RENOWNED AUTO PRODUCTS MANUFACTURES LIMITED
ANNUAL REPORT 2008-2009
The members of
Renowned Auto Products Mfrs. Limited
Your Directors have pleasure in presenting the 31st Annual Report and the
Audited Accounts of the Company for the year ended 31st March 2009.
The financial highlights are as follows:
(Rupees In lakhs)
Turnover 10,688.43 8,426.00
Prof & (Loss) before Interest
& Depreciation (694.42) 8.80
Interest & Finance Charges 8.84 10.29
Profit (Loss) after Interest &
before Depreciation (703.26) (1.49)
Depreciation 175.49 91.18
Profit Before Tax (878.75) (92.67)
Fringe Benefits Tax/Deferred
Tax Liability/Asset (202.83) 9.98
Profit for the period under review (1,081.58) (82.69)
Loss brought forward 1,328.53 1,245.84
Loss carried forward 2,410.11 1,328.53
The Directors report that in 2008-09 though there has been increase in
sales by about 27% (approx) the Company has incurred a loss to the tune of
Rs.879 lakhs. This is mainly on account of increase in Raw Material prices.
Significant improvements are being made in the manufacturing area, by
adopting Lean and Six Sigma methodology. Lean events are conducted to
identify and remove bottlenecks in production flow.
The company added fixed assets to the tune of Rs. 752.74 lakhs mostly as
Plant and Machinery, to augment production capabilities and ensure better
cost control for improved profitability.
INDIAN MARKET CONDITIONS
Indian Automobile Industry witnessed a growth of about 3.32 percent in
April-March 2009 when compared to April - March 2008.
The cumulative growth of the Passenger Vehicles segment during April -
March 2009 was 6.75 percent over Previous Year. Passenger Cars grew by 9.62
percent, Utility Vehicles was down by 9.03 percent and Multi Purpose
Vehicles were up by 5.79 percent in FY 2008-09. For the Passenger Vehicle
segment expected Growth is 17% in 2009-10 and 94% 2014-15 with respect to
Year 2007-08 Vehicle production.
India has been identified as a Hub for Small Car Manufacturing for both
Domestic and Export Requirement. Following are the Vehicle production Plan
and Investment Plan for the Major Global Car Manufacturers in India.
Passenger Car Segment:
* Increased their capacity to 600,000 cars per annum. They introduced their
Global Launch Car 110 and 120 last year.
* Ashok Leyland and Nissan Motor Co., Ltd., signed a binding Master Co-
Operation Agreement (MCA) for the formation of three joint venture
companies supporting the Light Commercial Vehicle (LCV) business at a
investment of USD 500mn. Investment got slight delayed by one Year due to
Global Economic down trend.
* The earlier plan of setting up a New plant to manufacture Rs. 1,00,000/-
car in West Bengal with an investment of US$ 240million was suspended and
New Plant at Sanad in Gujarat State is under progress. The Production is
expected to commence from Dec 2009. Interim Plant at Pant Nagar has started
producing Nano Car at the rate of 200 Cars per Day.
* Target of 200,000 units capacity p.a. Start of Production expected by end
2010 & they are already looking at the small segment.
* Additional Capacity to manufacture 150,000 cars p.a. from their Green
Field Plant at Pune. Started producing M200 Spark car from Q3 2008 onwards
and they are planning to launch M300 Global Mini Car in Q4 2009 from their
Mahindra & Mahindra:
Constructing their new Commercial Vehicle plant in Pune with capacity of
100,000 Vehicles per year. First Vehicle to roll out in Q4, 2009.
* Due to Economic Down trend Renault postpone their 50:50 JV, to make
400,000 cars a year with an investment of over US $ 1 billion.
* Now only Nissan is investing as per their Plan to start their A segment
compact Car from May 2010. New capacity would be around 250,000 Cars per
* Investing 400 million euro in a new plant in Pune. Operations are to
start in Dec 2009 having the Plant Capacity of 100K cars per Annum.
