Your Directors have pleasure in presenting the Forty Fourth Annual Report of yourCompany together with the Audited Balance Sheet as at March 31 2017 the Statement ofProfit & Loss for the year ended that date and the Auditors Report thereon.
The profit before tax for the year under review is at Rs.29.37 Crores as againstRs.31.89 Crores in the previous year. The financial results for the year 2016-17 ascompared with the previous year are summarized as under :
| ||2016-17 ||2015-16 |
| ||(Rs. in crores) ||(Rs. in crores) |
|Profit Before Tax and Depreciation ||34.61 ||37.03 |
|Less:Depreciationfortheyear ||5.24 ||5.14 |
|Profit Before Tax ||29.37 ||31.89 |
|Provision for tax including || || |
|Deferred tax ||10.40 ||14.95 |
|Profit after Tax ||18.97 ||16.94 |
|Add : Surplus in P&L Account || || |
|brought forward ||5.03 ||3.36 |
|Sub - Total ||24.00 ||20.30 |
|Your Directors recommend the following appropriations : |
|Less : APPROPRIATION || || |
|General Reserve ||7.00 ||4.00 |
|Proposed Dividend ||9.37 ||9.37 |
|Tax on proposed dividend ||1.91 ||1.87 |
|Surplus in P&L A/c carried forward ||5.72 ||5.06 |
|Total ||24.00 ||20.30 |
REVIEW OF PERFORMANCE
DRY CELL BATTERIES
The Dry Cell Battery Industry as a whole was affected due to demonetization and importof poor quality batteries from China. In terms of battery category wise sale of D sizecontinuous to drop year on yar over 25% AA varieties has sustained growth of more than 5%and AAA varieties continuous to be fastest growing category of batteries in India. YourCompany s production has inceased from 539 million pieces to 618 million pieces showing anincrease of 14.65%. The sales also increased from 624 millions pieces to 625 millionpieces. In terms of value your Company had registered a turnover of Rs.358 crores asagainst Rs.353 crores in the previous year.
The sales volume of flashlight and other lighting products had decreased from 46.69lakhs pieces to 40.90 lakhs pieces as compared to the previous year. In LED productcategory (bulbs fixtures tube lights etc.) your company expects to grab sizable marketshare in coming years which will improve both top and bottom line of the financials of thecompany.
Your Directors recommends a dividend of Rs.25/-per share (250%) for the year 2016-17.This Dividend if approved will be paid to the Shareholders whose names appear on theRegister of Members as on 25th September 2017. The Company intends to pay thedividend on 4th October 2017.
The Company has not accepted any deposits from the public.
CONSOLIDATED FINANCIAL STATEMENTS
Your Directors have pleasure in attaching the consolidated financial statementspursuant to section 129(3) of the Companies Act 2013 and SEBI (LODR) Regulations 2015 andprepared in accordance with the Accounting Standard prescribed by the ICAI in thisregard.
SUBSIDIARIES JOINT VENTURES OR ASSOCIATE COMPANIES
During the year your company through its wholly owned subsidiary company M/s. HeliosStrategic Systems Ltd (HSSL) has increased its stake in equity holding to 50.991% from44.49% in Kineco Limited a company based at GOA in to defence and Aerospace business. Inaddition to that HSSL is also entitled to appoint majority of the Board of directors inKineco Limited.
Pursuant to the provisions of Section 129(3) of the Act read with Rule 5 of theCompanies (Accounts) Rules 2014 a statement containing salient features of the financialstatements of the Company s subsidiaries Associates and Joint Ventures in Form AOC-1 isattached to the financial statements of the Company. Pursuant to the provisions of Section136 of the Act the financial statements of the Company consolidated financial statementsalong with relevant documents and separate audited financial statements in respect of thesubsidiaries are available on the website of the Company.
MANAGEMENT S DISCUSSION AND ANALYSIS REPORT
Management s Discussion and Analysis Report for the year under review as stipulatedunder SEBI (LODR) Regulations 2015 is presented in a separate section forming part of theAnnual Report.
