Your Directors have pleasure in presenting their Twenty Eight AnnualReport of your Company together with the Audited Accounts for the year ended 31st March2020.
Your Company's performance during the year as compared with thatduring the previous year is summarized below: (Rs. in Lakhs)
|Particulars ||2019-20 ||2018-19 |
|Manufacturing Sales ||53439 ||60616 |
|Add: Other Income ||1167 ||2504 |
|Total Income ||54607 ||63210 |
|Less: || || |
|(i) Materials & Manufacturing Expenses ||31315 ||33510 |
|(ii) Value Addition Cost ||15793 ||17025 |
|Profit before Depreciation Amortization ||7499 ||12585 |
|Less: Depreciation & Amortization Expenses ||4254 ||3993 |
|Profit before Tax ||3246 ||8593 |
Your Company's Revenues for the year stood at Rs.53439 Lakhs asagainst Rs.60616 Lakhs for previous year. Operating Profit before Depreciation &Amortization amounted to Rs.7499 Lakhs as against Rs.12585 Lakhs for previous year.Profit before Tax amounted to Rs.3246 Lakhs as against Rs.8593 Lakhs for previous year.
Given the uncertain economic outlook and to continue liquidity foroperations the Board considered it prudent to recommend a dividend of Rs.1.20/- perEquity Share on Face value of Rs.10/- each for the year ended March 31 2020.
Your Company's Dividend Distribution Policy was hosted on thewebsite of the Company at: http://www.igarashimotors.com/uploads/investor/pdf/14788383387IMIL-Dividend_Distribution_Policy.pdfThe Board has not recommended any transfer to general reserve from the profits of the yearunder review.
TRANSFER OF UNPAID & UNCLAIMED DIVIDEND AND UNCLAIMED SHARES TOIEPF
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 2020 is at Rs.42285Lakhs as against the Total Reserves of Rs.42958 Lakhs as at 31st March 2019.
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 2019-20 havebeen prepared as per IndAS.
INCOME TAX BENEFIT
Pursuant to the Taxation Laws (Amendment) Ordinance 2019 your Companyavailed lower income tax rate benefit with effect from April 012019.
In March 2020 the World Health Organisation declared COVID-19 to be apandemic. Consequent to this Government of India declared a national lock down on March24 2020. Your Company formed Management Taskforce comprising of key functions for actionplan & concerted efforts and suspended operations in the interest of employees healthand wellbeing during March 232020 and May 062020.
During this time your Company facilitated Senior Level employees towork from home. Your Company has ensured regular communication with all stakeholders viz.Customers Key Suppliers Employees Banks and Investors. With the approval of GovernmentAuthorities your Company re-started partial operations from May 072020 after taking allmeasures to comply with COVID-19 Guidelines relating to safety health hygiene reducedmanpower social distancing and other precautionary measures. Since COVID-19 situationevolves in India and Globally your Company will continue to closely monitor COVID-19pandemic material impact on business operations and financial resources.
DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES
Your Company has no Subsidiary/ Associate / Joint Venture Companies ason March 31 2020. Report under Form AOC-1 is annexed to this report.
Your Company holding 9.20% stake in Bosch Electrical Drives IndiaPrivate Limited (BEDPL). Your Company continue to be an investment partner of Bosch.
Your Company's investment in BEDPL has been assessed andappropriate impairment 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') covering 600000 equity shares. There has been no material changes tothe Scheme during the year under review. The relevant disclosures pursuant to Rule 12 (9)of the Companies (Share Capital and Debentures) Rules 2014 and Regulation 14 of SEBI(Share Based Employee Benefits) Regulations 2014 is forming part of Annual report.
Your Company has received a certificate from the Statutory Auditors ofthe Company that ESOP Scheme 2017 has been implemented in accordance with Regulation 13 ofthe SEBI (Share Based Employee Benefits) Regulations 2014 and the resolution(s) passed bythe Members of the Company. The certificate would be placed at the ensuing AGM forinspection by Members of the Company.
PAID-UP SHARE CAPITAL
Your Company's Paid-up equity share capital is Rs.3147.50 Lakhsas on March 31 2020.
