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Rico Auto Industries Ltd.

BSE: 520008 Sector: Auto
NSE: RICOAUTO ISIN Code: INE209B01025
BSE 00:00 | 02 Dec 77.45 6.05
(8.47%)
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NSE 00:00 | 02 Dec 77.45 6.10
(8.55%)
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OPEN 72.40
PREVIOUS CLOSE 71.40
VOLUME 852742
52-Week high 78.40
52-Week low 31.20
P/E 25.31
Mkt Cap.(Rs cr) 1,048
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 72.40
CLOSE 71.40
VOLUME 852742
52-Week high 78.40
52-Week low 31.20
P/E 25.31
Mkt Cap.(Rs cr) 1,048
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Rico Auto Industries Ltd. (RICOAUTO) - Director Report

Company director report

To the Shareholders

Your Directors present the 39th Annual Report of your Company together withthe Audited Financial Statements for the year ended 31st March 2022.

FINANCIAL RESULTS

(Rs. in Crores)

Standalone

Consolidated

Particulars Current Year 2021-22 Previous Year 2020-21 Current Year 2021-22 Previous Year 2020-21
Total Revenue 1623.16 1304.70 1878.86 1488.44
Profit before Interest Depreciation and Exceptional Items 151.15 93.34 176.88 107.13
Interest and Financial charges 36.67 34.96 42.17 38.61
Profit before Depreciation Exceptional Items and Tax 114.48 58.38 134.71 68.52
Depreciation 74.69 62.98 90.58 80.08
Profit before Exceptional Items and Tax 39.79 (4.60) 44.13 (11.56)
Exceptional Items 5.48 4.25 6.15 4.36
Profit/(Loss) before Tax (PBT) 34.31 (8.85) 37.98 (15.92)
Tax (Credit)/Expense 11.46 (3.09) 14.21 (1.85)
Profit/(Loss) after Tax 22.85 (5.76) 23.77 (14.07)
Other Comprehensive Income/(Loss) (net of tax) 3.81 2.96 4.00 3.41
Total Comprehensive Income/(Loss) 26.66 (2.80) 27.77 (10.66)

OPERATIONS AND THE STATE OF COMPANY'S AFFAIRS

Your Company has recorded a Total Revenue of Rs.1623.16 crores in the year under reportas against Rs.1304.70 crores in the previous year with a growth of 24 per cent. YourCompany has earned a profit after tax of Rs.22.85 crores during the year under report overthe previous year's loss of Rs.5.76 crores.

The Aftermarket Division of your Company caters the two-wheeler and four-wheelersegment. The Company has established a strong network of dealers and distributors inIndia Nepal Sri Lanka and Bangladesh & exploring South America Africa and Dubai.During the financial year 2021-22 a turnover of Rs.30.00 crores has been achieved by thisDivision. Aftermarket Division has a target to achieve sales of Rs.50.00 crores in thecurrent financial year 2022-23.

DIVIDEND

Your Directors are pleased to recommend for your approval a Dividend @ 40 percent i.e.Rs.0.40 per Equity Share of Rs.1/- each for the financial year 2021-22 amounting toRs.5.41 crores on the equity share capital of Rs.13.53 crores as against a dividend of 20per cent i.e. Rs.0.20 per Equity Share of Rs.1/- each amounting to Rs.2.71 crores in theprevious year on the same Equity Share Capital. The dividend payout is as per DividendDistribution Policy which is available on the website of the Company.

TRANSFER TO RESERVES

During the year under review no amount has been transferred to the Reserves.

SHARE CAPITAL

The Paid-up Share Capital as on 31st March 2022 was Rs.135285000/-divided into 135285000 equity shares of Rs.1/- each. During the year under review yourCompany has neither issued shares with Differential Voting Rights nor granted StockOptions or Sweat Equity.

EXPORTS

The export turnover of your Company during the year under review was Rs.455.08 croresas against Rs.358.87 crores in the previous year.

The export turnover includes sales to wholly owned subsidiaries amounting to Rs.174.09crores as against Rs.143.99 crores in the previous year. The wholly owned subsidiaries ofyour Company in United Kingdom and United States of America are engaged in providing lastmile sales warehousing and customer support in their respective regions.

Your Company has been one of the pioneers in exporting critical components based on theestablished quality systems and delivery experience of over 25 years. The Company hasestablished a network of warehousing and local business representatives to support andmanage its overseas customers. Since 2018 the Company has been focusing on the emergingElectric Vehicles and Hybrid Vehicle Components and have started supplying to BMW TOYOTASTELLANTIS (PSA) and RENAULT.

