Your Board of Directors hereby present to you the Fiftieth AnnualReport covering the operational and financial performance together with the accounts forthe year ended March 31 2022 and other prescribed particulars:
1. State of Company's affairs
The financial year 2021-22 started with India facing a second wave ofCOVID-19 pandemic. The economy bounced back strongly with output reaching pre-pandemiclevels on the back of buoyant government spending and pick up in investments post liftingof restrictions. The automotive and auto components industry faced supply chain challengeson the back of semiconductor shortage shipping and logistics constraints.
The Company scaled up the production in line with the demand and workedon several cost optimization measures to mitigate the inflationary environment. TheCompany continued to enhance its customer relationships and increased its business shareacross several customers.
1.1. Financial Performance
The financial highlights for the year under review are as follows:
(Rs in Crores)
|Particulars ||2021-22 ||2020-21 |
|Revenue from Operations ||382.06 ||301.85 |
|Other Income ||2.89 ||3.09 |
|Profit / loss before Depreciation Finance Costs Exceptional items and Tax ||16.43 ||(0.74) |
|Expense || || |
|Less: Depreciation / Amortisation / Impairment ||20.00 ||23.00 |
|Profit / loss before Finance Costs Exceptional items and Tax Expense ||(3.57) ||(23.74) |
|Less: Finance Costs ||7.89 ||8.19 |
|Profit / loss before Exceptional items and Tax Expense ||(11.46) ||(31.93) |
|Add / (less): Exceptional items ||(3.55) ||22.23 |
|Profit / (loss) before Tax Expense ||(15.01) ||(9.70) |
|Less: Tax Expense (Current & Deferred) ||3.15 ||3.61 |
|Profit / (loss) for the year (1) ||(11.86) ||(6.09) |
|Other Comprehensive Income / loss (2) ||0.11 ||0.13 |
|Total Comprehensive Income (1+2) ||(11.75) ||(5.96) |
|Balance of profit / loss for earlier years ||(35.85) ||(29.89) |
|Less: Transfer to Reserves ||- ||- |
|Less: Dividend paid on Equity Shares ||- ||- |
|Less: Dividend Distribution Tax ||- ||- |
|Balance carried forward ||(47.60) ||(35.85) |
The Key Performance Indicators (KPI) operational performance andsummary on balance sheet are furnished in page no 1 of this annual report.
The net sales and operating revenue of the Company for the year 2021-22was Rs382.06 crores as against Rs301.85 crores for the previous year. The Company incurreda net loss of Rs(11.86) crores as against Rs(6.09) crores in the previous year. TheEarnings Per Share (EPS) for the year 2021-22 was Rs(17.65) as against Rs(9.06) in theprevious year.
The Company continues to be a subsidiary of Rane Holdings Limited (RHL/ Holding Company). There was no material change or commitments affecting the financialposition of the Company between the end of the financial year of the Company and date ofthe report other than those disclosed in the financial statements section of this annualreport. There was no change in the nature of business during the year.
The net deficit for the financial year 2021-22 stood at Rs(47.60)crores after adjusting a deficit of Rs(35.85) crores brought forward from the previousfinancial year and adjustments of Other Comprehensive ncomeI to the tune of Rs0.11 crores.The Board of Directors taking into consideration the operational performance financialposition of the Company and uncertainties faced by the automotive sector has decided notto declare / recommend any dividend for the year under review.
1.3. Credit rating
The Company's financial management and its ability to servicefinancial obligations in a timely manner has been re-affirmed by CRISIL Limited for itscredit facilities during the year under review and this has been disclosed to stockexchange and made available in the Company's website. The Corporate Governancesection of this Annual Report carries the details of credit rating.
1.4. Share capital
During the year under review there was no change in the paid up equityshare capital of the Company and as at year ended March 31 2022 the paid up equitycapital of the Company stood at Rs67189920 consisting of 6718992 equity shareshaving face value of Rs10/- each fully paid up.
