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Rico Auto Industries Ltd.

BSE: 520008 Sector: Auto
NSE: RICOAUTO ISIN Code: INE209B01025
BSE 14:32 | 22 Sep 28.20 -1.30
(-4.41%)
OPEN

28.60

HIGH

29.75

LOW

27.50

NSE 14:29 | 22 Sep 28.10 -1.45
(-4.91%)
OPEN

29.75

HIGH

29.75

LOW

27.45

OPEN 28.60
PREVIOUS CLOSE 29.50
VOLUME 35366
52-Week high 54.00
52-Week low 15.95
P/E 470.00
Mkt Cap.(Rs cr) 382
Buy Price 28.10
Buy Qty 185.00
Sell Price 28.20
Sell Qty 204.00
OPEN 28.60
CLOSE 29.50
VOLUME 35366
52-Week high 54.00
52-Week low 15.95
P/E 470.00
Mkt Cap.(Rs cr) 382
Buy Price 28.10
Buy Qty 185.00
Sell Price 28.20
Sell Qty 204.00

Rico Auto Industries Ltd. (RICOAUTO) - Director Report

Company director report

To the Shareholders

Your Directors have pleasure in presenting the 36th Annual Report of your Company together with the Audited Financial Statements for the year ended 31st March 2019.

FINANCIAL RESULTS

(Rs. in Crores)

StandaloneConsolidated
ParticularsCurrent YearPrevious YearCurrent YearPrevious Year
2018-192017-182018-192017-18
Net Revenue and Other Income1224.501118.251412.061245.79
Profit before Interest Depreciation and Exceptional Items142.53128.00166.22150.18
Interest and Financial Charges23.1417.1626.7918.74
Profit before Depreciation Exceptional Items and Tax119.39110.84139.43131.44
Depreciation43.8340.9257.7053.90
Profit before Exceptional Items and Tax75.5669.9281.7377.54
Exceptional Items9.136.809.607.43
Profit before Tax (PBT)66.4363.1272.1370.11
Tax Expense17.6713.4821.1012.11
Profit after Tax48.7649.6451.0358.00
Other Comprehensive Income/(Loss) (net of tax)(0.45)(0.45)0.900.57
Total Comprehensive Income48.3149.1951.9358. 57

OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS

Your Company has recorded a gross turnover of Rs. 1224.50 crores in the year under report as against Rs. 1118.25 crores in the previous year. Your Company has earned a Profit after Tax (PAT) of Rs. 48.76 crores during the year under report over the previous year's profit ofRs. 49.64 crores.

The aftermarket segment of your Company catering to two and four wheeler has an optimistic target of achieving sales of over Rs. 100.00 crores by 2020-21. The Company has established a strong network of dealers and distributors PAN India while also marking a footprint in Nepal and Sri Lanka. During the financial year 2018-19 a turnover of Rs. 25.00 crores has been achieved by this segment.

Your Company entered into a Joint Venture Agreement with M/s. Ultra Fairwood PTE Limited Singapore on 12th December 2017 to manufacture PODs (Autonomous Electric Vehicles to be run on a dedicated track) for PRT (Personal Rapid Transport) GRT (Group Rapid Transport) or any variant thereof. The said agreement could not materialize due to lack of clear policies of the Government. Hence the project initiated under above agreement has been closed.

Your Company has also been focusing on tapping the opportunities in emerging Electric Vehicles (EV) market. The Company has already been nominated by Global Customers for critical components for their New Electric Vehicle programs.

DIVIDEND

During the financial year ended 31st March 2019 your Company has paid an Interim Dividend @ 40 percent i.e. Rs. 0.40 per Equity Share of Rs. 1/- each amounting to `6.51 crores including dividend tax of Rs. 1.10 crores which was declared by the Board of Directors on 11th February 2019 and paid on 1st March 2019. In addition the Board has recommended a Final Dividend @ 40 percent i.e. Rs. 0.40 per Equity Share of Rs. 1/- each for the financial year 2018-19. If approved the total dividend (interim and final) will amount to Rs. 13.02 crores including dividend tax of Rs. 2.20 crores as against a dividend of 80 per cent i.e. Rs. 0.80 per Equity Share of Rs. 1/- each aggregating toRs. 13.02 crores including dividend tax ofRs. 2.20 crores in the previous year on the same Equity Share Capital.