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

OUTLOOK FOR CURRENT YEAR

The impact of the pandemic on the operation of the Company was confined to firstquarter of FY22 when the second wave of Covid was at its peak. This was followed by thegeopolitical tensions and lockdown in China that disrupted supplies and commoditiesprices. Semiconductor shortage was felt at most Passenger Vehicles OEMs and theirproduction was not able to return to peak levels to meet rising customer demand due topreference for personal mobility in post pandemic period from second quarter of FY22onwards but is expected to be better in the remaining part of the current financial yearand expected to stabilise by end of 2023.

The first quarter ended 30th June 2022 recorded a total revenue ofRs.483.51 crores as against the total revenue of Rs.343.55 crores in the correspondingquarter of the previous year. Consequently the profit after tax stood at Rs.11.26 croresfor the first quarter as against loss of Rs.2.33 crores in the corresponding quarter ofthe previous year. The Company is confident to improve the turnover and margin during theremaining part of the year.

PLANTS AND FACILITIES

The Company continues its efforts towards expansion of its domestic and overseascustomer base by optimizing utilization of existing available capacities that have beenset-up expansion of existing facilities and setting up new facilities wherever requiredto enhance the Customer reach. The Company is using its geographical spread tostrategically locate its operations for de-risking.

ELECTRIC VEHICLES (EV)

The Chennai facility has started supplying high technology components to TOYOTA fortheir Electrified Vehicles. Besides your Company is a major supplier to BMWSTELLANTIS (PSA) RENAULT for their EV in Europe for Motor and Transmissions.

The details of Plants and Facilities are given in the Corporate Governance Report.

SUBSIDIARY COMPANIES

Your Company has nine Subsidiaries and two Associate Companies. There was no materialchange in the nature of the business of any Subsidiary Company. Pursuant to SEBI (LODR)Regulations 2015 Rico Aluminium and Ferrous Auto Components Limited Rico InvestmentsLimited and Rico Jinfei Wheels Limited are material subsidiaries of the Company.

NOTES ON SUBSIDIARY COMPANIES

A. Rico Auto Industries Inc. USA

This Company is engaged in the business of trading of Auto Components and providingwarehousing logistics and last mile support to our OEM and Tier-I Customers in NorthAmerica Mexico and Brazil for goods manufactured by your Company. The Company hasrecorded a total turnover of Rs.168.89 crores during the financial year ended 31stMarch 2022 as against Rs.133.59 crores in the previous year.

The Company earned a net profit after tax of Rs.1.23 crores in the financial year ended31st March 2022 as against Rs.2.36 crores in the previous year. The Companyhas not declared any dividend for the financial year ended 31st March 2022.

This Subsidiary has achieved a total turnover of Rs.58.47 crores for the first quarterended 30th June 2022 as against Rs.38.12 crores in the corresponding quarterof the previous year. The Company earned a profit after tax of Rs.0.76 crore for the firstquarter ended 30th June 2022 as against a profit after tax of Rs.0.22 crore inthe corresponding quarter of the previous year. During the financial year and period underreview 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 providingwarehousing logistics and last mile support to our OEM and Tier-I Customers for theEuropean Markets for goods manufactured by your Company.

There is a change of Business Model where Rico Auto has started direct supplies to manyof the European Customers. As a result of which sales from this Company has reducedsubstantially.

The Company has recorded a total turnover of Rs.5.20 crores during the financial yearended 31st March 2022 as against Rs.5.92 crores in the previous year. TheCompany incurred a loss of Rs.0.22 crore in the financial year ended 31stMarch 2022 as against loss of Rs.0.21 crore in the previous year.

This Subsidiary has achieved a total turnover of Rs.0.16 crore for the first quarterended 30th June 2022 as against Rs.1.96 crores in the corresponding quarter ofthe previous year. The Company incurred a loss of Rs.0.01 crore for the first quarterended 30th June 2022 as against loss of Rs.0.03 crore in the correspondingquarter of the previous year. During the financial year and period under review yourCompany has not made any additional investment in this Subsidiary.

C. AAN Engineering Industries Limited

AAN Engineering Industries Limited (AAN) an AS 9100D Certified Company which definesit as a "Manufacturer of Precision Machined Components & Assemblies" for theAerospace and Defence Industry.

AAN offers an extensive array of services for the manufacture of components/sub-systemswithin the Defence & Aerospace Industry. These include Design & Development ofTooling Casting Machining and Assembly supported by CAD CAM CAE and R&D testingfacilities. AAN works with a wide range of Raw Materials-namely Aluminium Alloy AlloySteel & High Manganese Steel & Raw Material/Castings as required by Client.