1.4.1. Convertible warrants
In order to pursue capital expenditure programs reduction of directexpenses and for repayment of loans the Board considered it desirable to increase theequity capital base of the Company which will also help the Company in reducing the debtposition and achieve an optimum debt-equity ratio. After a detailed review of theperformance and business plans of the Company and after careful consideration of variousoptions of fundraising the Board of Directors had decided that it would be in the bestinterest of the Company in the long-term to increase the capital base of the Company byabout Rs15 crores by way of preferential issue to the Promoter and Promoter Group of thecompany. Rane Holdings Limited (RHL) being the holding Company and the Promoter of theCompany agreed to infuse funds upto Rs15 crores into the Company by subscribing to equityshares or convertible securities of the Company. The preferential issue of convertiblewarrants was approved by the shareholders vide postal ballot on February 24 2022. RHL wasissued and allotted 515463 warrants on March 08 2022 after receiving the warrantsubscription price of Rs 3.75 Crores (being 25% of the issue price) entirely for cashconvertible into equity shares in one or more tranches within a period of 18 months fromthe date of allotment. The funds were utilized for the purpose stated in the objects tothe issue and there were no deviations thereof.
1.5. Management Discussion & Analysis
The business of your Company is manufacturing and marketing of autocomponents for transportation industry viz. engine valves valve guide and tappet. Theanalysis on the performance of the industry the Company internal control systems riskmanagement are presented in the Management Discussion and Analysis report forming part ofthis report and provided in Annexure A'.
1.6. Subsidiaries Associate and Joint Venture Companies
The Company does not have any subsidiary associate or joint venture.There was no Company which has become or ceased to be Company's subsidiary Jointventure or associate during the financial year 2021-22.
2. Board of Directors Committees and Management
The composition of the Board of Directors and its Committees viz.Audit Committee Nomination and Remuneration Committee Stakeholders Relationship Committeeand Corporate Social Responsibility Committee are constituted in accordance with CompaniesAct 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015(SEBI LODR) wherever applicable. The Board of Directors have also constituted anExecutive Committee and a Finance Committee. The Corporate Governance Report given inAnnexure D' contains an overview of the role terms of reference meetings andcomposition of the Board of Directors of the Company and its Committees. The followingwere the changes in the composition of Board of Directors and its Committees:
Mr. S Krishna Kumar (DIN: 00062582) Director of the company retiredfrom the Board and its Committees as per the retirement policy of the Company with effectfrom May 01 2021.
Mr. Lakshman Lakshminarayan (DIN: 00012554)
Non - Executive Director retired as per the retirement policy of theCompany effective from the conclusion of the business hours on May 27 2021. He has beenassociated with Rane group for over 5 decades and as Director for about 3 decades. He hasbeen instrumental in steering the Rane Group during a very challenging and exciting phasein the automobile industry's evolution and transformation in India. The Board placedon record its appreciation for the valuable advice and guidance rendered by him during histenure especially on various strategic matters. Consequent to his retirement he ceased tobe a member / chairman of the Audit Committee Nomination and Remuneration Committee andCorporate Social Responsibility Committee.
The Shareholders at their 49th AGM approved the appointmentof Mr. Anil Kumar Venkat Epur (DIN: 00202454) as an Independent Director with effect fromMay 19 2021 to May 18 2024.
Mr. Ashok Malhotra (DIN: 00029017) & Mr. C N
Srivatsan (DIN: 00002194) will be completing their second term asIndependent Directors of the Company at the ensuing Annual General Meeting and will ceaseto hold office as per the provisions of the Companies Act 2013. The Board placed onrecord its appreciation for their valuable advice and guidance rendered by them duringtheir tenure.
Mr. Ramesh Rajan Natarajan (DIN: 01628318) is proposed to be appointedas an independent Director. His appointment as an Independent Director of the Company hasbeen recommended by the Nomination and Remuneration Committee and Board for approval ofthe shareholders of the Company at the ensuing Annual General Meeting.