TRANSFER TO RESERVES

The Company proposes to retain the entire amount of profits in the Profit and Loss account.

SHARE CAPITAL

The paid-up share capital as on 31st March 2019 was Rs. 135285000 divided into 135285000 equity shares of Rs. 1/-each. During the year under review your Company has neither issued shares with Differential Voting Rights nor granted Stock Options nor Sweat Equity.

EXPORTS

The export turnover of your Company during the year under review wasRs. 298.39 crores as againstRs. 268.85 crores in the previous year.

The export turnover includes sales to wholly owned subsidiaries amounting to Rs. 198.51 crores as against Rs. 213.14 crores in the previous year. The wholly owned subsidiaries of your Company in United Kingdom and United States of America are engaged in providing last mile sales and customer support in their respective regions.

Further details as regards to the efforts of your Company on this front have been dealt with in the Management Discussion and Analysis section of this report.

OUTLOOK FOR CURRENT YEAR

The Unaudited Financial Results for the first quarter ended 30th June 2019 already announced show a gross turnover of Rs. 312.11 crores for the first quarter of the current year as against a turnover of Rs. 311.89 crores in the corresponding quarter of the previous year.

The Profit after Tax stood at`6.27 crores for the first quarter ended 30th June 2019 as against Rs. 13.57 crores in the corresponding quarter of the previous year. The Earning per Share (EPS) is Rs. 0.46 for the quarter ended 30th June 2019 as against Rs. 1.00 in the corresponding quarter of the previous year. The Company is confident to improve the turnover and margin during the remaining part of the year.

PLANTS AND FACILITIES

The Company continues its efforts towards expansion of its domestic and overseas customer base by optimizing utilization of existing available capacities expansion of existing facilities and setting up new facilities wherever required to enhance the capacity. The Company is using its geographical spread to strategically locate its operations for de-risking.

To augment the existing facilities new plants are being commissioned at Pathredi and Halol. The Halol Plant went into production in the first quarter of this year while Pathredi Plant will commence production in the 3rd quarter of this year.

SUBSIDIARY COMPANIES

Your Company has three Wholly Owned Subsidiaries two Subsidiary Companies and three Step-down Subsidiary Companies.

There was no material change in the nature of the business of any Subsidiary Company. Pursuant to SEBI (LODR) Regulations 2015 Rico Aluminium and Ferrous Auto Components Limited and Rico Investments Limited are material subsidiaries of the Company.

A. Rico Auto Industries Inc. USA

This Company is engaged in the business of trading of Auto Components and providing warehousing logistics and last mile support to our OEM and Tier-I Customers in North America Mexico and Brazil. The Company has recorded a gross turnover of Rs. 140.47 crores during the financial year ended 31st March 2019 as against Rs. 140.67 crores in the previous year.

The Company earned a net profit after tax of Rs. 1.54 crores in the financial year ended 31st March 2019 as against Rs. 1.79 crores in the previous year. The Company has not declared any dividend for the financial year ended 31st March 2019. This Subsidiary has achieved a gross turnover of Rs. 34.27 crores for the first quarter ended 30th June 2019 as against Rs. 37.24 crores in the corresponding quarter of the previous year. During the financial year and period under review your Company has not made any additional investment in this Subsidiary.

The Subsidiary is expecting a moderate growth during the current financial year.

B. Rico Auto Industries (UK) Limited U.K.

This Company is engaged in the business of trading of Auto Components and providing warehousing logistics and last mile support to our OEM and Tier-I Customers for the European Markets.

The Company has recorded a gross turnover of Rs. 97.34 crores during the financial year ended 31st March 2019 as against Rs. 83.92 crores in the previous year. The Company earned a net profit of 0.60 crore in the financial year ended 31st March 2019 as against Rs. 0.50 crore in the previous year. The Company has not declared any dividend for the financial year ended 31st March 2019.

During the financial year and period under review your Company has not made any additional investment in this Subsidiary.

C. AAN Engineering Industries Limited

AAN Engineering Industries Limited (AAN) is an AS 9100D Certified Company which defines it as a Manufacturer of Precision Machined Components & Assemblies for the Aerospace and Defence Industry.

AAN offers an extensive array of services for the manufacture of components/sub-systems within the Defence & Aerospace Industry. These include Design & Development of Tooling Casting (Aluminium Ferrous & High Manganese Steel) Machining and Assembly supported by CAD CAM CAE and R&D testing facilities.