AAN currently manufactures machined metal components for Mechanical and Electronic FuseAssembly. In the current year the Company supplied machined High Grade Machined Casting toOrdnance Factory Board. This particular technical engagement places the Company favorablyfor manufacturing and servicing this specific need for Ministry of Defence over nextseveral years. The Company is also one of the shortlisted engineering firms by DRDO labfor the key Make in India program for indigenization of Inflatable Decoy for IndianDefence forces. AAN Engineering has inked a transfer of technology agreement with Globalleader of Inflatable Decoy manufacturer for the same.

AAN Engineering is one of the leading participating companies in the largest ammunitiontender taken out by Ministry of Defence in the year 2018. The Company has signed StrategicTransfer of Technology agreement with leading OEMs across the globe. The Company is alsoin consideration as one of the shortlisted Tier 1 vendor for supply of Tatra Truck T-71and ARV related spares including various types of engine assemblies by Tatra Trucks CzechRepublic & Excalibur Defence Systems (CSG Group Co.)

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

AAN embodies your Company's Defence Outfit and a Strategic Investment. With the missionAtma Nirbhar Bharat more involvement with Defence Sector is foreseen.

During the year under review the Company has recorded a total revenue of Rs.11.65crores as against Rs.9.08 crores in the previous year. During the year the Company hasincurred a loss of Rs.0.60 crore as against a loss of Rs.0.82 crore in the previous year.

This Subsidiary has recorded a total revenue of Rs.4.01 crores in the first quarterended 30th June 2022 as against Rs.1.64 crores in the corresponding quarter ofthe previous year. The Company earned a profit after tax of Rs.0.10 crore for the firstquarter ended 30th June 2022 as against a loss of Rs.0.33 crore in thecorresponding quarter of the previous year. During the financial year under review yourCompany has made an investment of Rs.6.00 crores in this Subsidiary and paid-up sharecapital of this Company now stands at Rs.6.05 crores.

D. Rico Fluidtronics Limited

This Company during the year under review has recorded a total revenue of Rs.68.01crores as against Rs.53.89 crores in the previous year. This Company has earned a profitafter tax of Rs.5.92 crores in the financial year ended 31st March 2022 asagainst profit after tax of Rs.4.10 crores in the previous year.

This Company has orders from Maruti Suzuki India Limited (MSIL) and others in hand tocross Rs.130.00 crores turnover in the Financial Year 2022-23.

The Board of this Company has recommended a dividend (10 per cent) of Rs.1.00 perEquity Share of Rs.10/- each for the financial year 2021-22. If approved the dividendwill amount to Rs.4.22 crores as against dividend of Rs.4.22 crores in the previous yearon the same Equity Share Capital. Your Company and step-down subsidiary namely RasaAutocom Limited expects to receive an amount (after TDS) of Rs.1.94 crores and Rs.1.86crores respectively by way of dividend on their investment.

This Company has recorded a total revenue of Rs.23.92 crores for the quarter ended 30thJune 2022 as against Rs.14.61 crores in the corresponding quarter of the previous year.The Company has earned a profit after tax of Rs.1.01 crores for the quarter ended 30thJune 2022 as against profit after tax of Rs.1.64 crores in the corresponding quarter ofthe previous year.

With reference to previous year's business realization development of MSIL Engine K15COil Pump & Water Pumps have been completed and these products have been launched inserial production from March 2022 onwards.

E. Rico Investments Limited

During the year under review this Company has recorded a total revenue of Rs.4.34crores as against Rs.4.69 crores in the previous year. This Company has earned a profitafter tax of Rs.2.69 crores in the financial year ended 31st March 2022 asagainst a profit after tax of Rs.2.89 crores in the previous year.

This Subsidiary has achieved a total revenue of Rs.1.09 crores for the first quarterended 30th June 2022 as against Rs.1.07 crores in the corresponding quarter ofthe previous year. The Company earned a profit after tax of Rs.0.73 crore for the firstquarter ended 30th June 2022 as against profit after tax of Rs.0.70 crore inthe corresponding quarter of the previous year.

This Company has paid an interim dividend @ 2 percent i.e. Rs.0.20 per Equity Share ofRs.10/- each for the financial year 2021-22. The interim dividend paid amounted to Rs.2.38crores as against a dividend of 3 percent i.e. Rs.0.30 per Equity Share of Rs.10/- eachaggregating to Rs.3.56 crores in the previous year on the same Equity Share Capital.However the Directors have not recommended any final dividend.

As reported last year the Board of this Company in its meeting held on 26thJuly 2021 had approved amalgamation of this Company with your Company. The AmalgamationScheme is pending for approval before the Hon'ble NCLT.