The Board of Directors are of the opinion that the Director(s) proposedfor appointment / re-appointment at the ensuing 50th AGM of the Company possessintegrity necessary expertise relevant experience and proficiency and the CorporateGovernance Report annexed to this report contains necessary disclosures regarding theDirector(s). The terms and conditions of appointment of Independent Directors have beendisclosed on the website of theCompanyandavailableattheweblink:https://ranegroup.com/rane-engine-valve-ltdinvestors/#policiesAll the Directors have affirmed compliance with the Code of Conduct of the Company. TheIndependent Directors have affirmed that they satisfy the criteria laid down under section149(6) of the Companies Act 2013 (Act) and Regulation 25 and other applicable regulationsof SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 (SEBI LODR)as amended from time to time. Further in terms of Section 150 of the Companies Act 2013read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules2014
Independent Directors of the Company have confirmed that they haveregistered themselves with the databank maintained by the Indian Institute of CorporateAffairs ( IICA ) and have passed the proficiency test if applicable to them. The Board ofDirectors at its first meeting of the FY 2021-22 has taken on record the declarations andconfirmations submitted by the Independent Directors. During the year the Board had notappointed any person as an Alternate Director for an independent Director only the Board.The Company has obtained a certificate from a Company Secretary in Practice that none ofthe Directors on the Board of the Company has been debarred or disqualified from beingappointed or continuing as Directors of Companies by the SEBI / Ministry of CorporateAffairs or any such statutory authority.
2.2. Retirement by rotation
Mr. Ganesh Lakshminarayan (DIN: 00012583) retires by rotation at theensuing 50th Annual General Meeting (AGM) being eligible he offers himselffor re-appointment. The notice of the 50th AGM includes a proposal to thiseffect.
2.3. Board and Committee Meetings
The schedule of meetings of the Board of Directors and Committees ofthe Board is circulated to the Directors in advance. During the year five (5) BoardMeetings were convened and held the details of which are given in the CorporateGovernance report. The gap between two consecutive meetings of the Board of Directors wasless than 120 days. The details of Committee meetings are provided in the CorporateGovernance Report annexed to this report of the Board. For eligible matters the Board /its Committees may also accord approvals through resolutions passed by circulationbetween two meetings.
2.4. Meeting of Independent Directors
A meeting of Independent Directors was held to assess the qualityquantity and timeliness of flow of information between the management and the Board. TheIndependent Directors expressed that the current flow of information and contents weregood to effectively perform their duties.
2.5. Board evaluation
An annual evaluation of the performance of the Board functioning ofits committees individual directors and the Chairman of the Board was carried out basedon the criteria set by the Nomination and Remuneration Committee. A structuredquestionnaire was sent to all the directors seeking qualitative inputs and detailedcomments on various parameters as recommended by the Nomination and RemunerationCommittee.
Board diversity and skill set to review strategies risk managementdimensions and processes flow of information adequacy and timeliness of agendamaterials effectiveness of presentations and more importantly the processes of reviewingstrategic matters annual operating plan and strategic business plans were the key focusareas for evaluation of the Board and its Committee functioning.
Engagement with stakeholders versatility in facilitating discussionsand approach towards ensuring implementation of board action points were the areas onwhich the Board of Directors evaluated the performance of the Chairman.
Individual directors including Independent Directors performance andcontributions were evaluated through peer evaluation based on evaluation criteriadetermined by Nomination and Remuneration Committee. Contributions to board decisions anddiscussions and attributes like staying up to date on recent trends being aware of macrolevel developments and networking skills were the areas considered for framing theevaluation criteria of directors besides commitment competency and sectoral knowledge.
The Chairman after detailed consideration of all the feedbackscomments and suggestions received from the directors discussed with the Board a proposedaction plan on matters requiring attention of the Board which inter-alia included mattersrelating to competitor analysis technological & industrial trends strategy and riskmanagement. The evaluation framework includes mechanism to share evaluation feedback onindividual directors to the Nomination and Remuneration Committee wherever required.
2.6. Familiarisation program for Independent Directors
The details of familiarisation program for Independent Directors areavailable in the weblink https://ranegroup. com/rane-engine-valve-ltd-investors/#policies
2.7. Key Managerial Personnel
Mr. Murali K Rajagopalan Manager & President Mr. V KVijayaraghavan Senior Vice President-Finance & Chief Financial Officer (CFO) Mr.Vivekanandaa M Secretary hold the office of Key Managerial Personnel (KMP)respectively within the meaning of Section 2(51) of the Companies Act 2013.