DIRECTORS RESPONSIBILITY STATEMENT
Your Directors state that: a) in the preparation of the annual accounts for the yearended March 31 2017 the applicable accounting standards read with requirements set outunder Schedule III to the Act have been followed and there are no material departuresfrom the same; b) the Directors have selected such accounting policies and applied themconsistently and made judgements and estimates that are reasonable and prudent so as togive a true and fair view of the state of affairs of the Company as at March 31 2017 andof the profit of the Company for the year ended on that date; c) the Directors have takenproper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting fraud and other irregularities; d) the Directors haveprepared the annual accounts on a going concern basis; e) the Directors have laid downinternal financial controls to be followed by the Company and that such internal financialcontrols are adequate and are operating effectively; and f) the Directors have devisedproper systems to ensure compliance with the provisions of all applicable laws and thatsuch systems are adequate and operating effectively.
A separate report on Corporate Governance along with Auditors Certificate on itscompliance is attached as Annexure - B to this report.
RELATED PARTY TRANSACTIONS
As per the requirements of the Companies Act 2013 and SEBI (LODR) Regulation 2015your Company has formulated a Policy on Related Party Transactions which is also availableon Company s website at www.nippobatteries.com.
The Policy intends to ensure that proper reporting approval and disclosure processesare in place for all transactions between the Company and Related Parties. This Policyspecifically deals with the review and approval of Material Related Party Transactionskeeping in mind the potential or actual conflicts of interest that may arise because ofentering into these transactions.
All Related Party Transactions are placed before the Audit Committee as well as Boardfor review and approval. Prior omnibus approval is obtained for Related Party Transactionson a quarterly basis for transactions which are of repetitive nature and/ or entered inthe Ordinary Course of Business and are at Arm s Length.
There were no contract / arrangement / transactions entered in to during the year endedMarch 31 2017 which were not at arm s length basis. All the material related partytransitions exceeding ten percent of the annual consolidated turnover as per the lastaudited financial statement were entered during the year by the company are disclosed inaccordance with section 134 (3) (h) of the Companies Act 2013 in form AOC 2 as perAnnexure - C of this report.
CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE:
The CSR committee comprises Mr.N.Ramesh Rajan Chairman Mr. S. Obul Reddy and Mr. P.Aditya Reddy as other members.
The Board has laid out the Company s policy on Corporate Social Responsibility (CSR)and the CSR activities of the Company are carried out as per the instructions of thecommittee. The Committee also monitors the implementation of the framework of the CSRPolicy and recommending the amount to be spent on CSR activities. During the year theCompany has spent 2% of its average net profits for the three immediately precedingfinancial years on CSR activities.
The financial data / Annual Report pertaining to the Company s CSR activities for thefinancial year 2016-2017 is presented in the prescribed format in Annexure- D to the BoardReport.
The CSR Policy is available on our website www.nippobatteries.com.
The Board has constituted a Risk Management Committee which has been entrusted with theresponsibility to assist the Board in overseeing that all the risks that the organizationfaces such as strategic financial credit market legal regulatory reputational andother risks have been identified and assessed and there is an adequate risk managementinfrastructure in place capable of addressing those risks. The Company regularly updatesto committee on the principal risks and uncertainties that can impact its ability toachieve its strategic objectives.
In accordance with the Articles of Association of the Company Mr. P. Dwaraknath Reddywill retire by rotation at this ensuing Annual General Meeting. He being eligible offerhimself for re-appointment.
In accordance with the Articles of Association of the Company Mr. R.P. Khaitan willretire by rotation at this ensuing Annual General Meeting. He being eligible offerhimself for re-appointment.
In accordance with the Articles of Association of the Company Mr. P. Aditya Reddy willretire by rotation at this ensuing Annual General Meeting. He being eligible offerhimself for re-appointment.