This Company has the following subsidiaries:

i) Rico Aluminium and Ferrous Auto Components Limited

During the year under review this Company has recorded a total revenue of Rs.188.06crores as against Rs.171.57 crores in the previous year. This Company has incurred a lossof Rs.10.14 crores as on 31st March 2022 as against the loss of Rs.9.24 croresin the previous year. Further this Company has recorded a total revenue of Rs.45.52crores for the quarter ended 30th June 2022 as against Rs.47.22 crores in thecorresponding quarter of the previous year. The Company has incurred a loss of Rs.3.89crores for the quarter ended 30th June 2022 as against the loss of Rs.1.87crores in the corresponding quarter of the previous year.

As reported last year the Board of this Company in its meeting held on 26thJuly 2021 had approved amalgamation of this Company with your Company. The AmalgamationScheme is pending for approval before the Hon'ble NCLT.

ii) Rasa Autocom Limited

This Company has recorded a total revenue of Rs.3.73 crores during the financial yearended 31st March 2022 as against Rs.55.26 crores in the previous year. TheCompany has earned a profit after tax of Rs.2.05 crores in the financial year ended 31stMarch 2022 as against the profit after tax of Rs.1.68 crores in the previous year. TheCompany expects to receive a dividend of Rs.1.86 crores on its investment from RicoFluidtronics Limited for the financial year 2021-22.

This Subsidiary has achieved a total revenue of Rs.0.44 crore from lease rental andother income for the first quarter ended 30th June 2022 as against Rs.0.40crore in the corresponding quarter of the previous year. The Company has earned a profitafter tax of Rs.0.21 crore for the quarter ended 30th June 2022 as against theprofit after tax of Rs.0.20 crore in the corresponding quarter of the previous year.

As reported last year the Board of this Company in its meeting held on 26thJuly 2021 had approved amalgamation of this Company with your Company. The AmalgamationScheme is pending for approval before the Hon'ble NCLT.

This Company has not recommended any dividend for the financial year 2021-22.

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

This Company has recorded a total turnover of Rs.221.08 crores during the financialyear ended 31st March 2022 as against Rs.149.73 crores in the previous year.This Company has earned a profit after tax of Rs.2.05 crores in the financial year ended31st March 2022 as against the profit after tax of Rs.2.08 crores in theprevious year.

Further this Company has recorded a total turnover of Rs.72.54 crores for the quarterended 30th June 2022 as against Rs.37.03 crores in the corresponding quarterof the previous year. The Company has incurred a loss of Rs.0.55 crore for the quarterended 30th June 2022 as against a profit after tax of Rs..0.16 crore incorresponding quarter of the previous year.

Rico Jinfei Wheels Limited (RJWL) a Step-down Subsidiary Company has in its BoardMeeting held on 26th July 2021 approved the Scheme of Amalgamation("Scheme") for merger of Rico Castings Limited ("Transferor Company")with RJWL pursuant to Sections 230 to 232 of the Companies Act 2013 with effect fromAppointed Date i.e. 1st April 2021. The Scheme was filed with Hon'ble NCLT on30th September 2021 and is subject to necessary statutory and regulatoryapprovals. Pursuant to the directions of Hon'ble NCLT the shareholders and creditors ofthe respective Companies have approved the Scheme with requisite majority. The Scheme ispending for approval before the Hon'ble NCLT. After approval of Hon'ble NCLT theTransferor Company will be dissolved without winding-up.

F Rico Friction Technologies Limited

During the year your Company has invested Rs.0.756 crores in the equity share capitalof this Company and the total investment now stands at Rs.0.763 crores.

This Company has recorded a total turnover of Rs.3.03 crores during the financial yearended 31st March 2022 as against Rs.4.03 crores in the previous year. ThisCompany has earned a profit after tax of Rs.0.39 crore in the financial year ended 31stMarch 2022 as against the profit after tax of Rs.1.00 crore in the previous year.This Company has not recommended any dividend for the financial year 2021-22.

Further this Company has recorded a total turnover of Rs.1.01 crores for the quarterended 30th June 2022 as against nil in the corresponding quarter of theprevious year. The Company has earned a profit after tax of Rs.0.20 crore for the quarterended 30th June 2022 as against a loss of Rs.0.19 crore in the correspondingquarter of the previous year.

NOTES ON ASSOCIATE COMPANIES

A. Rico Care Foundation

Your Company subscribed 10000 equity shares (20% of the total paid up capital) of theaforesaid Company on 15th July 2021. The Company is registered under Section 8of the Companies Act 2013 and will undertake Corporate Social Responsibility (CSR)activities on behalf of Rico Group Companies.