OUT-GOING PROMOTER RE-CLASSIFICATION
On August 282019 Igarashi Electric Works Ltd Japan(Promoter') [IGJ'] along with Agile Electric Sub Assembly Pvt Ltd(Promoter Group' & Holding Company) [AESPL'] acquired 21.15%stake in the Company held by Mr. P Mukund (Promoter') as inter-setransfer of shares between Promoters. Despite of this transaction Promoter & PromoterGroup continues to hold 75% stake in the Company. Also IGJ increased its stake to 91.35%from 56.84% in AESPL by acquiring stake from Mr. P Mukund and Igarashi Motors Sales PvtLtd.
On November 072019 the Board of Directors approved re-classificationrequest of Mr. Padamanabhan Mukund ("P Mukund") and MAPE Securities PrivateLimited ("Outgoing promoters") status from "Promoter Category" to"Public Category" as per Regulation 31A Listing Regulations. Subsequently theShareholders at the Extraordinary General Meeting held on February 142020 approved saidre-classification by passing an Ordinary Resolution and also approved appointment of Mr. PMukund as Advisor by passing an Ordinary resolution.
On February 202020 your Company submitted application with StockExchanges (NSE & BSE) for re-classification of Outgoing Promoters as Public Categoryand await Stock Exchanges approval of the same.
During the year Mrs. Eva Maria Rosa Schork (DIN: 07159550)re-appointed as Director.
Mr. Hemant M Nerurkar (DIN: 00265887) and Mr. S Radhakrishnan (DIN:01246033) as Non-Executive Independent Directors not liable to retire by rotation.
The Board at its meeting held on March 23 2020 based on Nomination& Remuneration Committee recommendation appointed Mrs. Vinodhini Sendhil Manian (DIN:08719578) as Additional Director Non-Executive and Independent Woman Director fora term of 5 years from April 01 2020 subject to the approval of shareholders at theensuing 28th Annual General Meeting.
All Independent Directors have given declarations that they meet thecriteria of independence as laid down under Section 149(6) of the Companies Act 2013 andSEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (ListingRegulations').
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
RETIREMENT BY ROTATION
Mr. Keiichi Igarashi (DIN: 00356779) Director retires by rotation atforthcoming 28th Annual General Meeting and being eligible offers himself forre-appointment.
The Nomination and Remuneration Committee and the Board of Directorsrecommend re-appointment of Mr. Keiichi Igarashi as Director and Mrs. VinodhiniSendhil Manian as Independent Woman Director for your approval.
Further the brief profiles of above Directors are given in the Noticeof 28th Annual General Meeting being sent to the shareholders along with the AnnualReport.
RESIGNATION OF MANAGING DIRECTOR
Mr. P Mukund (DIN: 00007788) resigned as Managing Director and as KMPeffective September 30 2019 due to a strategic role within Igarashi Group. Your Directorswishes to place on record their sincere appreciation of all achievements efforts inshaping the business and product portfolio especially taking care of employee welfare andexcellent Human Resource Management by Mr. P Mukund since 1992.
CHANGE IN DESIGNATION APPOINTMENT OF MANAGING DIRECTOR
The Board upon resignation of Mr. P Mukund appointed Mr. RChandrasekaran Chief Financial Officer (DIN: 00012643) as an Additional Directorand Managing Director for a period of 3 years from October 01 2019 at its meeting held onSeptember 102019. Consequently Mr. R Chandrasekaran resigned as Chief Financial Officereffective from September 30 2019.
On November 062019 shareholders by way of Postal Ballot approved bypassing Special Resolution for appointment of Mr. R Chandrasekaran (DIN 00012643) asManaging Director for 3 years from October 01 2019.
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 (FY 2019-20)of its own performance the directors individually as well the evaluation of the workingof its Audit Nomination & Remuneration and Stakeholder Committee. Each Board membercompleted a questionnaire providing feedback on the functioning and overall engagement ofthe Board and its committees on various parameters such as the composition execution ofspecific duties quality quantity and timelines of flow of information deliberations atthe meeting etc. Besides this one on-one meeting of the individual directors withthe Chairman of the Board was also conducted as a part of self-appraisal and peer groupevaluation. The Directors were also asked to provide their valuable feedback andsuggestions about the over all functioning of the Board and its committees.