Investing US $ 250million in a new plant in Rajasthan with capacity of
60,000 car per year First car to roll out in 2009.
* Restarted their Ranjan Gaon, Pune Plant having the Plant Capacity of 100K
cars per Annum.
* Plans to invest US$ 500 million including the expansion of Ford India's
current manufacturing facility in Chennai, India.
Commercial Vehicle Segment
The Commercial Vehicles segment has been heavily affected and there is very
serious Down Trend. In Medium & Heavy Commercial Vehicles it was (33.16)
percent and Light Commercial Vehicles it was (7.10) percent compared to
2 and 3 Wheeler Segment
Two Wheelers had a marginal Growth of 2.60 percent and Three Wheelers sales
dropped by 4.13 percent during April 08- March 09 compared to the
corresponding period previous year.
Automobile Exports registered a substantial growth of 23.61 percent during
April- March 2009 over the same period during the previous year.
TENNECO'S ALIGNMENT WITH MARKET
Nissan, has awarded Development and Supply of Strut and Rear Shocks for
their A Segment Compact Car. Tenneco met all the project Milestones on time
and expecting the start of Mass production from May 2010.
Tata Motors, have awarded our Company their New Indica Vista and Tata Nano
small Car. Tenneco successfully supported the development activity and
started Mass production from Aug 2008 for Tata New Indica Vista at Pune and
Dec 2008 for Tata Nano from their Interim Plant at PantNagar due to the
issue at Singur Plant construction.
For Toyota India Small Car, Company has been awarded to develop and start
Mass production for Strut and Rear Shocks. Start of Mass Production is
expected around Oct 2010.
Mahindra & Mahindra, have awarded Company Xylo, LTV and U 202 vehicles for
Development and is starting Mass production for Strut and Rear Shocks.
* Company has successfully supported Development and Started Mass
Production for Xylo from Dec 2008.
* Development for LTV is under progress and Start of mass production is
expected around Oct 2009 from their newly built Pune Plant.
* Development started from July 2009 for recently awarded U202 Business.
Ford India, has awarded our Company their 8517 project for the development
and Supply of mass production.
Successful launch of Indica Vista and Nano. Tata team interested to send
RFQ for commercial Vehicles and Crossover Vehicle too.
They are interested to work with Company for Heavy Duty Trucks and
Trailers. We are in the preliminary stage to receive their RFQ.
They have sent the RFQ for their upcoming Heavy duty Commercial Vehicles
and we have submitted the Quotation too.
Atter successful support for 8517 project, we started getting all the new
RFQ's from Ford India and currently we are working for 2 RFQs.
In the last four years the Company's product mix has changed gradually from
2- wheel Shocks to 4-wheel Shocks and Struts. In 4-wheeler applications for
the last four years we have been awarded the deveiopment and supply of Rear
Shocks and Front Struts for the above mentioned platforms from various
Apart form the above the company is working on various new platforms with
various Global Customers like Renault-Nissan JV, Maruti Suzuki, Nissan,
Ford and Reva Electric Car in passenger car segment. Also we are working
for the Heavy Duty application shocks for the customer like, Taco
Hendrickson, Mahindra Internationals, Ashok Leyland -Nissan JV, Volvo and
For the two wheeler market as we do not have the technology for Front Fork
we had constraint to approach. Tenneco acquired M/s Marzocchi an Italian
Two wheeler Front fork and Rear shocks manufacturing company. With this
Tenneco now has very good business opportunity with Two wheeler
Manufacturing Original Equipment Manufacturers (OEMs) like TVS Motors,
Royal Enfield Motors for Two wheeler Market also. Tenneco expects
substantial business from the above-mentioned customers.
The company has successfully obtained very prestigious business from new
OEMs and we booked business that Triple our revenue in next 2 to 3 Years.
This is very significant measure of our success in this Industry. With this
we upgraded our Hosur Plant Line A and Line B inline with European standard
of manufacturing capabilities. There will be a Line C which we plan to
install in Year 2009 inline with Customer Launch Plan.