AAN currently manufactures and assembles Mechanical Fuses and metal parts for Electronic Fuses with an installed capacity of producing 25000 Fuze body component per month with scalability up to 75000 per month.

AAN works with a wide range of Raw Materials - namely Aluminium Alloy Alloy Steel & High Manganese Steel & Raw Material/Castings as required by Client. Supplied Track Links for one of the prestigious Tracked Fighting vehicle - T72 in High Manganese Steel grade. In the current year the Company successfully submitted samples for a critical high grade manganese casting for ammunition with Ordnance Factory Board. The Company's capability has been assessed and passed for supplies of Air Force Ammunition.

AAN is empanelled and registered with the Special Products division of Electronics Corporation of India Limited (ECIL) Hyderabad Bharat Electronics Limited (BEL) Pune Engine Divisions of Hindustan Aeronautical Limited (HAL) (Bangalore Nasik and Koraput) Heavy Vehicles Factory (HVF) Avadi Army Base Workshop and Army Directorate of Indigenization and various Ordnance Factories.

AAN Engineering is one of the leading participating companies in the largest ammunition tender taken out by Ministry of Defence in the year 2018. The Company has signed Strategic Transfer of Technology with leading OEMs across the globe.

During the year under review the Company has earned a total revenue of Rs. 4.19 crores against Rs. 4.10 crores in the last year. During the year the Company has incurred a loss of Rs. 1.40 crores against a loss of Rs. 0.25 crore in the previous year.

This Subsidiary has not earned any revenue in the first quarter ended 30th June 2019 as against Rs. 1.89 crores in the corresponding quarter of the previous year. The Company incurred a loss of Rs. 0.55 crore for the first quarter ended 30th June 2019 as against Rs. 0.03 crore profit in the previous year. During the financial year and period under review your Company has not made any additional investment in this Subsidiary.

D. Rico Investments Limited

During the year under review this Company has recorded a gross revenue of Rs. 5.90 crores as against Rs. 4.92 crores in the previous year. This Company has earned a profit of Rs. 4.04 crores in the financial year ended 31st March 2019 as against Rs. 3.54 crores in the previous year.

This Company has paid an Interim Dividend @ 1 percent i.e. @ Rs. 0.10 per Equity Share of Rs. 10/- each amounting to Rs. 1.24 crores including dividend tax of Rs. 0.05 crore which was declared by the Board of Directors on 11th February 2019 and paid on 25th February 2019. In addition the Board of this Company has recommended a Final Dividend @ 1 percent i.e. @ Rs. 0.10 per Equity Share of Rs. 10/- each for the financial year 2018-19. If approved the total dividend (interim and final) will amount to Rs. 2.48 crores including dividend tax of Rs. 0.11 crore as against a dividend of 2 percent i.e. Rs. 0.20 per Equity Share of Rs. 10/- each aggregating to Rs. 2.86 crores including dividend tax of Rs. 0.48 crore in the previous year on the same Equity Share Capital. Your Company expects to receive an amount ofRs. 1.15 crores by way of dividend on its investment.

This Company has not made any additional investment in its Subsidiary Companies. This Company has the following subsidiaries:

i) Rico Aluminium and Ferrous Auto Components Limited

During the year under review this Company has recorded a gross turnover of Rs. 253.54 crores as against Rs. 248.70 crores in the previous year. This Company has earned a profit of Rs. 1.09 crores as on 31st March 2019 as against the loss of Rs. 0.13 crore in the previous year. Further this Company has achieved a gross turnover of Rs. 52.56 crores and incurred a loss of Rs. 2.33 crores for the quarter ended 30th June 2019.

This Company has paid an Interim Dividend @ 2 percent i.e. Rs. 0.20 per Equity Share of Rs. 10/- each amounting to Rs. 1.11 crores including dividend tax of Rs. 0.19 crore which was declared by the Board of Directors on 11th February 2019 and paid on 20th February 2019. In addition the Board of this Company has recommended a Final Dividend @ 2 per cent i.e.Rs. 0.20 per Equity Share ofRs. 10/-each for the financial year 2018-19. If approved the total dividend (interim and final) will amount to Rs. 2.22 crores including dividend tax ofRs. 0.38 crore.

ii) Rasa Autocom Limited

This Company is engaged in the business of manufacturing of High Pressure Gravity and Low Pressure Die Cast Auto Components. Its plant is equipped with Automation and better controls to produce high quality parts in large volume for export. This Company has recorded a gross turnover of Rs. 53.14 crores during the financial year ended 31st March 2019 as against Rs. 33.16 crores in the previous year. The Company has earned a profit of Rs. 1.52 crores in the financial year ended 31st March 2019 as against the profit ofRs. 2.63 crores in the previous year.