B. Roop Ram Industries Limited

As per the terms and conditions of Power Purchase Agreement (PPA) for solar power yourCompany on 23rd August 2021 invested an amount of Rs.2.43 crores by way ofpurchase of 2434640 fully paid up equity shares of Rs.10/- each (26% of the total paidup capital) of M/s. Roop Ram Industries Limited and from 17th February 2022your Company started procuring 1.60 lakh units per year of solar power from the saidcompany resulting in an approximate savings of '1.80 crores annually.

The financials of the aforesaid associate companies have not been considered forconsolidation in the accounts of your Company.

CONSOLIDATED FINANCIAL STATEMENTS

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

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

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

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

MATERIAL CHANGES AND COMMITMENTS

There was no change in the nature of the business of the Company.

As reported last year the Board based on the recommendation of Audit Committee in itsmeeting held on 26th July 2021 have considered and approved the Scheme ofAmalgamation ("Scheme") for merger of its Subsidiary Companies namely RicoInvestments Limited RASA Autocom Limited and Rico Aluminium and Ferrous Auto ComponentsLimited ("Transferor Companies") with your Company pursuant to Sections 230 to232 of the Companies Act 2013 with effect from Appointed Date i.e. 1st April2021. The Scheme was filed with Hon'ble National Company Law Tribunal Bench at Chandigarh("NCLT") on 29th September 2021. Pursuant to the directions ofHon'ble NCLT the shareholders and creditors of each of the Companies have approved theScheme. The Scheme is pending for approval before the Hon'ble NCLT. After approval ofHon'ble NCLT the Transferor Companies will be dissolved without winding-up process.

There were no other material changes and commitments affecting the financial positionof the Company occurring between 31 st March 2022 and the date of this Report.

CREDIT RATING

India Ratings and Research Private Limited - a Credit Rating Agency has affirmed theLong-Term Issuer Rating at ‘IND A-' based on a consolidated view of the Company andits Subsidiaries business on the back of their similar business profile Common Treasuryand Management Team and the instrument wise rating actions are given below:

Credit Ratings:

Instrument Type Size of Issue (Million) Rating/Outlook Rating Action
Term loans/ letter of credit INR4058 IND A-/Negative Affirmed; Outlook revised to Negative from Stable
Fund based working capital limit INR2050 IND A-/Negative/ IND A2+ Affirmed; Outlook revised to Negative from Stable
Non-fund based working capital credit limits INR225 IND A-/Negative/ IND A2+ Affirmed; Outlook revised to Negative from Stable

RWN = Rating Watch Negative

Above specified ratings being latest one are published on 18th May 2022.

The above credit ratings are being reviewed at regular intervals.

FIXED DEPOSITS

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

MANAGEMENT DISCUSSION AND ANALYSIS REPORT (MDA)

Pursuant to Regulation 34(2) of the SEBI (Listing Obligations and DisclosureRequirements) 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 ofthis Report.

Details of the Risk Management Committee are given in the Corporate Governance Report.The policy is available on the website link of the Company https://www.ricoauto.in/investor-relation.html.

SECRETARIAL STANDARDS

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

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

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

CORPORATE GOVERNANCE

A separate report on Corporate Governance containing General Shareholders informationalong with the Certificate from Practicing Company Secretary regarding compliance ofconditions of Corporate Governance as stipulated under the SEBI (Listing Obligations andDisclosure Requirements) Regulations 2015 is annexed as a part of this Report.

AUDIT COMMITTEE

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

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

NOMINATION AND REMUNERATION COMMITTEE

Your Company has in place a duly constituted Nomination and Remuneration Committee tomeet the requirements of the Companies Act 2013 and Regulation 19 of the SEBI (ListingObligations and Disclosure Requirements) Regulations 2015. Details of the Nomination andRemuneration Committee are given under the Corporate Governance Report.

The Board has framed (i) Policy on Board Diversity; and (ii) Nomination &Remuneration Policy which lays down a framework in relation to the remuneration ofDirectors Key Managerial Personnel and Senior Management of the Company. This policy alsolays down criteria for selection and appointment of Board Members. This Policy is placedon the website link of the Company https://Www.ricoauto. in/investor-relation.html.

CORPORATE SOCIAL RESPONSIBILITY (CSR)

In accordance with the requirements of Section 135 of the Companies Act 2013 theamount to be spent during the financial year 2021-22 worked out to be '49.00 lakhs. TheCompany has spent an amount of '72.00 lakhs including '23.00 lakhs on voluntary basistowards the CSR activities/projects as specified in CSR policy of the Company during thefinancial year 2021-22. The CSR activities of the Company are being monitored by the CSRCommittee. The focus area of CSR activities is as per Schedule VII of the Companies Act2013.

