INGERSOLL-RAND (INDIA) LIMITED
Your Directors are pleased to submit the Ninety-Sixth Annual Report along with theAudited Balance Sheet and Statement of Profit and Loss for the year ended March 31 2018that is the year under review.
1. FINANCIAL SUMMARY OF THE COMPANY
| || ||(Rupees in Lakhs) |
| ||2017-18 ||2016-17 |
|Gross Profit: ||14216.22 ||12697.50 |
|(Less): Depreciation and amortization expenses ||(1256.71) ||(1180.00) |
|(Less)/Add: Finance costs ||208.02 ||(78.80) |
|Profit before taxation and exceptional items ||13164.53 ||11438.70 |
|(Less): Provision for Current Tax ||(4348.98) ||(3757.50) |
|(Less): Deferred Tax for the year ||(299.16) ||(267.30) |
| ||372.43 ||313.40 |
|Add: Write back relating to prior years (net) ||(4275.71) ||(3711.40) |
|Net Profit ||8888.82 ||7727.30 |
|Other comprehensive income: (net of tax) ||17.03 ||(119.90) |
|Total comprehensive income for the year ||8905.85 ||7607.40 |
|Add: Balance in retained earnings brought forward from earlier years ||72556.40 ||67228.60 |
| ||81462.25 ||74836.00 |
|Appropriations: || || |
|Dividends paid (including tax thereon) ||2279.68 ||2279.60 |
|Balance carried to Balance Sheet ||79182.57 ||72556.40 |
| ||81462.25 ||74836.00 |
2. MANAGEMENT DISCUSSION AND ANALYSIS
I. Industry Structure and Development: India has registered a steady pace of economicgrowth in Fiscal 2017-18 as it did in Fiscal 2016-17. Key reforms undertaken by theGovernment of India for raising economic growth and maintaining stability have made Indiaone of the fastest growing major economies in the world.
India's GDP for fiscal year 2017-18 was at 6.70% slowing from 7.1% in the previousfinancial year. Macroeconomic developments this year have been characterized by swings. Inthe first half India's economy temporarily slowed down as the rest of the worldaccelerated. This can be attributed to a slew of reforms and policies; demonetizationteething difficulties with the new GST reform high and rising real interest rates theTwin Balance Sheet (TBS) challenge and sharp falls in certain food prices that impactedagricultural incomes. However the economy showed signs of revival in the second half ofthe year.
Following the impact of GST on India's economy there has been a fifty percent increasein the number of indirect taxpayers. There has also been a large increase in voluntaryregistrations especially by small enterprises that buy from large enterprises wanting toavail themselves of input tax credits.
Reflecting the cumulative actions to improve business sentiments India jumped 30 spotson the World Bank's Ease of Doing Business rankings while similar actions to liberalizethe foreign direct investment (FDI) regime helped increase flows by 20 percent.
Your Company's products are primarily sold to industries in the automotive metalspharmaceutical and textile sectors and these sectors have shown moderate growth improvingthe revenue by 1.7% during the year under review.
II. Segment-wise operational performance: Air Solutions is the only segment in yourCompany's operations. The gross revenue of Air Solutions business in the year under reviewwas Rs. 62525 lakhs as against Rs. 66397 lakhs in the previous financial year. YourCompany continues to focus on local innovation and creating markets "In India; ForIndia; By India".
The profit before tax is Rs. 13165 lakhs in the year under review as against Rs.11439 lakhs in the previous financial year.
III. Outlook: The Economic Survey report 2017-18 has estimated the economic growth ratein the fiscal year 2019 between 7% and 7.5% while saying that the rising crude oil pricehas become a major concern and is expected to grow by average 12% in the FY19. YourCompany will continue to move on its path of sustained growth through differentiatedproduct offerings and providing great service to its customers. The International MonetaryFund (IMF) has said that India could grow at 7.4% in the current year 2018-19 as againstChina's 6.8% making it the fastest growing country among emerging economies. Notably theInternational Monetary Fund has projected a 7.8% growth rate for India in 2019
IV. Threat and concerns: The primary threat continues to be leading competitors thatare using price pressures as a tool to win the market share. Availability of spuriousparts and components at cheap prices is also an added threat. Fluctuating foreign currencyrates will have impact on imports. However the superior product quality together withsustained performance and strong brand image is helping your Company in securing customerorders. Innovation based approach ensures that your Company stays ahead of competition.
