certificate is forming part of thisReport.
As your Company has been operating from MEPZ-Special Economic Zoneappointment of Cost Auditor is exempted under Section 148 of the Companies Act 2013 readwith Companies (Cost Records and Audit) Rules 2014. Your Company has been maintainingsuch accounts and cost records as required under the Rules.
EXTRACT OF THE ANNUAL RETURN
Relevant extract of annual return in Form MGT-9 as required underSection 92(3) of the Act read with Rule 12 of Companies (Management and Administration)Rules 2014 (as amended) to be filed with the Registrar of Companies for financial year2018-19 is given in Annexure to this Report. A soft copy is also placed at website:www.igarashimotors.com.
INTERNAL CONTROL SYSTEMS
The Company has adequate system of internal control to safeguard andprotect from loss unauthorized use or disposition of its assets. All the transactions areproperly authorized recorded and reported to the Management. Internal Audit is carriedout in a programmed way and follow-up actions were taken for all audit observations. YourCompany's Statutory Auditors have in their report confirmed the adequacy of theinternal control procedures.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In terms of Section 135 and Schedule VII of the Companies Act 2013the Board of Directors of your Company has constituted a CSR Committee. The CSR Committeecomprises four members and the Chairman of Board is heading the Committee. CSR Committeeof the Board has developed a CSR Policy. The CSR Committee met two times during the yearon May 22 2018 and August 08 2018.The details of role and functioning of the Committeeare given in Annexure to this Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report of the Company for year underreview as required under Regulation 34 of Listing Regulations is given as aseparate Statement in the Annual Report.
DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY
Your Company has adopted a Risk Management Policy and constituted aRisk Management Committee for monitoring the same. The Company has been addressing variousrisks impacting the Company which is provided elsewhere in this Annual Report inManagement Discussion and Analysis Report.
BUSINESS RESPONSIBILITY REPORT (BRR)
The Business Responsibility Report is not applicable as your Company isnot in top 500 Criteria as per the Market Capitalisation as on March 31 2019. YourCompany voluntarily providing the Business Responsibility Report for the financial yearended March 31 2019. As green initiative Business Responsibility Report has been hostedon the Company's website at :http://www.igarashimotors.com/investor-list.php?invescatid=17 as required under Regulation34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. AnyMember interested in obtaining a copy of BRR may write to the Company.
APPOINTMENT AND REMUNERATION OF KEY MANAGERIAL PERSONNEL
The information required pursuant to Section 197 read with Rule 5 (1)of The Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of the statement of particulars of Appointment and Remuneration of Key ManagerialPersonnel is forming part of this Report.
The remuneration paid to all Key Managerial Personnel was in accordancewith remuneration policy adopted by the Company.
STATEMENT ON EMPLOYEE REMUNERATION
The information required pursuant to Section 136(1) of the CompaniesAct 2013 the Report of the Board of Directors is being sent to all the shareholders ofthe Company excluding statement prescribed under Rule 5 of The Companies (Appointment andRemuneration of Managerial Personnel) Rules 2014. The Statement is available forinspection by the Shareholders at the registered office of the Company as per the detailsmentioned in the Notice of the 27th AGM during business hours upto the date of 27th AnnualGeneral Meeting.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There have been no significant and material orders passed by theRegulators or Courts or Tribunals impacting the going concern status and Company'soperations.
Your Company has 790 numbers of permanent employees on the rolls of theCompany as on March 31 2019. The Board of Directors wishes to place on record theirsincere appreciation to all the employees of the Company for their dedication commitmentand loyalty to the Company.
A Report on Corporate Governance along with a certificate from theAuditors of the Company regarding compliance of the requirements of Corporate Governancepursuant to Listing Regulations is annexed hereto.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has a vigil mechanism by way of established Whistle BlowerPolicy as per the requirement of the Companies Act 2013 and the Listing Regulations toenable all employees and the directors to report in good faith any violation of thePolicy. The Audit Committee of the Board oversees the functioning of Whistle BlowerPolicy. Your Company has disclosed the details of revised Whistle Blower policy on itswebsite:http://www.igarashimotors.com/investor-list.php?invescatid=18.
Your Company has been regularly conducting training programmes to allthe employees about this policy.
PREVENTION OF INSIDER TRADING
Your Company has adopted a code of conduct for prevention of"Insider Trading" as mandated by the SEBI and same is available on the websiteof the Company: http://www.igarashimotors.com/investor-list.php?invescatid=18. The saidPolicy has been revised effective from April 012019 in line with SEBI (Prohibition ofInsider Trading) (Amendment) Regulations 2018.
CODE OF CONDUCT
Your Company has laid down a Code of Conduct Policy which can beaccessed on the Company's website: http://www.igarashimotors.com/investor-list.php?invescatid=18.
The shares of your Company continued to be listed at National StockExchange of India Limited and Bombay Stock Exchange Limited. Listing fee has already beenpaid for the financial year 2018-19.
The Board places on record its sincere appreciation for the continuedsupport from the relevant Government Authorities Promoters ShareholdersSuppliers Customers and other business associates for their strong support.
| ||For and on behalf of the Board of Directors |
| ||KK Nohria |
| ||Chairman |
| ||Din:00060015 |
|Place:Chennai || |
|Date:May 162019 || |