2.8. Remuneration policy
The policy contains criteria for determining positive qualificationspositive attributes and independence of a Director and also covers aspects ofremuneration which is reasonable and sufficient to attract retain and motivate Directors/ high potential employees of the Company to run successfully. The policy on appointmentand remuneration of Directors KMP and Senior Management Personnel (SMP) as laid down bythe NRC of the Board is available at the web-link athttps://ranegroup.com/revl_investors/policyon-appointment-remuneration-of-directors-kmpsmp/.There has been no change in this policy during the financial year 2021-22.
The details of remuneration paid / payable to the Directors during thefinancial year 2021-22 is furnished in the Corporate Governance report annexed to thisreport of the Board.
3. Audit and allied matters
3.1. Audit Committee
The composition terms of reference and meetings of the Audit Committeeare disclosed in the Corporate Governance Report section of the Annual Report. The AuditCommittee of the Board acts in accordance with the terms of reference which is incompliance with the provisions of Section 177 of the Companies Act 2013 (Act) andRegulation 18 of SEBI LODR and other applicable provisions of SEBI LODR as amended fromtime to time.
3.2. Statutory Auditor
The Statutory Auditors report to the members for the year ended March31 2022 does not contain any qualification reservation adverse remark or disclaimer.Also there has been no instance of fraud reported by the statutory auditors for the periodunder review. M/s. Varma & Varma Chartered Accountants (Varma & Varma) (Firmregistration Number. 004532S) hold the office of statutory auditors as per themembers' approval accorded at the 45th Annual General Meeting AG ( M) heldon August 21 2017 till the conclusion of the 50th Annual General Meeting ofthe Company. Based on the recommendations of the Audit Committee the Board recommends there-appointment of M/s Varma & Varma Chartered Accountants (Firm registration Number.004532S) Chartered Accountants as Statutory Auditors of the Company for a second termof five consecutive years commencing from 50th Annual General Meeting and tohold office upto the conclusion of the 55th Annual General Meeting of theCompany. The appointment is subject to approval of the shareholders of the Company at theensuing AGM. The notice convening the ensuing AGM includes the proposal for reappointmentof statutory auditors.
3.3. Cost Audit & maintenance of cost records
Pursuant to section 148 of the Companies Act 2013 read with theCompanies (Cost Records and Audit) Rules 2014 the Board of Directors at their meetingheld on July 22 2021 had appointed M/s. Jayaram & Associates Cost Accountantsrepresented by Mr. R Jayaram (Membership no. 26103) as Cost Auditor of the Company for thefinancial year 2021-22 as per the recommendations of the Audit Committee after obtainingnecessary certificate under Section 141 of the Act conveying his eligibility forre-appointment. In terms of Section 148(3) of the Companies Act 2013 the remuneration asfixed by the Board based on the recommendation of the Audit Committee is required to beratified by the members at the AGM in terms of Section 148(3) of the Act. The noticeconvening the ensuing AGM includes the proposal for ratification of the remunerationpayable to the Cost Auditor. The Company maintains all such accounts and records asspecified by the Central Government under section 148 (1) of the Companies Act 2013.
3.4. Secretarial Auditor
M/s. S Krishnamurthy & Co. a firm of Company Secretaries inPractice have been appointed by the Board of Directors in terms of Section 204 of theCompanies Act 2013 as Secretarial Auditors of the Company for the FY 2021-22. TheSecretarial Audit report given in Annexure B' was taken on record by the Boardof Directors at its meeting held on May 16 2022. The report does not contain anyqualification reservation adverse remark or disclaimer.
The Annual Secretarial Compliance report (hereinafter referred to ascompliance report') for the FY 2021-22 issued by M/s. S Krishnamurthy &Co. confirms compliance with securities law applicable to the Company and the same hasbeen taken on record by the Board of Directors at their meeting held on May 16 2022. Thecompliance report does not contain any qualification reservation adverse remark ordisclaimer and the Board has approved filing of the same with the stock exchanges.