V. Safety Health and Environment: Environmental Health and Safety (EHS) are areas ofprime focus at Ingersoll Rand. Your Company is committed to pursue the goal of "zeroinjuries" and "incident free" operations and ensure all employees arealigned with this objective. The management is dedicated to formulating policies anddecisions that help conduct the Company's business in a sustainable manner with stringentprocedures around safety systems and processes. Regular health check-up and hygienestudies are conducted every year for the employees. Your Company continues to monitor thehazardous and non-hazardous waste generation and disposal improving its own environmentalfootprint by continually reducing greenhouse gas (GHG) emissions consumption of water andby diverting waste from landfill disposal. Your Company has also achieved substantialsavings by carrying out energy audits and implementing projects to save energy.
VI. Technology Innovation: Your Company has continued to invest in technologyinnovation to sustain its leadership position and be the pioneer of best-in-classsolutions for its customers. This year your company introduced new models to its line ofNext Generation R-Series oil-flooded rotary screw air compressors which provide a moreenergy-efficient solution for customers with high capacity air requirements. The RS200 toRS250 models rotary screw air compressor reduce energy cost by approximately 10% for largemanufacturing facilities. The ability for these compressors to deliver outstandingefficiency without compromising reliability meets the increasing demands of industries toincrease productivity while reducing energy use. Our customers in India will be able tobecome more competitive in the global environment by boosting their productivity with astate of the art airend that delivers as much as 15% improved efficiency and 16% greaterairflow capacity.
With this and more we continue to push the edge of innovation to help our customersachieve real business results including cost reductions and lower total cost ofownership. Ingersoll Rand holds very high standards for quality and performance and wecontinue to work diligently to ensure what we launch is true innovation and lives up tonot only our high standards but the standards of our customers.
Your Company on November 8 2017 declared an interim dividend at the rate of Rs. 3/-per share absorbing Rs. 947.04 lakhs. Your Company also on May 10 2018 has declared aspecial dividend of Rs. 202/- per share as second interim dividend for the financial yearunder review out of profits for the current year and accumulated surplus from profits ofearlier years.
Your Directors at its meeting held on May 10 2018 have subject to the approval of themembers at the ensuring Annual General Meeting recommended payment of final dividend forthe year under review at the rate of Rs. 3/- per share.
The total dividend payout for the year is Rs. 208/- per share absorbing Rs.65661.44 lakhs (previous year Rs. 1894.08 lakhs). Dividend distribution tax payable bythe Company would be Rs. 13687.80 lakhs (previous year Rs. 385.60 lakhs).
As per Regulation 43A of the Securities and Exchange Board of India (ListingObligations and Disclosure Requirements) Regulations 2015 ("SEBI ListingRegulations") the dividend distribution policy of the Company has been disclosed inthe Corporate Governance Report and on the website of the Company.
4. TRANSFER TO RESERVES
Pursuant to the provisions of the Act your Directors have decided to retain the fullprofits for the year under review in Retained Earnings.
5. MATERIAL CHANGES AND COMMITMENTS
There are no material changes and commitments which has occurred affecting thefinancial position of the Company between the end of the financial year of the Companyi.e. March 31 2018 and the date on which this report has been signed.
6. SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS IMPACTING THEGOING CONCERN STATUS
There are no significant and material order(s) passed by any of the Regulators orCourts or Tribunals which could impact the going concern status of the Company and itsfuture operations.
7. DETAILS IN RESPECT OF ADEQUACY OF INTERNAL FINANCIAL CONTROLS WITH REFERENCE TO THEFINANCIAL STATEMENTS
The Company's management is responsible for establishing and maintaining an adequatesystem of internal controls over financial reporting. Accordingly the Board of Directorshas laid down internal financial controls to be followed by the Company and such policiesand procedures to be adopted by the Company for ensuring efficient and orderly conduct ofits business including adherence to Company's policies the safeguarding of its assetsthe accuracy and completeness of the accounting records and the timely preparation offinancial information. The internal controls are commensurate with the size scale andcomplexity of your Company's operations and facilitate prevention and timely detection ofany irregularities errors and frauds. The internal controls are continuously assessed andimproved/modified to meet changes in business conditions statutory and accountingrequirements.
As a subsidiary of a corporation that is publicly listed on the New York StockExchange your Company complies with the requirements of the Sarbanes Oxley Act of 2002.The Company through its own Corporate Internal Audit Department carries out periodicaudits to independently assess the design and operating effectiveness of the internalcontrol system to provide a credible assurance to the Board of Directors and the AuditCommittee regarding the adequacy and operating effectiveness of the internal controlsystem. The observations arising out of audit are periodically reviewed by the AuditCommittee and compliance ensured.