In accordance with the Articles of Association of the Company Mr.S. Obul Reddy willretire by rotation at this ensuing Annual General Meeting. He being eligible offerhimself for re-appointment. The Company has received declarations from all the IndependentDirectors of the Company confirming that they meet with the criteria of independence asprescribed both under sub-section (6) of Section 149 of the Companies Act 2013 and SEBI(LODR) Regulations 2015.
Information about all the Directors proposed to be re-appointed is furnished in theExplanatory Statement under Section 102 of the Companies Act 2013 under the headingInformation about the Directors proposed to be re-appointed attached to the Notice of theensuing Annual General Meeting for your consideration.
PERFORMANCE EVALUATION OF THE BOARD ITS COMMITTEES AND DIRECTORS
As per Companies Act 2013 and SEBI (LODR) Regulations 2015 mandates that the Boardshall monitor and review the Board evaluation framework and a formal annual evaluationneeds to be made by the Board of its own performance and that of its committees andindividual directors. Schedule IV of the Companies Act 2013 states that the performanceevaluation of independent directors shall be done by the entire Board of Directorsexcluding the director being evaluated.The Board subsequently evaluated its ownperformance the working of its Committees and Independent Directors without participationof the relevant Director(s).
TRAINING OF INDEPENDENT DIRECTORS
To familiarize the strategy operations and functions of our Company the executivedirectors make presentations / orientation programme to non executive independentdirectors about the company s strategy operations product and service offeringsmarkets organization structure finance human resources production facilities andquality and risk management. The appointment letters of Independent Directors has beenplaced on the Company s website at www.nippobatteries.com.
MEETING OF INDEPENDENT DIRECTORS
The Independent Directors of the Company had met during the year on 02ndFebruary 2017 to review the performance of non- Independent Directors and the Board as awhole review the performance of the Chairperson of the Company and had accessed thequality quantity and timeliness of flow of information between the company management andthe Board.
MEETINGS OF THE BOARD
Four meetings of the Board of directors were held during the year. The details of whichare given in the Corporate Governance Report. The intervening gap between the Meetings waswithin the period prescribed under the Companies Act 2013.
Your Directors wish to place on record their appreciation for the dedication and hardwork put in by the employees at all levels for the overall growth of your Company.Relations with the employees at Factory Head office and other Branches were cordialduring the year.
In terms of the provisions of Section 197(12) of the Companies Act 2013 read withRules 5(2) and 5 (3) of the Companies (Appointment and Remuneration of ManagerialPersonnel) Rules 2014 the information required in respect of employees of the Companywill be provided upon request. As per section 136 (1) of the Companies Act 2013 thereport and accounts are being sent to the members and others entitled thereto. Any memberinterested in inspecting or obtaining copy of the statement of particulars of employeesbeing forms part of the Report may contact the Company Secretary at Registered Officeduring working hours and any member interested in obtaining such information may write tothe company secretary and the same will be furnished on request.
REMUNERATION POLICY OF THE COMPANY
The Company s policy on directors appointment and remuneration and other mattersprovided in Section 178(3) of the Act has been disclosed in the Corporate Governancereport which forms part of the Board s Report. The objective of the Remuneration Policyis to attract motivate and retain qualified and expert individuals that the Company needsin order to achieve its strategic and operational objectives.
PARTICULARS OF LOAN GUARANTEES OR INVESTMENTS UNDER SECTION 186 OF THE COMPANIES ACT2013
The particulars of loans guarantees and investments under section 186 of the Act readwith the Companies (Meetings of Board and its powers) Rules 2014 for the financial year2016-17 are given in the notes to the financial statements.
At the Annual General Meeting held on September 23 2016 the appointment of M/s. P.Srinivasan & Co Chartered Accountants as statutory auditors of the Company wereratified to hold office till the conclusion of the 44th Annual General Meetingof the Company have completed more than ten years as statutory auditor of the Company. Asper section 139 of the Companies Act 2013 and applicable rules thereon and with therecommendation of the Audit Committee M/s G. Balu Associates (Firm Registration No.000376S) have been appointed as the Statutory Auditors of the Company for a period of 5years to hold office from the conclusion of this Annual General Meeting till theconclusion of the Forty Ninth Annual General Meeting (subject to ratification of theirappointment at every AGM if so required under the Act). M/s G. Balu Associates haveconsented to their appointment as Statutory Auditors and have confirmed that if appointedtheir appointment will be in accordance with Section 139 read with Section 141 of the Act.