NUMBER OF MEETINGS OF THE BOARD
During the year Seven Board Meetings were held on May 16 2019 August08 2019 September 10 2019 September 27 2019 November 14 2019 February 13 2020 andMarch 23 2020. The Company's last Annual General Meeting was held on September 272019. The particulars of Directors their attendance during the financial year 2019-2020has 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 March312020 the applicable Accounting Standards have been followed with explanation relatingto material departures if any;
b) They have selected such accounting policies and applied them consistently and madejudgments and estimates that are reasonable and prudent so as to give true and fair viewof the state of affairs of the Company as at March 31 2020 and of the profit of theCompany for that period;
c) Proper care has been taken for maintenance of adequate accounting for safe guardingthe assets of the Company and detecting fraud and other irregularities;
d) They have laid down Internal Financial Controls to be followed by the Company andthe Audit Committee of the Board of Directors shall ensure that the internal control isadequate and robust;
e) The annual accounts are prepared on a going concern basis;
f) They have devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively.
DEMATERIALISATION OF SHARES
99.28% of the Company's paid up Equity Share Capital is indematerialized form as on March 31 2020 and balance 0.72% 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 and Share TransferAgent (RTA) Cameo Corporate Services Limited No.1 Subramaniam Building Club House RoadChennai 600 002.
During the year under view CARE has given credit ratings of CARE A+for long term debt 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 covered under Section186 of the Companies Act 2013 form part of the notes to the financial statementsprovided in this report.
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 10 2018 and November 062019 for material related party transactions though such transactions being entered duringordinary course of business and on arm's length basis as required under ListingRegulations. Your Board has reviewed Policy on Related Party Transaction at their Meetingheld on June 04 2020.
Your Company's Policy on Related Party Transactions which can beaccessed through weblink: http://www.igarashimotors.com/investor-list.php?invescatid=18Your Company presents a statement of all related party transactions before the AuditCommittee. Details of such transactions are given in the accompanying financialstatements. Disclosure of Related Party transaction (include details of thetransactions with promoter/promoter group holding is annexed with the report as per theformat prescribed).
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE(PREVENTION PROHIBITION AND REDRESSAL) ACT 2013
Your Company adopted Policy on Prevention Prohibition and Redressal ofSexual Harassment and Non-discrimination at Work Place in line with therequirements of the Sexual Harassment of Women at the Workplace (Prevention Prohibition& Redressal) Act 2013. A copy of Policy is made available on the Company'swebsite.
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. ICC has meet atregular intervals for review of implementation and grievances if any.
During the year ended March 31 2020 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. R Chandrasekaran Managing Director Mr. SVivekchandranth Chief Financial Officer and Mr. P Dinakara Babu Company Secretary.
During the year there were changes in the Key Managerial PersonnelResignation of Mr. P Mukund as Managing Director effective September 30 2019 Resignationof Mr. R Chandrasekaran as Chief Financial Officer effective September 30 2019 andappointment of Mr. R Chandrasekaran Managing Director from October 01 2019. Alsoappointment of Mr. S Vivekchandranth who was working as Business Leader-Finance as ChiefFinancial Officer effective October 01 2019. Based on Nomination & RemunerationCommittee recommendation the Board approved at its meeting held on September 10 2019the above changes.
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 02 2017 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 ensuring 28thAnnual General Meeting does not include the proposal for seeking shareholders'approval for ratification of Statutory Auditors appointment.
M/s. B S R & Co LL.P Chartered Accountants has furnished acertificate of their eligibility and consent under Section 139 and 141 of the CompaniesAct 2013 and the Companies (Audit and Auditors) Rules 2014 for their continuance as theAuditors of the Company for the financial year 2020-21.
In terms of the Listing Regulations the Auditors have confirmed thatthey hold a valid certificate issued by the Peer Review Board of the ICAI.
No qualification adverse remarks or disclaimer made by the StatutoryAuditors with regard to the financial statements for the financial year 2019-20.