8. DETAILS OF JOINT VENTURES SUBSIDIARIES AND ASSOCIATES
Ingersoll-Rand Company USA is the holding Company and Ingersoll-Rand plc Ireland isthe ultimate holding company of your Company. Your Company does not have any associatesubsidiary or joint venture either in India or anywhere else in the world.
During the year under review your Company has not accepted any fixed deposits from thepublic within the meaning of Section 73 of the Act read with the Companies (Acceptance ofDeposits) Rules 2014. There are no unclaimed deposits as on March 31 2018.
10. STATUTORY AUDITORS
M/s. B S R & Co. LLP. Chartered Accountants (Firm Registration No. 101248W/W-100022) were appointed as the Statutory Auditors of the Company to hold office for aperiod of five (5) years commencing from the 95th Annual General Meeting heldon August 3 2017 subject to ratification by the members at every Annual General Meeting.However pursuant to the notification of certain sections of the Companies (Amendment)Act 2017 with effect from May 7 2018 the requirement of ratification of the StatutoryAuditors by members is no longer required. Taking into consideration this recentamendment the annual ratification will not be required from this year onwards.
11. COST AUDITORS
As per Section 148 of the Act read with Companies (Cost Records and Audits) Rules2014 as amended and on the recommendation of the Audit Committee the Board of Directorshas appointed M/s. Ashish Bhavsar & Associates Cost Accountants as Cost Auditors forconducting the audit of the cost records maintained by the Company for the year endingMarch 31 2019. The Company has received their written consent that the appointment is inaccordance with the applicable provisions of the Act and rules framed thereunder. Asrequired under the Act the remuneration payable to cost auditors is required to be placedbefore the Members in a General Meeting for their ratification. Accordingly a resolutionseeking Members ratification for the remuneration payable to M/s. Ashish Bhavsar &Associates Cost Accountants is included in the Notice convening the Annual GeneralMeeting.
12. SHARE CAPITAL
The Company has only one class of share viz. equity share with a face value of Rs. 10each. During the year under review there is no change in the issued and subscribedcapital of your Company. The outstanding capital as on March 31 2018 is Rs. 3156.80lakhs comprising 31568000 equity shares of Rs. 10/- each. Share capital audit as per thedirectives of the Securities and Exchange Board of India is being conducted on a quarterlybasis by Parikh & Associates Company Secretaries and the Audit Reports are placed onthe table of the Board Meeting and duly forwarded to the stock exchanges where the equityshares of your Company are listed.
13. EXTRACT OF THE ANNUAL RETURN
The Extract of Annual Return as on March 31 2018 as per Section 92(3) of the Act andRule 12(1) of the Companies (Management and Administration) Rules 2014 is set out inAnnexure A forming part of this report.
14. NUMBER OF MEETINGS OF THE BOARD
Five meetings of the Board of Directors were held during the year under review. Themeeting details are provided in the Corporate Governance Report that forms part of thisAnnual Report. The maximum interval between any two meetings did not exceed 120 days asprescribed in the Act.
15. CONSERVATION OF ENERGY TECHNOLOGY ABSORPTION FOREIGN EXCHANGE EARNINGS AND OUTGOThe information relating to conservation of energy technology absorption and foreignexchange earnings and outgo required to be disclosed as per the provisions of Section134(3) (m) of the Act read with Rule 8 of the Companies (Accounts) Rules 2014 is set outin Annexure B forming part of this report.
16. CORPORATE SOCIAL RESPONSIBILITY (CSR)
Your Company has a long and proud history of supporting good activities ofphilanthropic organizations. Each year your Company contributes time and financialsupport to the communities and beneficiaries in and around its areas of operation. Thisyear your Company has continued its CSR initiatives to focus on providing educationhealthcare & sanitation livelihood and furthering sustainability. These activitiesare in accordance with Schedule VII of the Act. The Board of Directors and CSR Committeereview and monitor from time to time all the CSR activities being undertaken by theCompany.
The details of CSR activities carried out by your Company during the year under revieware set out in Annexure C forming part of this report.
The Board has adopted a policy on Corporate Social Responsibility which has beenuploaded on website of the Company www.ingersollrand.co.in
17. INDEPENDENT DIRECTORS
The Board has an optimum combination of Independent and Non-Independent Directors. Inline with the requirements of the SEBI Listing Regulations more than half of the Boardcomprise of Independent Directors. Mr. Hemraj C. Asher Mr. Darius C. Shroff and Mr.Sekhar Natarajan are independent directors of the Company. The independent directors havegiven a declaration confirming that they meet the criteria of independence as laid downunder Section 149 (6) of the Act and Regulation 25 of SEBI Listing Regulations.