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

VIGIL MECHANISM

The Company has established Vigil Mechanism/Whistle Blower Policy for DirectorsEmployees Clients Vendors Suppliers and Contractors as an avenue to report concernsincluding unethical behavior actual or suspected frauds or violation of the Company'scode of conduct. The same meets the requirements of Section 177(9) of the Companies Act2013 and Regulation 22 of the SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 and is available on the website link of the Company https://www.ricoauto.in/investor-relation.html. During the year under review no matter has been receivedunder this policy.

RELATED PARTY TRANSACTIONSAND MATERIAL SUBSIDIARIES

The Company has duly approved policies for determining the Material Subsidiaries andMaterial Related Party Transactions.

These Policies are available on the website link of the Company https://www.ricoauto.in/investor-relation.html.All contracts/ arrangements/ transactions entered by the Company during the financial yearwith related parties were in the ordinary course of business and on arm's length basis andprior approval of the Audit Committee was sought for entering into related partytransactions. The details are provided in Form AOC-2 which is annexed and forms part ofthis Report. As required by SEBI (Listing Obligations and Disclosure Requirements)Regulations 2015 a return has been filed with BSE/NSE. Please also refer note 43 to thestandalone financial statements for related party disclosures.

LISTING OF EQUITY SHARES

The Equity Shares of your Company are presently listed on the BSE Limited and NationalStock Exchange of India Limited. The Annual Listing Fees have been paid for the financialyear 2022-23.

ANNUAL RETURN

The Annual Return of the Company as on 31st March 2022 is available on thewebsite link of the Company https://www.ricoauto. in/investor-relation.html.

PARTICULARS OF LOANS GUARANTEES OR INVESTMENTS

The particulars of investments made loans and guarantees given are provided in thestandalone financial statements. (Please refer to note 7 8 and 36 of the standalonefinancial statements).

BOARD OF DIRECTORS AND KEY MANAGERIAL PERSONNEL (KMP)

In accordance with the provisions of the Companies Act 2013 Smt. Upasna Kapur (DIN:00327461) Director of the Company will retire by rotation at the forthcoming AGM and tomake way for induction of Professional Directors has desired not to offer her candidaturefor re-appointment.

Shri Arun Kapur (DIN: 00100270) also desired to discontinue as Director andconsequently as Joint Managing Director w.e.f. 25th August 2022 to make placefor his son Shri Samarth Kapur who has been inducted as Whole-time Director w.e.f. 26thAugust 2022.

The Board places on record its appreciation for the contribution guidance and supportmade by them during their association with the Company.

Shri Hemal Bharat Khandwala (DIN: 05241590) has been appointed as an AdditionalDirector in the category of Independent Director w.e.f. 26th August2022 and the resolution for regularization of his appointment has been proposed for fiveyears for your approval at this AGM.

Shri Kaushalendra Verma (DIN: 02004259) who is presently Managing Director of RicoFluidtronics Limited a subsidiary of Rico Auto has been appointed as Additional Directoras well as Wholetime Director designated as "Executive Director" witheffect from 26th August 2022 on the Board of the Company. As AdditionalDirector he holds office up to the date of the ensuing Annual General Meeting. The termsand conditions of his appointment as Wholetime Director for a period of three years witheffect from 26th August 2022 are set out in the Statement annexed to the AGMNotice. By virtue of holding the position of "Whole-time Director" he would beconsidered as "Key Managerial Personnel" of the Company. The Board recommendshis appointment.

Shri Rajiv Kumar Miglani (DIN: 06873155) who is presently Managing Director of RicoAluminium and Ferrous Auto Components Limited a subsidiary of Rico Auto has beenappointed as Additional Director as well as Whole-time Director designated as "ExecutiveDirector" with effect from 26th August 2022 on the Board of theCompany. As Additional Director he holds office upto the date of the ensuing AnnualGeneral Meeting. The terms and conditions of his appointment as Whole-time Director for aperiod of three years with effect from 26th August 2022 are set out in theStatement annexed to the AGM Notice. By virtue of holding the position of "Whole-timeDirector" he would be considered as "Key Managerial Personnel" of theCompany. The Board recommends his appointment.

Shri Samarth Kapur (DIN: 01525517) who is presently Whole-time Director of Rico JinfeiWheels Limited a subsidiary of Rico Auto has been appointed as Additional Director aswell as Whole-time Director designated as "Executive Director" witheffect from 26th August 2022 on the Board of the Company. As AdditionalDirector he holds office upto the date of the ensuing Annual General Meeting. The termsand conditions of his appointment as Whole-time Director for a period of three years witheffect from 26th August 2022 are set out in the Statement annexed to the AGMNotice. By virtue of holding the position of "Whole-time Director" he would beconsidered as "Key Managerial Personnel" of the Company. The Board recommendshis appointment.