This Subsidiary has achieved a gross turnover of Rs. 11.88 crores for the first quarter ended 30th June 2019 as against Rs. 14.75 crores in the corresponding quarter of the previous year. The Company has received a Dividend of Rs. 2.59 crores during the quarter ended 30th June 2019.

iii) Rico Jinfei Wheels Limited (Subsidiary and Joint Venture)

This Company has recorded a gross turnover ofRs. 136.54 crores during the financial year ended 31st March 2019 as against Rs. 114.02 crores in the previous year. This Company has incurred a loss of Rs. 7.60 crores in the financial year ended 31st March 2019 as against the profit ofRs. 0.13 crore in the previous year.

Further this Company has recorded a gross turnover of Rs. 32.80 crores for the quarter ended 30th June 2019 as against Rs. 36.61 crores in the corresponding quarter of the previous year. The Company has earned a profit of Rs. 0.22 crore for the quarter ended 30th June 2019.

E. Rico Fluidtronics Limited

During the year under review Your Company along with its step down Subsidiary namely Rasa Autocom Limited acquired entire shareholding in M/s. Rico Fluidtronics Limited (Formerly Magna Rico Powertrain Private Limited a Joint Venture Company) from its JV Partner M/s. Magna Powertrain GmbH consequently it has become a subsidiary of your Company.

This Company during the year under review has recorded a gross turnover of Rs. 94.15 crores as against Rs. 93.82 crores in the previous year. This Company has earned a profit of Rs. 6.31 crores in the financial year ended 31st March 2019 as against Rs. 5.81 crores in the previous year. The Members of this Company in their 11th AGM has declared dividend of 12.50 percent for the financial year ended 31st March 2019 as against maiden dividend of 7.50 percent for the financial year ended 31st March 2018. Your Company and step down Subsidiary namely Rasa Autocom Limited has received Rs. 2.69 crores and Rs. 2.59 crores respectively by way of dividend on their investment.

This Company has maintained the consistency in sales and is generating profit continuously and has surplus reserves. On the operational front this Company is consistently working towards lean set-up to achieve manufacturing excellence at optimum cost.

CONSOLIDATED FINANCIAL STATEMENTS

Pursuant to Section 129(3) of the Companies Act 2013 read with rules made thereunder the appended Audited Consolidated Financial Statements of the Subsidiaries and the Joint Venture Company forms part of the Annual Report.

A Statement containing salient features of the financial statements of Subsidiaries and Joint Venture Company has been provided in Form AOC-1 which is annexed and forms part of this Report.

Further audited financial statements of the Subsidiaries and Joint Venture Company have also been placed on the website of the Company i.e. https://www.ricoauto.in/investor-relation.html.

The Company will make available these documents upon request by any member of the Company interested in obtaining the same.

MATERIAL CHANGES AND COMMITMENTS

There was no change in the nature of business of the Company. There were no material changes and commitments affecting the financial position of the Company occurring between 31st March 2019 and the date of this Report.

CREDIT RATING

The India Ratings and Research Private Limited - a Credit Rating Agency has upgraded the credit ratings on 24th August 2018 based on a consolidated view of the Company and its Subsidiaries business on the back of their similar business profile Common Treasury and Management Team and the same are given below:

Credit Ratings:

ParticularsRatings
Long Term Issuer RatingsIND A/Stable
INR 1838.20m Term Loans/Letter of CreditIND A/Stable
INR 2150m Fund and Non-Fund Based Working Capital LimitsIND A/Stable
Short TermIND A1
Proposed Term Loan/Letter of CreditProvisional
IND A/Stable

The above credit ratings are being reviewed and the revised ratings would be available by end of August 2019.

FIXED DEPOSITS

The Company has not accepted deposits from the public during year under review.

MANAGEMENT DISCUSSION AND ANALYSIS REPORT (MDA)

Pursuant to Regulation 34(2) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 MDA is annexed which forms part of this Report.

RISK MANAGEMENT

Business risk evaluation and its management is an ongoing process within the Company. The same is further discussed in Management Discussion and Analysis which forms part of this Report.