18. AUDIT COMMITTEE
Mr. Sekhar Natarajan Mr. Amar Kaul and Mr. Darius C. Shroff continue as members of theCommittee. The powers and role of Audit Committee are included in the corporate governancereport section of the annual report. All the recommendations made by the Audit Committeewas accepted by the Board of Directors.
19. DIRECTORS AND KEY MANAGERIAL PERSONNEL
In accordance with the provisions of Section 152 (6) of the Act and the Article 131 ofthe Articles of Association of the Company Ms. Jayantika Dave retires by rotation at theforthcoming Annual General Meeting and being eligible offers herself for re-appointment.
The brief resume and other relevant details of Director seekingappointment/re-appointment is given in the annexure to the Notice of the Annual GeneralMeeting.
Mr. G. Madhusudhan Rao Vice President (Finance) retired during the year underreview and Mr. Vikas Goel was appointed as Chief Financial Officer in lieu thereofeffective November 8 2017. Mr. Vikas Goel is a qualified Chartered Accountant and CostAccountant with over 23 years professional experience in senior management positions withdifferent corporate entities.
As on date Mr. Amar Kaul Chairman and Managing Director Mr. Vikas Goel ChiefFinancial Officer and Mr. P. R. Shubhakar General Manager Corp. Finance &Company Secretary are the Key Managerial Personnel of the Company.
20. PARTICULARS OF EMPLOYEES
The information on employees particulars as required pursuant to Section 197 (12) ofthe Act read with Rule 5(1) 5(2) and 5(3) of the Companies (Appointment and Remunerationof Managerial Personnel) Rules 2014 as amended from time to time are furnished inAnnexure D forming part of this report.
21. DETAILS OF ESTABLISHMENT OF VIGIL MECHANISM FOR DIRECTORS AND EMPLOYEES
Your Company has an effective Vigil Mechanism system which is embedded in its Code ofConduct. The Code of Conduct of your Company serves as a guide for daily businessinteractions reflecting your Company's standard for appropriate behavior and livingcorporate values. The Code of Conduct is applicable to all employees of the Company.
The suppliers and vendors of the Company are also required to adhere to Code of Conductas it is a prerequisite for conducting business with your Company.
The Company's Whistle Blower Policy is the mechanism for directors and employees of theCompany to report concerns about unethical behavior actual or suspected fraud orviolation of the Company's code of conduct violations of legal or regulatoryrequirements incorrect or misrepresentation in any financial statements and reports etc.The mechanism provides for adequate safeguards against victimization of those who availthe mechanism and also provides for direct access to the Chairman of Audit Committee inexceptional cases.
The Whistle Blower Policy has been uploaded on the website of the Companywww.ingersollrand.co.in
22. POLICY ON DIRECTORS' APPOINTMENT AND REMUNERATION
The Nomination and Remuneration Committee of the Company has formulated a policyrelating to the remuneration of the directors key managerial personnel and otheremployees of the Company. The Company's policy on directors' appointment and remunerationincluding the criteria for determining qualifications positive attributes independenceof a director and other details are set out in the policy which has been uploaded on thewebsite of the Company www. ingersollrand.co.in.
23. ANNUAL EVALUATION BY THE BOARD OF ITS OWN PERFORMANCE AND THAT OF ITS COMMITTEESAND INDIVIDUAL DIRECTORS
Pursuant to the provisions of the Act and SEBI Listing Regulations read with theGuidance Note on Board Evaluation the Board has carried out the annual performanceevaluation of the Board as a whole the Directors individually as well as the working ofthe Board and its Committees.
The performance of the Board was evaluated by the Board after seeking inputs from allthe Directors on the basis of criteria such as board composition and structureeffectiveness of board processes information and functioning etc. The Board and theNomination and Remuneration Committee reviewed the performance of individual directors onthe basis of criteria such as contribution of individual director to the board andcommittee meetings like preparedness on matters to be discussed constructive contributionand inputs in meetings etc. Further in a separate meeting of independent directorsperformance of non-independent directors the Board as a whole and its Chairman wasevaluated as stipulated under the SEBI Listing Regulations.
24. PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS UNDER SECTION 186
During the year under review your Company has not given any loans or provided anyguarantees or made any investments within the meaning of Section 186 of the Act.
25. CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES
All Related Party Transactions (RPTs) that were entered into during the year were on anarm's length basis and were in the ordinary course of business. All RPTs are placed beforethe Audit Committee for approval. Prior omnibus approval of the Audit Committee isobtained on a yearly basis for the transactions which are of a foreseen and repetitivenature. A statement giving details of all RPTs is placed before the Audit Committee andthe Board of Directors for their approval on a quarterly basis.