3.5. Internal Auditor
M/s. Capri Assurance and Advisory Services a firm of independentassurance service professionals continues to be the Internal Auditor of the Company.Their scope of work includes review of processes for safeguarding the assets of theCompany review of operational efficiency effectiveness of systems and processes andassessing the internal control strengths in all areas. Internal Auditor findings arediscussed with the process owners and suitable corrective actions taken as per thedirections of the Audit Committee on a regular basis to improve efficiency in operations.The Internal Auditor reports directly to the Audit Committee. The Audit Committee whilereviewing their performance scope functioning periodicity and methodology forconducting the Internal Audit has taken into consideration their confirmation to theeffect that their infrastructure viz. internal audit structure staffing and seniority ofthe officials proposed to be deployed etc. are adequate and commensurate to the scopefunctioning periodicity and methodology for conducting the Internal Audit.
4. Directors' responsibility statement
In terms of Section 134(3)(c) read with section 134(5) of the CompaniesAct 2013 the Directors to the best of their knowledge and belief based on theinformation and explanations obtained by them confirm that: a. in the preparation of theannual accounts the applicable accounting standards had been followed and there were nomaterial departures; b. they had selected such accounting policies and applied themconsistently and made judgments and estimates that were reasonable and prudent so as togive a true and fair view of the state of affairs of the Company at the end of thefinancial year and of the loss of the Company for the year under review; c. they had takenproper and sufficient care for the maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Companypreventing and detecting fraud and other irregularities; d. they had prepared thefinancial statements for the financial year on a going concern' basis; e. theyhad laid down internal financial controls to be followed by the Company and such internalfinancial controls were adequate and were operating effectively; and f. they had devisedproper systems to ensure compliance with the provisions of all applicable laws and suchsystems were adequate and operating effectively.
5. Related Party Transactions (RPT)
All RPTs that were entered into during the financial year were on anarm's length basis and were in the ordinary course of business. There are nomaterially significant related party transactions made by the Company with Related partieswhich requires approval of the shareholders / which may have potential conflict with theinterest of the Company at large.
All RPTs are placed before the Audit Committee and to the Boardwherever required for approval. Prior omnibus approval of the Audit Committee is obtainedfor the transactions which are entered into in the ordinary course of business and arerepetitive in nature. The transactions entered into pursuant to the omnibus approval sogranted are also reviewed by the Audit Committee on a quarterly basis. The Company has putin place a proper system for identification and monitoring of such transactions. Save asdisclosed in this report none of the Directors or Key Managerial Personnel has anypecuniary relationships or transactions with the Company. During the year the policy onRPT was amended by the Board of Directors of the Company at their meeting held on January25 2022 to incorporate the changes to the SEBI ( Listing Obligations and DisclosureRequirements) Regulations 2015. The policy as approved by the Board is uploaded on theCompany's website and is available at the weblink:https://ranegroup.com/rane-engine-valve-ltd-investors/#policies None of the Directors orKey Managerial Personnel or Senior Management Personnel has any material financial andcommercial transactions (except receipt of remuneration as applicable) which may havepotential conflict with interest of the Company at large.
6. Corporate Social Responsibility (CSR)
The Rane Group's vision on Corporate Social Responsibility (CSR)is: "To be socially and environmentally responsible corporate citizen". The CSRactivities of Rane Group focus on four specific areas of:
(c) Community Development; and
(d) Environment. The CSR policy of the Company is available at theweb-link https:// ranegroup.com/revl_investors/corporate-social-responsibility-policy/Owing to the inadequacy of profits / loss during the immediately preceding three financialyears the Company was not required to spend towards CSR activities during FY 2021-22 asper Section 135 of the Companies Act 2013 read with rules thereunder. Thus there was norequirement for the CSR committee to consider any subject matter in this regard duringthe year under review.
7. Energy conservation technology absorption and foreign exchangeearnings and outgo
The Annexure C' to this report contains the information onconservation of energy technology absorption and foreign exchange earnings and outgo asrequired under Section 134(3)(m) of the Companies Act 2013 read with Rule 8 of theCompanies (Accounts) Rules 2014.
8. Corporate Governance Report
Your Company is committed to maintaining the highest standards ofcorporate governance and effective compliance with the regulatory norms under the SEBIregulations and other laws and regulations applicable to the Company. The CorporateGovernance report and the certificate issued by the Statutory Auditors are available inAnnexure D' to this report.
9. Particulars of Directors Key Managerial Personnel and Employees
The information required pursuant to Section 197 read with Rule 5 ofthe Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 inrespect of Directors Key Managerial Personnel (KMP) and Employees of the Company areprovided as an Annexure to this report.