SECRETARIAL STANDARDS

The Company is in compliance with the applicable Secretarial Standards issued by the Institute of Company Secretaries of India.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The adequacy of Internal Financial Controls is discussed in Management Discussion and Analysis which forms part of this Report.

CORPORATE GOVERNANCE

A separate report on Corporate Governance along with General Shareholders information is annexed as a part of this Report along with the Certificate from the Practising Company Secretary regarding compliance of conditions of Corporate Governance as stipulated under the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

AUDIT COMMITTEE

Your Company has an Audit Committee to meet the requirements of the Companies Act 2013 and Regulation 18 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015.

Details of the Audit Committee are given under the Corporate Governance Report. There are no recommendations of the Audit Committee which were not accepted by the Board.

NOMINATION AND REMUNERATION COMMITTEE

Your Company has a Nomination and Remuneration Committee to meet the requirements of the Companies Act 2013 and Regulation 19 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. Details of the Nomination and Remuneration Committee are given under the Corporate Governance Report.

The Board has framed a Nomination and Remuneration Policy which lays down a framework in relation to the remuneration of Directors Key Managerial Personnel and Senior Management of the Company. This policy also lays down criteria for selection and appointment of Board Members. This Policy is placed on the website of the Company i.e. https://www.ricoauto.in/investor-relation.html.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In pursuance of the provisions of Section 135 of the Companies Act 2013 the amount to be spent during the financial year 2018-19 as per computation worked out to be Rs. 104.00 lakhs. The Company therefore has spent an aggregate amount towards the CSR activities/projects as specified in CSR policy of the Company during the financial year 2018-19. The CSR activities of the Company are being monitored by the CSR Committee. The focus area of CSR activities will be as per Schedule VII of the Companies Act 2013.

The details about the policy on Corporate Social Responsibility (CSR) including initiatives taken on CSR the annual report on CSR activities and the composition of CSR Committee are annexed and forms part of this report. The Policy is available on the website of the Company i.e. https://www.ricoauto.in/investor-relation.html.

VIGIL MECHANISM

The Company has established Vigil Mechanism/Whistle Blower Policy for Directors Employees Clients Vendors Suppliers and Contractors as an avenue to report concerns including unethical behaviour actual or suspected frauds or violation of the Company's code of conduct. The same meets the requirements of Section 177(9) of the Companies Act 2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 and is available on the website of the Company i.e. https://www.ricoauto.in/investor-relation.html.

RELATED PARTY TRANSACTIONS AND MATERIAL SUBSIDIARIES

The Company has duly approved policies for determining the Material Subsidiaries and Material Related Party Transactions. These Policies are available on the website of the Company i.e. https://www.ricoauto.in/investor-relation.html. All contracts/ arrangements/transactions entered by the Company during the financial year with related parties were in the ordinary course of business and on arm's length basis and prior approval of the Audit Committee was sought for entering into related party transactions. The details are provided in Form AOC-2 which is annexed and forms part of this Report. As required by SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 a return has been filed with BSE/NSE. Please also refer Note 42 to the standalone financial statements for related party disclosures.

LISTING OF EQUITY SHARES

The Equity Shares of your Company are presently listed on the BSE Limited and National Stock Exchange of India Limited. The Annual Listing Fees have been paid for the financial year 2019-20.

EXTRACT OF ANNUAL RETURN

In accordance with the provisions of the Companies Act 2013 the extract of Annual Return in Form MGT-9 is enclosed and forms part of this report.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The particulars of investments made loans and guarantees given are provided in the standalone financial statements. (Please refer to note 06 07 & 36 of the standalone financial statements).

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

In accordance with the provisions of the Companies Act 2013 Shri Arun Kapur Director (DIN: 00100270) of the Company will retire by rotation at the forthcoming AGM and who being eligible offers himself for re-appointment. A brief resume of Shri Arun Kapur is given in the Notice of the AGM.

The first term of appointment of following Independent Directors of the Company is expiring on 29th September 2019:

1. Shri Kanwal Monga

2. Shri Amarjit Chopra

3. Dr. Ashok Seth

4. Shri Satish Sekhri

5. Shri Rajeev Kapoor

6. Shri Vinod Kumar Nagar

The Nomination and Remuneration Committee in its meeting held on 2nd August 2019 has recommended to the Board re-appointment of above Independent Directors for second term. The Board of Directors in its meeting held on 2nd August 2019 has approved the re-appointment of above Independent Directors for second term of five consecutive years commencing from 30th September 2019 subject to approval of the shareholders.