DECLARATION BY INDEPENDENT DIRECTORS AND STATEMENT ON COMPLIANCE OF THE CODE OF CONDUCT

All Independent Directors of the Company have given declarations confirming that theymeet the criteria of independence as laid down under Section 149(6) of the Companies Act2013 and the Listing Regulations 2015 and they have further confirmed compliance with thecode for Independent Directors as prescribed in the Schedule IV of the Companies Act2013.

Further a declaration has been received from all Independent Directors pursuant to Rule6 of the Companies (Appointment and Qualification of Directors) Rules 2014 affirmingthat they have registered themselves with the Indian Institute of Corporate Affairs in theIndependent Director's Data Bank. In the opinion of the Board all the IndependentDirectors are proficient and have requisite experience and expertise to undertake theresponsibilities conferred on them.

BOARD MEETINGS

During the year under review five Board Meetings were held and one separate meeting ofIndependent Directors was held the details of which forms part of Corporate GovernanceReport.

BOARD EVALUATION

Pursuant to the provisions of the Companies Act 2013 and the SEBI (Listing Obligationsand Disclosure Requirements) Regulations 2015 the Board of Directors have carried outthe annual evaluation of its own performance the Individual Directors including theChairman as well as the evaluation of the working of its Committees. The evaluation ofBoard as a whole and Non-Independent Directors including Chairman was done by theIndependent Directors in their meeting held on 29th March 2022. The manner inwhich the evaluation has been carried out has been explained in the Corporate GovernanceReport.

BUSINESS RESPONSIBILITY REPORT

Business Responsibility Report for the Year under review is annexed and forms part ofthis 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 31stMarch 2022 the applicable accounting standards have been followed and there are nomaterial departures;

ii) appropriate accounting policies have been selected and applied consistently andhave made judgements and estimates that are reasonable and prudent so as to give a trueand fair view of the state of affairs of the Company as at 31st March 2022 andof the profit for the year 1 st April 2021 to 31st March 2022;

iii) proper and sufficient care has been taken for the maintenance of adequateaccounting records in accordance with the provisions of the Companies Act 2013 forsafeguarding the assets of the Company and preventing and detecting fraud and otherirregularities;

iv) the annual accounts for the financial year ended 31 st March 2022 havebeen prepared on a going concern basis;

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

vi) proper systems have been devised to ensure compliance with the provisions of allapplicable 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 34thAnnual General Meeting (AGM) held on 22nd September 2017 for second term offive consecutive years till the conclusion of 39th AGM to be held in the year2022. As per the Companies Act 2013 they are not eligible for re-appointment andtherefore will retire after the conclusion of this AGM. The Board place on record itsappreciation for the valuable services rendered by them during their tenure as StatutoryAuditors of your Company.

The Board on recommendation of the Audit Committee has proposed M/s. B S R & Co.LLP Chartered Accountants (Firm Registration No.101248W/W-100022) to be appointed asStatutory Auditors of the Company to hold such office for a term of five consecutiveyears i.e. from the conclusion of this 39th Annual General Meeting (AGM) tillthe conclusion of the 44th AGM of the Company subject to your approval in theensuing AGM.

The Company has received a Certificate from M/s. B S R & Co. LLP CharteredAccountants confirming their eligibility to act as Auditors of the Company.

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

During the year under report there were no revisions in the financial statements ofthe Company. The observations in the Auditor's Report on Standalone and ConsolidatedFinancial Statements are dealt within the notes to accounts at appropriate places andbeing selfexplanatory need no further comments.

INTERNAL AUDITORS

The Board on the recommendation of the Audit Committee has appointed M/s. ProtivitiIndia Member Private Limited (CIN: U93000HR2009PTC057389) as the Internal Auditors of theCompany for the Financial Year 2022-23.

APPOINTMENT OF COST AUDITORS AND MAINTENANCE OF COST RECORDS

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

The Board on the recommendation of Audit Committee has re-appointed M/s. MM &Associates Cost Accountants (Firm Registration No.000454) as Cost Auditors to carry outthe cost audit of the Company for the financial year 2022-23. In terms of Section 148 ofthe Companies Act 2013 and the rules made thereunder remuneration of Cost Auditors is tobe ratified by members of the Company. Accordingly a resolution is included in the Noticeof ensuing Annual General Meeting for your approval. The Cost Audit Report for thefinancial year 2021-22 would be filed with the Ministry of Corporate Affairs Delhi withinthe stipulated time.

SECRETARIAL AUDITORS

The Secretarial Audit Report for the financial year ended 31st March 2022is enclosed and forms part of this report. There is no secretarial audit qualification forthe year under review.