Yours directors placed on record their appreciation for the services rendered by M/s.P. Srinivasan & Co Chartered Accountants during their tenure as a Statutory Auditorof the Company.
In terms of Section 148 of the Companies Act 2013 read with Companies (Cost recordsand audits) Rules 2014 the Company has appointed Mr. P. Raju Iyer Practicing CostAccountant as the Cost Auditor of the Company for conducting the audit of cost records ofthe Company for the financial year 2016-17.
As required under Section 204 of the Companies Act 2013 and Rules thereunder the Boardhas appointed M.Damodaran & Associates Practising Company Secretaries as SecretarialAuditor of the company to conduct Secretarial Audit for the financial year 2016-17. TheSecretarial Audit Report for the financial year ended March 31 2017 is annexed herewithmarked as Annexure F to this Report. The Secretarial Audit Report does not contain anyqualification reservation or adverse remark.
WHISTLE BLOWER POLICY/VIGIL MECHANISIM
The Company has adopted a whistle blower policy/ Vigil mechanism that covers directorsand employees of the Company to bring to the attention of the management any issues whichis to be in violation or in conflict with the fundamental business principles of theCompany. The Company is committed to adhere to the highest standards of ethical moral andlegal conduct of business operations and in order to maintain these standards the Companyencourages its employees who have genuine concerns about suspected misconduct to comeforward and express those concerns without fear of punishment or unfair treatment.
No one may take any adverse action against any employee for complaining aboutreporting or participating or assisting in the investigation of a reasonably suspectedviolation of any law this Policy or the Company s Code of Conduct and Ethics.
All the employees have been given access to the Audit Committee. The Company Secretaryis the designated officer for effective implementation of the policy and dealing with thecomplaints registered under the policy.
The Whistle Blower Policy is available on the website of the Companywww.nippobatteries.com.
INTERNAL CONTROL SYSTEM AND INTERNAL FINANCIAL CONTROL AND THEIR ADEQUACY
The Company has a proper and adequate internal control system to ensure that all theassets of the Company are safeguarded and protected against any loss and that all thetransactions are properly authorised and recorded.
The Company has an established Internal Financial Control to cover internal controlsover financial reporting and operating controls etc. The framework is reviewed regularlyby the management and tested by internal audit team and presented to the Audit Committee.Based on the periodical testing the framework is strengthened from time to time toensure adequacy and effectiveness of Internal Financial Controls of the Company.
ENERGY CONSERVATION TECHNOLOGY ABSORPTION FOREIGN EXCHANGE ETC
Your Company has always been in the forefront of energy conservation. Several measuresto conserve energy and to reduce the costs associated with it have been taken. The detailsregarding conservation of energy foreign exchange technology absorption including R& D efforts as required under Section 134 (3) (m) of the Act read with Rule 8(3) ofthe Companies (Accounts) Rules 2014 are given in Annexure A to this Report. The Companyhas an in-house Research Development Department where the main areas of focus are EnergyConservation Process upgradation and Environment Preservation. The Ministry of Scienceand Technology Department of Scientific and Industrial Research Government of India hasrecognized in-house R&D facilities of the Company.
EXTRACT OF ANNUAL RETURN
The extract of Annual Return of the Company is annexed herewith as Annexure E to thisreport.
STATEMENT PURSUANT TO LISTING AGREEMENT / SEBI (LODR) REGULATIONS 2015
The Company s Securities are listed with Bombay Stock Exchange (BSE) and National StockExchange (NSE). The Company has paid the Annual Listing fees to all the Stock Exchanges.
DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS
There are no significant and material orders passed by the regulators or courts ortribunals impacting the goingconcern status of the Company.
DISCLOSURE UNDER THE SEXUAL HARASMENT OF WOMAN AT WORKPLACE (PREVENTION PROHIBITIONAND REDRESSAL) ACT 2013
The company has in place an anti-sexual Harassment Policy as required under preventionof Sexual Harassment of Woman at workplace (Prohibition Prevention and Redressal) Act2013 and constituted an Internal Complaints Committee (ICC).Your Directors further statesthat during the year under review there were no cases filed pursuant to the SexualHarassment of Woman at Workplace (Prevention Prohibition and Redressal) Act 2013.
Your Directors thank the Central and State Governments and the Banks for theircontinued help and support.
Your Directors also thank the Authorised Wholesale Dealers Stockiest and Retailers fortheir excellent support under difficult conditions and the Consumers for their continuedpatronage of your Company s products. Your Directors are especially thankful to theesteemed Shareholders for their continued encouragement and support.
For and on behalf of the Board of Directors For Indo National Ltd
|Place: ||Chennai ||N. Ramesh Rajan |
|Date: ||17th August 2017 ||Chairman |
| || ||(DIN:01628318) |
Annexure A to Directors Report
Information required under Section 134(3)(m) of the Companies Act 2013 read with theCompanies (Accounts) Rules 2014 and forming part of the Directors Report for the yearended March 31 2017.
A. Conservation of Energy
Efforts are being made to control Energy cost wherever possible even though Energy costforms only negligible proportion of total cost of manufacture of batteries. Energyconservation activities initiated earlier years
INDO NATIONAL LIMITED
based on Energy Audit has been continued during 2016-2017.
B. Technology Absorption
Research and Development (R & D)
(1) Specific areas in which R & D activities are carried out by the Company: a) NewProducts Development b) Finding alternate source of materials c) Import Substitution d)Development of improved designs e) Development of new products to suit consumerrequirements
(2) Benefits derived as a result of the above R & D activities: a) Efficiency inusage of raw materials b) Cost Reduction c) Improvement in product quality d) Automaticand accurate testing of batteries e) Foreign exchange savings due to indigenisationefforts
(3) Future plan of action:
To continue indigenisation efforts and to further strengthen R & D activities forthe purpose of cost reduction and quality improvements and for developing new productsdepending on market requirements.
|(4) Expenditure on R & D ||(Rs. in Lakhs) |
|a) Recurring ||18.10 |
|b) Total R & D expenditure as a || |
|percentage of total turnover ||0.050% |
Technology absorption adaptation and innovation
1. Efforts in brief made towards technology absorption adaptation andinnovation: Installation of sophisticated instrument for R & D testing and processcontrol measures. Technology has been fully absorbed and adapted for all types of Dry cellbatteries.
2. Benefits derived as a result of the efforts e.g: product improvement costreduction product quality maintenance and import substitution etc. (a) Improvement ofdesigns.
(b) Import Substitution. (c) Cost Reduction.
(d) Product Quality Maintenance & Improvement.
(e) New products development.
3. Imported Technology: Not Applicable
(Imported during the last 5 years reckoned from the beginning of the financial year)(a) Technology imported.
(b) Year of Import
(c) Has Technology been fully absorbed
C. Foreign Exchange Earnings and Outgo:
(1) Activities relating to Exports; we have taken initiatives to increase exports; anddeveloping of new export markets for products and services.
At present no Exports are being made. However continuous efforts are being made toprocure Export orders.
(2) Total Foreign Exchange used and earned:
Total expenditure on Foreign Currency on imports of raw materials components capitalgoods spare parts travel and others amounts to Rs. 2974.05 Lakhs as against Rs.4578.33Lakhs for the previous year.
For and on behalf of the Board of Directors
For Indo National Ltd
|Place: ||Chennai ||N. Ramesh Rajan |
|Date: ||17th August 2017 ||Chairman |
| || ||(DIN:01628318) |