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 above mentionedAuditors under Section 143(12) of the Act and Rules framed thereunder either to theCompany or to the Central Government during FY 2019-20.
SECRETARIAL AUDITOR SECRETARIAL AUDIT REPORT & 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 CompanySecretaries (Membership No. A30433; Certificate of Practice No. 11033) to undertake thesecretarial audit of the Company for the year ended March 31 2020. Your Company hascomplied with the Secretarial Standards issued by the Institute of Company Secretaries ofIndia on Board Meetings and Annual General Meetings.
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 SEBI(LODR) Regulations is given in Annexure to this Report.
As required under SEBI (LODR) 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 andAdministration) Rules 2014 (as mended) to be filed with the Registrar of Companies forfinancial year 2019-20 is given in Annexure to this Report.
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 of four members and the Chairman of Board is heading the Committee. CSRCommittee of the Board has developed a CSR Policy. The CSR Committee met one time duringthe year on May 16 2019.The details of role and functioning of the Committee are given inAnnexure to this Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report of the Company for year underreview as required under Regulation 17 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)
As required under Regulation 34(2)(f) of Listing Regulations yourCompany has provided BRR for the year ended March 312020 as Annexure to this report.
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 Management 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(2) & 5(3) of The Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014. The Statement will besent by e-mail to the Shareholders if such request is mailed to the Company.
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 723 number of permanent employees on the rolls of theCompany as on March 31 2020. 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 established Whistle Blower Policyas per the requirement of the Companies Act 2013 and the Listing Regulations to enableall employees and the directors to report in good faith any violation of the Policy. TheAudit Committee of the Board oversees the functioning of Whistle Blower Policy. YourCompany has disclosed the details of Whistle Blower policy on its website: http://www.igarashimotors.com/investor-list.php?invescatid=18
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. YourCompany's Audit Committee monitors implementation of said Policy.
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 Limited and Bombay Stock Exchange Limited. Listing fee has already been paid forthe financial year 2019-20.
28TH ANNUAL GENERAL MEETING THROUGH VIDEO CONFERENCE
As per Ministry of Corporate Affairs Circular No. 20/2020 dated May 052020 read with other circulars and SEBI Circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/79 datedMay 12 2020 regarding COVID-19 Pandemic and relaxations (e.g VC no physical report)thereon your Company made arrangement to conduct 28th AGM through Video Conference /Other Audio Visual Means for which necessary information has been given separately inNotice of 28th AGM.
Also your Company will be complying with said Circulars by sending 28thAnnual Report along with Annexures by way of e-mail to the shareholders as such nophysical copies shall be distributed. Those Shareholders whose email IDs are notregistered have to register their email ID with RTA of the Company.
The Board places on record its sincere appreciation for the continuedsupport from the relevant Government Authorities Promoters Shareholders SuppliersCustomers and other business associates for their strong support.
ANNEXURE TO THE DIRECTORS' REPORT
A. CONSERVATION OF ENERGY
1) Energy Conservation Measures Taken
i. Additional LED lights installed instead of T5 TL in which 40% of energy issaved for the same lux requirement. 400 KWh/ month is being saved.
ii. In-house built BLDC fans installed in canteens and in manufacturing areas in someof our facilities thereby saving 750 KWh / Month.
2) Steps taken by the Company for utilizing alternate sources of energy are
i. The Company uses green energy at a tariff less than Tamil Nadu Electricity Board
3) The capital investment on energy conservation equipment's
i. HVLS fans installed to circulate air in large manufacturing area avoiding numerousair circulators thereby reducing substantial energy consumption
B. TECHNOLOGY ABSORPTION
1) the efforts made towards technology absorption : continuous process
2) the benefits derived (like product improvement cost reduction product developmentor import substitution): continuous process
3) Information regarding imported technology (last three years): Not applicable
4) Expenditure on Research and Development:
a) Capital : Rs.Nil (`Nil lakhs previous year)
b) Recurring : Rs.412.59 lakhs (`391.57 lakhs previous year)
c) Total : Rs.412.59 (`391.57 Lakhs previous year)