10. Risk Management
The Company has laid down well-structured procedures for monitoring theRisk Management plan and implementing risk mitigation measures and it has been elaboratelydiscussed under the Management Discussion and Analysis Report which forms part of theannual report.
11. Other disclosures a. The details of loan guarantees andinvestments if any under the provisions of Section 186 of the Companies Act 2013 aregiven in the notes to the financial statements. b. The Internal control systems andadequacy are discussed in detail in the Management Discussion and Analysis annexed to theDirectors Report. c. There was no significant / material order passed by the Regulators /Courts which would impact the going concern status of the Company and its futureoperations. d. The policies approved and adopted by the Board have been made available onthe Corporate Governance section of the Investor page on the website of the Company viz.www.ranegroup.com. e. The copy of the Annual Return is available on the website of theCompany at www.ranegroup.com. f. The Company has complied with the applicable secretarialstandards viz. SS-1 on meetings of Board of Directors and SS-2 on General Meetings issuedby Institute of Company Secretaries of India ( ICSI ) as per section 118(10) of theCompanies Act 2013.
g. The details regarding shares and dividend transferred / proposed tobe transferred to the Investor Education and Protection Fund (IEPF) and other relevantdetails in this regard have been provided in the corporate governance section of thisannual report.
h. The Company does not accept any deposit falling under the provisionsof section 73 of the Companies Act 2013 and the rules framed thereunder.
i. The Company has established a formal vigil mechanism namedRane Whistle Blower Policy' for reporting improper or unethical practices oractions which are violative of the code of conduct of the Company. The policy which isalso available on the intranet portal of the Company provides adequate safeguard againstvictimisation and has provided direct access to the Chairman of the Audit Committee forthe employees and state their complaints / grievances.
j. The Company has always provided a congenial atmosphere for work thatis free from discrimination harassment and has provided equal opportunities of employmentto all irrespective of their caste religion colour marital status and gender. TheCompany believes that women should be able to do their work in a safe and respectfulenvironment that encourages maximum productivity. The Company has a zero tolerance towardssexual harassment. The Company has adopted a policy on prevention of sexual harassment ofwomen at work place and put in place proper dissemination mechanism across the Company.The Company has carried out awareness programmes / sessions on the mechanism establishedunder this policy across its various locations. The Company has complied with theprovisions relating to the constitution of internal Complaints Committee ICC () under TheSexual Harassment of Women at Workplace Prevention Prohibition and Redressal) Act 2013(POSH)comprising of Presiding Officers and members with an appropriate mix of employeesand external subject matter experts. During the period the details of complaints received/ resolved or pending are as under: No. of complaints received during the financial year Nil No. of complaints disposed off during the financial year Nil No. ofcomplaints pending as on end of the financial year Nil k. The Company has notprinted physical copies of the Annual Report for distribution in view of the exemptionsavailable vide General circular 02/2022 dated May 05 2022 issued by the Ministry ofCorporate Affairs ("MCA") read with previous circulars and SEBI circular no.SEBI/HO/ CFD/CMD2/CIR/P/2022/62 dated May 13 2022 in this regard. The full Annual Reportwill be made available on the website of the Company and will also be disseminated to thestock exchanges where shares of the Company are listed. The electronic copies of theannual report and the notice convening the 50th AGM would be sent to all themembers whose e-mail addresses were registered with the Company or their respectiveDepository Participants (DP). l. Annual General Meeting
In view of the COVID-19 pandemic and in the interest of stakeholdersthe 50th AGM would be conducted through video conferencing or other audiovisual means on June 28 2022 at 10:00 hrs ( IST ) as per the framework notified byMinistry of Corporate Affairs. The notice convening the 50th AGM containsdetailed instructions and notes in this regard.
We thank our Customers Investors Suppliers Vendors BankersGovernment Regulatory Authorities and other Business Associates for their continuedsupport in successful performance of the Company. We place on record our appreciation forthe committed services of all our employees.
| ||For and on behalf of the Board || |
| ||Harish Lakshman ||Ganesh Lakshminarayan |
|Chennai ||Vice-Chairman ||Chairman |
|May 16 2022 ||DIN: 00012602 ||DIN: 00012583 |