All Independent Directors of the Company have given declarations confirming that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act 2013 and the Listing Regulations 2015. Details of the proposal including rational for re-appointment of above Independent Directors are mentioned in the explanatory statement of the notice of AGM.

The Board has re-appointed Shri Arvind Kapur as Managing Director for a further period of five years commencing from 17/12/2019 to 16/12/2024. The Resolution for his re-appointment and remuneration is being placed for your approval by way of Postal Ballot.

There is no change in the KMPs of the Company during the year under report.

BOARD MEETINGS

During the year under review four Board Meetings were held and one separate meeting of Independent Directors was held the details of which forms part of Corporate Governance Report.

BOARD EVALUATION

Pursuant to the provisions of Companies Act 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 the Board of Directors have carried out the annual evaluation of its own performance the Individual Directors including the Chairman as well as the evaluation of the working of its Committees. The evaluation of Board as a whole and Non-Independent Directors including Chairman was done by the Independent Directors in their meeting held on 29th May 2019. The manner in which the evaluation has been carried out has been explained in the Corporate Governance Report.

DIRECTORS' RESPONSIBILITY STATEMENT

Pursuant to Section 134 of the Companies Act 2013 your Directors confirm that:

i) in the preparation of the annual accounts for the financial year ended 31st March 2019 the applicable accounting standards have been followed and there are no material departures;

ii) appropriate accounting policies have been selected and applied consistently and have made judgements 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 2019 and of the profit for the year 1st April 2018 to 31st March 2019;

iii) proper and sufficient care has been taken for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act 2013 for safeguarding the assets of the Company and preventing and detecting fraud and other irregularities;

iv) the annual accounts for the financial year ended 31st March 2019 have been prepared on a going concern basis;

v) internal financial controls have been laid down to be followed by the Company and that such internal financial controls are adequate and were operating effectively; and

vi) proper systems have been devised to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively.

STATUTORY AUDITORS

M/s. Walker Chandiok & Co LLP Chartered Accountants (Firm Registration No. 001076N/N500013) were re-appointed as Statutory Auditors of your Company at 34th Annual General Meeting (AGM) held on 22nd September 2017 for a term of five consecutive years till the conclusion of 39th AGM to be held in the year 2022. The requirement of annual ratification of the Statutory Auditor's appointment has been dispensed with accordingly no resolution is proposed for ratification of their appointment. The Company has received a certificate from M/s. Walker Chandiok & Co LLP Chartered Accountants confirming their eligibility to continue as Auditors of the Company.

As required under Regulation 33 of the SEBI (LODR) Regulations 2015 the Statutory Auditors have confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India.

During the year under report there were no revisions in the financial statements of the Company. The observations in the Auditor's Report on Standalone and Consolidated Financial Statements are dealt within the notes to accounts at appropriate places and being self-explanatory need no further comments.

INTERNAL AUDITORS

The Board has re-appointed M/s. SCV & Co. LLP Chartered Accountants (Firm Registration No.000235N/N500089) New Delhi as the Internal Auditors of the Company.

APPOINTMENT OF COST AUDITORS AND MAINTENANCE OF COST RECORDS

The Board on the recommendation of Audit Committee has appointed M/s. J.K. Kabra & Co. Cost Accountants New Delhi as Cost Auditors to carry out the cost audit of the Company for the financial year 2019-20. In terms of Section 148 of the Companies Act 2013 and the rules made thereunder remuneration of Cost Auditors is to be ratified by members of the Company. Accordingly a resolution is included in the Notice of ensuing Annual General Meeting for your approval. The Cost Audit Report for the financial year 2018-19 would be filed with the Ministry of Corporate Affairs New Delhi within the stipulated time.

The cost records as required under section 148 of the Companies Act 2013 read with Companies (Cost Records and Audit) Rules 2014 are being prepared and maintained by the Company in order to ensure proper compliance.

SECRETARIAL AUDITORS

The Board has appointed Shri K. K. Sachdeva of M/s. K.K. Sachdeva & Associates Company Secretaries (C.P. No. 4721 FCS No. 7153) as Secretarial Auditors to carry out the secretarial audit of the Company for the financial year 2019-20. The Secretarial Audit Report for the financial year ended 31st March 2019 is enclosed and forms part of this report. There is no secretarial audit qualification for the year under review.