There are no materially significant related party transactions entered into by theCompany with its promoters directors key managerial personnel or other designatedpersons which may have a potential conflict with the interest of the Company at large.
As per Regulation 23(2) of SEBI Listing Regulations material RPTs shall require priorapproval of the Members. A transaction with a related party shall be considered materialif the transaction / transactions to be entered into individually or taken together withprevious transactions during a financial year exceeds ten percent of the annual turnoveras per last audited financial statements of the Company. In pursuance of the same theshareholders of the Company have approved and authorised the Board of Directors and AuditCommittee to enter into transactions in excess of 10% of the Company's annual turnoverwith Ingersoll Rand Company USA and Ingersoll Rand International
Limited Ireland up to December 31 2020.
Transactions with related parties as per the requirements of Ind AS 24 are disclosedin the notes to financial statements.
The Board of Directors has adopted a policy on Related Party Transactions which hasbeen uploaded on website of the Company www.ingersollrand.co.in
26. SECRETARIAL AUDIT REPORT
Pursuant to the provisions of Section 204 of the Act read with Rule 9 of the Companies(Appointment and Remuneration of Managerial Personnel) Rules 2014 your Board ofDirectors appointed Mr. Natesh K Practicing Company Secretary Bangalore to conduct theSecretarial Audit of the Company for the year ended March 31 2018. The Secretarial AuditReport issued by Mr. Natesh K is given in Annexure E forming part of this report.
There is no qualification reservation or adverse remark or disclaimer made by thecompany secretary in practice for the year under review.
27. CORPORATE GOVERNANCE CERTIFICATE
The Company is committed to adhere to highest standards of Corporate Governance in allareas of its functioning. As required under Regulation 34 read with Schedule V of SEBIListing Regulations a report on Corporate Governance together with a certificate from Mr.Natesh K Practicing Company Secretary confirming compliance with the requirements ofCorporate Governance is set out in Annexure F forming part of this report.
28. RISK MANAGEMENT POLICY
Your Company has constituted a Risk Management Committee which comprises Mr. Amar Kaul Chairman Mr. Darius C. Shroff Director Ms. Jayantika Dave Director.
The Committee has formulated a risk management policy for identifying the elements ofrisk which in the opinion of the Board of Directors threatens the existence of theCompany. The said policy sets out the objectives and elements of risk management withinthe organization and helps to promote risk awareness amongst employees along withfacilitating integration of risk management within the corporate culture.
The formulation and monitoring of the Risk Management Policy at the corporate levelsillustrates the executive management's commitment to implement and continuously developrisk management within the Company.
29. PREVENTION OF SEXUAL HARASSMENT POLICY
The Company has zero tolerance towards sexual harassment at the workplace and hasadopted a policy on prevention of sexual harassment policy in line with the requirementsof the Sexual Harassment of Women at Workplace (Prevention Prohibition and Redressal)Act 2013 and the Rules thereunder. An Internal Compliance Committee has been set up toredress complaints received regarding sexual harassment. All employees (permanentcontractual temporary trainees) are covered under this policy.
During the year under review no complaint relating to sexual harassment has beenreceived.
30. DIRECTORS' RESPONSIBILITY STATEMENT
To the best of their knowledge and belief and according to the information andexplanations provided to them your Directors pursuant to sub-section (5) of Section 134of the Act state:
(a) that in the preparation of the annual accounts the applicable accounting standardshave been followed and no material departures have been made from the same;
(b) that appropriate accounting policies have been selected and applied consistentlyand have made judgments and estimates that are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company as March 31 2018 and of the profitand loss of the Company for the year ended March 31 2018;
(c) that proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities;
(d) that the annual accounts have been prepared on a going concern basis;
(e) that proper internal financial controls were followed by the Company and that suchinternal financial controls are adequate and were operating effectively; and
(f) that proper systems have been devised to ensure compliance with the provisions ofall applicable laws and that such systems were adequate and operating effectively.
Your Directors take this opportunity to express their gratitude to the variousstakeholders customers shareholders banks dealers vendors and other businesspartners for the continued cooperation and support extended by them during the year underreview. Your Directors would also like to acknowledge the exceptional contribution andcommitment from all the employees of the Company during the year under review.
| ||For and on behalf of the Board of Directors |
| ||Amar Kaul |
|Mumbai May 10 2018 ||Chairman & Managing Director |