The company is receiving a huge number of Requests for Quotation (RFQ) from
OEMs both in India and overseas. This positive indication provides
confidence and opportunity to grow business. Converting the above RFQs to
orders would ensure revenue growth in the medium to long term.
The Company has plans to improve business in 2 Wheeler with the help of
Tenneco Europe and with the Technical know-how from Marzocchi - Italy the
company expects to improve its business in this segments. Quotation
submitted for Suzuki Motors Spain and Yamaha Motors for Front Fork and Rear
As done in 2008-09 the Company would work closely with Tenneco Europe and
North America to enhance exports. Exports shall continue to be a major
thrust area and the quantum of orders received is increasing both in Export
Aftermarket and in OE Business.
The company has given a big thrust to the after-market. We serve more than
500 Distributors and Retailers including NAPA, TEMOT Autoteile, ADI,
Advance Auto Parts O'reilly Automotive, Kwik-fit Europe, Uni-Select and Pep
Boys and major new product and new brand launches are planned in current
and future years to enhance market share and volumes.
We are developing advanced technologies and targeting growth markets
including expanding our presence in the Heavy duty Commercial and
Speciality Vehicle Market for both Shock Absorbers and Elastomer products.
In 2006-07 the Government of India had taken a number of initiatives like
Automotive Mission Plan (AMP) launched by Prime Minister Dr. Manmohan Singh
for Heavy Industry and Public Enterprises for the benefit of Indian auto
industry and also announced India as a major small car hub and as result of
this both Indian and Global OEM's expanding their existing facilities and
Installing new plants for the manufacture of Passenger vehicles and
Commercial vehicles and Two & Three wheelers. Major Expansions happening in
Hyundai, Maruti Suzuki, FIAT, TKML, TATA Motors, Honda Motors for passenger
vehicles and new entry has been made by OEM's NISSAN, VOLKSWAGEN, Mahindra
International etc. The Company is planning to become a major base of shock
and struts manufacturer for the small cars, Heavy-duty application and two
SCHEME OF ARRANGEMENT
As the Shareholders are aware the Company for sometime had under
consideration a Scheme of Arrangement for reduction of Share Capital of the
Company. In this regard the Company had approached you for the sanction of
the Scheme in December 2008. Consequent to your approval the Company has
filed a Petition in the Hon'ble High Court of Judicature, Madras and the
matter is pending before the High Court. Based on the order further action
would be taken.
Mr. Abhijit Mukherjee was appointed as an Additional Director w.e.f.
25.11.08. His re-election as Director liable to retire by rotation is being
sought at the forthcoming Annual General Meeting.
Ms. Shweta Dubey Alternate Director of Mr. Hari Nair has resigned w.e.f.
19.7.09. Mr. Hari Nair retires by rotation at the ensuing Annual General
Meeting of the Company, and being eligible offers himself for
Mr. Ravichandran, Mr. Michael John Charlton, Mr. Horace Vincent draa
continue to be Directors. The application of appointment of Mr. Michael
John Charlton as Managing Director is pending with the Government. Mr.
Rajarshi Chakrabarti continues to be the Alternate Director for Mr. Horace
M/s Haribhakti & Co., Chartered Accountants, retire as statutory auditors
at the ensuing Annual General Meeting and being eligible offer themselves
for reappointment. The declaration under Sec 224 (1B) has been received
from M/s. Haribhakti & Co. in relation to their proposed reappointment.
The Audit Committee members are Mr. Abhijit Mukherjee, Mr. Horace Vincent
Draa, Mr. Ravichandran and Mr. Hari Nair. The Committee has appointed Mr.
Abhijit Mukherjee as its Chairman.
ACQUISITION OF COMPANY'S EQUITY SHARES BY HOLDING COMPANY UNDER ITS LETTER
As the members are aware, the equity shares of the company were originally
listed at Madras Stock Exchange.
The company's holding company Hydraulics Private Limited (now Tenneco RC
India Private Limited) issued a Letter of Offer dated 29th August 2000 to
the shareholders of the company to buy their equity shareholdings.