The Board has approved re-appointment of Shri Vimal Chadha of M/s. Vimal Chadha &Associates Company Secretaries (C.P. No.18669 FCS No. 5758) as Secretarial Auditors tocarry out the Secretarial Audit of the Company for three financial years from 2022-23 to2024-25.

SECRETARIAL AUDIT OF MATERIAL UNLISTED INDIAN SUBSIDIARY

The Secretarial Audit of Rico Jinfei Wheels Limited Rico Investments Limited (RIL) andRico Aluminium and Ferrous Auto Components Limited (RAFA) Material Subsidiaries of theCompany for the Financial Year 2021-22 was carried out pursuant to Section 204 of theCompanies Act 2013 and Regulation 24A of the SEBI (Listing Obligations and DisclosureRequirements) Regulations 2015. The Secretarial Audit Reports of these Subsidiaries donot contain any qualification reservation or adverse remark or disclaimer. These reportsare annexed to this report.

ANNUAL SECRETARIAL COMPLIANCE REPORT

The Company has undertaken an audit for the Financial Year 2021-22 for all applicablecompliances as per Securities and Exchange Board of India Regulations andCirculars/Guidelines issued thereunder. The Annual Secretarial Compliance Report has beensubmitted to the Stock Exchanges timely for the Financial Year 2021-22.

DETAILS IN RESPECT OF FRAUDS REPORTED BY AUDITORS

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

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

Pursuant to the provisions of Section 124(5) and other applicable provisions of theCompanies Act 2013 (the Act) read with rules made thereunder the declared dividendswhich remained unpaid/ unclaimed ('0.23 crore) for a consecutive period of seven yearshave been transferred by the Company to the IEPF established by the Central Governmentpursuant to Section 125 of the Act.

Pursuant to the provisions of the section 124(6) of the Companies Act 2013 read withInvestor 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 IEPFAuthority all shares in respect of which dividends have not been paid or claimed for sevenconsecutive years or more. In accordance with the aforesaid provisions of the Act readwith the rules your Company during the financial year 2021-22 had transferred 11090shares pertaining to the financial year 2013-14 to the Demat Account of IEPF Authoritywithin the stipulated time period.

CONSERVATION OF ENERGY RESEARCH AND DEVELOPMENT TECHNOLOGY ABSORPTION AND FOREIGNEXCHANGE EARNINGS AND OUTGO

The relevant information as required by the provisions of Section 134(3)(m) of theCompanies Act 2013 read with the Companies (Accounts) Rules 2014 is given in theAnnexure 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 theregulators or courts or tribunals during the financial year 2021-22 impacting the goingconcern status and Company's operations in future.

APPLICATION/PROCEEDING UNDER THE INSOLVENCY AND BANKRUPTCY CODE 2016

During the year the Company has not made any application under the Insolvency andBankruptcy Code 2016 (IBC) and there is no proceeding pending under IBC.

ONE-TIME SETTLEMENT WITH ANY BANK OR FINANCIAL INSTITUTION

There was no instance of one-time settlement with any Bank or Financial Institution.

PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE

The Company has zero tolerance for sexual harassment at workplace and has adopted apolicy on prevention prohibition and redressal of sexual harassment at workplace and hasin place an Internal Complaint Committee to redress the complaints and circumstancesregarding the behavior of sexual harassment at workplace. The Policy for the same isplaced on the intranet for the benefit of its employees. There were no complaints receivedfrom any employee during the year under review.

PERSONNEL

The information required under Section 197(12) of the Companies Act 2013 read withRule 5(1) Rule 5(2) and Rule 5(3) of the Companies (Appointment and Remuneration ofManagerial Personnel) Rules 2014 as amended and forming part of this Report for the yearended 31st March 2022 are set out in the Annexure of this Report.

However the Annual Report excluding the Annexure is being sent to the Members of theCompany in terms of the provisions of Section 136 of the Companies Act 2013. A Member whois interested in obtaining these particulars may write to the Company Secretary at theRegistered Office of the Company.

During the year under report the Industrial relations with personnel remained cordialat all Plants.

ACKNOWLEDGEMENTS

The Board wishes to place on record its sincere appreciation for the continuedassistance and support extended to the Company by Banks & Financial Institutions andvarious departments of Central & State Governments. Your Directors acknowledge withgratitude the encouragement and support extended by Company's valued shareholderscustomers business associates and other stakeholders. The Directors also place on recordtheir appreciation of the sincere and unstinted support provided to the Company by itsemployees at all levels.

On behalf of the Board of Directors
Arvind Kapur
Place : Gurugram Chairman CEO & Managing Director
Date : August 25 2022 (DIN: 00096308)

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