SECRETARIAL AUDIT OF MATERIAL UNLISTED INDIAN SUBSIDIARY

Rico Investments Limited (RIL) and Rico Aluminium and Ferrous Auto Components Limited (RAFA) material subsidiaries of the Company undertake Secretarial Audit every year under Section 204 of the Companies Act 2013. The Secretarial Audit of RIL and RAFA for the Financial Year 2018-19 was carried out pursuant to Section 204 of the Companies Act 2013 and Regulation 24A of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015. The Secretarial Audit Report of RIL and RAFA submitted by Shri Deepak Bansal Practicing Company Secretary do not contain any qualification reservation or adverse remark or disclaimer.

ANNUAL SECRETARIAL COMPLIANCE REPORT

The Company has undertaken an audit for the Financial Year 2018-19 for all applicable compliances as per Securities and Exchange Board of India Regulations and Circulars/Guidelines issued thereunder. The Annual Secretarial Compliance Report duly signed by Shri K.K. Sachdeva has been submitted to the Stock Exchanges timely for the Financial Year 2018-19.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS

The Statutory Auditors Internal Auditors Cost Auditors and Secretarial Auditors of the Company have not reported any frauds to the Audit Committee or to the Board of Directors under Section 143(12) of the Companies Act 2013 including rules made thereunder.

TRANSFER OF UNCLAIMED AMOUNTS TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)

Pursuant to the provisions of Section 124(5) and other provisions of the Companies Act 2013 (the Act) read with rules made thereunder the declared dividends which remained unpaid/unclaimed (Rs. 0.04 crore) for a consecutive period of seven years have been transferred by the Company to the IEPF established by the Central Government pursuant to Section 125 of the Act.

Pursuant to the provisions of the section 124(6) of the Companies Act 2013 read with Investor Education and Protection Fund Authority (Accounting Audit Transfer and Refund) Rules 2016 (the Rules) a Company is required to transfer to the DEMAT Account of IEPF Authority all shares in respect of which dividends have not been paid or claimed for seven consecutive years or more. In accordance with the aforesaid provisions of the Act read with the rules your Company during the financial year 2018-19 had transferred 612695 shares pertaining to the financial year 2010-11 to the Demat Account of IEPF Authority within the stipulated time period.

CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO

The relevant information as required by the provisions of Section 134(3)(m) of the Companies Act 2013 read with the Companies (Accounts) Rules 2014 is given in the Annexure forming part of this report.

SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS

There were no significant and material orders passed against the Company by the regulators or courts or tribunals during the financial year 2018-19 impacting the going concern status and Company's operations in future.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

The Company has zero tolerance for sexual harassment at workplace and has adopted a policy on prevention prohibition and redressal of sexual harassment at workplace and has in place an Internal Complaint Committee to redress the complaints and circumstances regarding the behaviour of sexual harassment at workplace. The Policy for the same is placed on the intranet for the benefit of its employees. There were no complaints received from any employee during the year under review.

PERSONNEL

The information required under Section 197(12) of the Companies Act 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 is given in the Annexure forming part of this Report. The information required under Section 197(12) of the Companies Act 2013 read with Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules 2014 as amended and forming part of this Report for the year ended 31st March 2019 are set out in the Annexure of this Report.

However the Annual Report excluding the Annexure is being sent to the Members of the Company in terms of the provisions of Section 136 of the Companies Act 2013. A Member who is interested in obtaining these particulars may write to the Company Secretary at the Registered Office of the Company. The said information is also available for inspection by Members at the Registered Office of the Company during working hours upto the date of the ensuing Annual General Meeting.

During the year under report the Industrial relations with personnel remained cordial at all Plants. Your Directors wish to place on record their appreciation of the sincere and unstinted support provided to the Company by its employees at all levels.

ACKNOWLEDGEMENTS

The Board wishes to place on record its sincere appreciation for the continued assistance and support extended to the Company by Financial Institutions Banks and various departments of Central and State Governments. Your Directors acknowledge with gratitude the encouragement and support extended by Company's valued customers business associates and shareholders.

On behalf of the Board of Directors

Arvind Kapur
Chairman CEO &
Place : GurugramManaging Director
Date : August 02 2019(DIN: 00096308)

   

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