Consequent to the increase in shares held by the holding company, the
Company sought and obtained consent from Madras Stock Exchange for de-
listing the shares with effect from 27th August 2001.
In April 2009 another offer at the rate of Rs.10 per share was made for
purchase of shares by Promoters. as per the direction of Hon'ble High Court
of Judicature, Madras.
As on date the Holding Company hods in all 17,429,203 equity shares (over
98%) in the capital of `he Company.
DIRECTORS' RESPONSIBILITY STATEMENT
The Board wishes to state that:
1. In the preparation of the annual accounts, for the year ended 31st March
2009, the applicable Accounting Standards have been followed and that there
are no material departures.
2. The Directors have selected such accounting policies and applied them
consistently and made judgments and estimates that are reasonable and
prudent so as to give a true and fair view of the state of affairs of the
Company as at 31st March 2009 and of the profits of the Company for the
year ended on that date.
3. The Directors have taken proper and sufficient care for the maintenance
of adequate records in accordance with the provisions of Companies Act for
safeguarding the assets of the Company and for preventing and detecting
fraud and other irregularities.
4. The Directors have prepared the accounts for the year ended 31st March
2009, on going concern basis.
AUDITOR'S REPORT TO THE SHAREHOLDERS
In point 2(a) the Auditors have stated that the inventory with sub
contractors have not been verified. In this regard the Directors wish to
state that Physical verification of Subcontractor's end is an ongoing
exercise and continuing process. A round of verification has been done as
on 4th April 2009 and necessary provisions have been made for any probable
differences in stock after a detailed reconciliation/negotiation with the
In Point No 2(c), 7 of the Annexure to the Auditors Report the Auditors
have suggested that the existing internal control procedures and the scope
of Internal Audit systems need to be strengthened to make it commensurate
with the size and nature of business. In this regard, Directors wish to
state that the scope and procedures will continue to be strengthened in
accordance with Tenneco's own standards and statutory requirements. This
together with the implementation of SAP a well known ERP package will
greatly strengthen the Internal control procedures.
In point No 9 of the Annexure to the Auditors report, the Auditors have
pointed out that the Company has been regular in the Deposit of Statutory
dues except for an amount of Rs. 672,176/- on account of Sales Tax. In this
regard the Director's wish to state that the Company has filed an appeal
against concerned authorities and the Company would take necessary action
based on the outcome of the appeal.
PARTICULARS AS PER SECTION 217 OF THE COMPANIES ACT, 1956
Details of the employees receiving the remuneration of Rs.2 lakhs per month
or 24 lakhs p.a. during the year is attached (Annexure C)
The particulars required under Section 217(1)(e) of the Companies Act, 1956
are given in Annexure to this report.
EXPORTS AND IMPORTS
The value of imports on CIF basis in 2008-09 was Rs.1,292.61 lakhs. The FOB
earnings in foreign exchange were at Rs. 673.80 lakhs and expenditure in
foreign currency were Rs. 8.08 lakhs.
The Board of Directors place on record their appreciation for the
cooperation extended by the Company's Employees, Customers, Suppliers and
For and on behalf of the Board
Date : 25th August, 2009 Abhijit Mukherjee Rajarshi Chakrabarti
Place: Bangalore Director Director
ANNEXURE TO REPORT OF DIRECTORS
Information under Section 217(1) (e) of the Companies (Disclosure of
particulars in the report of the Directors) Rules 1988 and forming part of
the Directors' Report.
1. Power & Fuel Consumption
a) Purchased Units (KWH) 1,695,995 2,024,191
Total amount (Rs.) 8,089,956 9,395,993
Rate/Unit (Rs.) 4.785 4.64
b) Own Generation through Diesel Generators:
Units (KWH) 497690.5 163,010
Units per litre of Diesel 2.82 3.34
Cost of Diesel per KWH (Rs.) 12.79 10.20
ii) Furnace Oil
Quantity (K. Litres) Nil Nil
Total Amount (Rs.) Nil Nil
Average Rate (Rs.) Nil Nil
Diesel consumed for preheating Painting plant is 113,536 litres (P.Y.
192,483 litres) valued at Rs. 4,083,889/(P.Y. Rs. 6,573,420/-) not included
in the above.
2. Consumption per Unit of Production
Shock Absorbers Shock Absorbers
Units (in nos) 2,024,126 2,133,373
Electricity 1.08 1.03
Furnace Oil Nil Nil
For and on behalf of the Board
Date : 25th August 2009 Abhijit Mukherjee Rajarshi Chakrabarti
1. Specific areas in which Research and Development, were carried out by
(i) New Product Development
(ii) Constant design updating
(iii) Low cost Shock
(iv) Value Engineering
(v) Global valve technology
(vii) Product Testing & Evaluation
(viii) Ride tuning trials
(ix) Special proto samples
(x) Alignment with Tenneco
(xi) Localization of parts
(xii) Program Management
(xiii) 3D drawing and analysis
(xiv) Finite Element Analysis
(xv) Sintered parts
2. Benefit derived as a result of the above Research and Development
(i) Cost Reduction
(ii) Adherence to time line by following NPIS
(iii) Technical know how of the Engineers
(iv) Reduced field complaints and enhanced customer acceptance
(v) Product Quality Improvement
(vi) Customer's Satisfaction
(vii) Award of new Global Business
(viii) Competitive Advantage
(ix) Smooth launch of products in market
3. Future Plan of Action
i) Development of new varieties of gas filled Struts and Shock absorbers
with 'Global Valve' for better performance. Improvement in product quality,
Technology up gradation & modernization
ii) FEA software
iii) Training of Engineers in Europe at different Technical centres.
iv) Enhancing the testing capability by installing Noise Testing facility
v) Design and development of Full Module for Strut.
vi) Installation of additional Catia stations for 3D drawings
vii) Localization of the remaining components such as oil, rebound bumper
viii) Launch of Low cost Shock in market
ix) Installation of R&D test machine at Bawal plant
x) Installation GPDM
4. Expenditure in R & D
a) Capital Expenditure Nil
b) Recurring expenses for the year Rs. 78,27,871
c) Total Expenditure Rs. 78,27,871
d) Total R & D expenditure as
percentage of total turnover 0.73%
5. Technology Absorption, Adoption & Innovation:
1. Efforts in brief made towards technology absorption, adoption and
a) Three new test machines have been installed in R&D to validate the parts
as per customer's requirement in India. With these facilities 80% of the
testing are being done locally. Customers often witness these tests.
b) NPIS is being followed for all new OE products
c) Ride Tuning truck has been made ready to do Ride tuning trial at
customer's end. Several Tuning trials have been done using this truck at
Customer end. Customers are very happy with this facility. This has given
edge over the competition This truck is equipped with all the requisite
facilities like Dynamometer, Work bench, Gas filling arrangement, Drilling
machine, Riveting machine, Modular assembly fixture etc.
d) Introduction of Global valve for new projects.
e) DWO system being followed in Proto cell and CAD department
2. Benefits derived as a result of the above efforts (e.g. product
improvement, cost reduction, product development, import substitution, etc)
a) We have won new businesses from Global customer such as Toyota, Suzuki,
b) Improvement on quality and reliability
c) Customer Satisfaction
d) Capability of Indian Engineers
e) Standardization of the product.
f) Products at competitive price.
g) Timely supply of proto samples to customer
3. In case of imported technology (imported during the last 5 years
reckoned from the beginning of the financial year) following information
may be furnished:
3.1. a) Imported Technology:
Banded piston designed Struts and Shock Absorber, Gas charged Struts and
Shock Absorbers, Direct sealed over Struts and Shock Absorbers.
b) Year of import 2002-04
c) Has the technology been
fully absorbed Yes
3.2 a) Imported Technology : Global valve for Strut and Shocks
b) Year of import 2007-2008
c) Has the technology been
fully absorbed Yes. Maruti YV4 (Ritz) product is
with this technology. launched This has given very good
ride and handling comfort. Positive
feedback from market.