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Shriram Pistons & Rings Ltd.

BSE: 533021 Sector: Auto
NSE: SHRIPISTON ISIN Code: INE526E01018
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Shriram Pistons & Rings Ltd. (SHRIPISTON) - Director Report

Company director report

The Directors have pleasure in presenting the 58th Annual Report along withthe audited accounts of the Company for the year ended 31st March 2022.

Financial & Operational Performance

During the year the Company witnessed growth in the Sales despite the recurring wavesof COVID increasing commodity prices semi-conductor chip shortages and non-availabilityof containers.

Company's revenues from operations during the year were Rs.20647 Million compared toRs.15966 Million in the previous year. Profit before Depreciation and Taxes [before OtherComprehensive Income (OCI)] for the year after all interest charges but beforedepreciation and taxes was Rs.3223 Million compared to Rs. 2225 Million in the previousyear.

The improvement in performance was contributed by factors like increase in production& sales increase in productivity streamlining of the supply chain digitizationfocused approach to meet customer requirements effective management of cash flow andimplementation of cost optimization measures including effective utilization of resources.However increase in Commodity Prices had an adverse impact on Profits.

The summarized standalone and consolidated results of the Company are as under:

(Rs./Million)

Financial Year ended

Particulars

Standalone

Consolidated

31/03/2022 31/03/2021 31/03/2022 31/03/2021
Revenue from Operations 20647 15966 20647 15966
Profit/(loss) before Interest Depreciation & Tax (EBITDA) 3337 2351 3337 2351
Profit before Depreciation and Taxes (before OCI) 3223 2225 3223 2225
Depreciation 1020 1026 1020 1026
Profit Before Tax (before OCI) 2202 1200 2202 1200
Income Tax (including for earlier years) 566 312 566 312
Net Profit After Tax (before OCI) 1636 BBS 1636 BBS
Dividend including Dividend Distribution Tax (on declared basis) 220 134 220 134
Amount transferred to General Reserve 1082 77S 1082 77S

Company's exports increased from Rs. 2798 Million to Rs. 4010 Million. The Companyincreased its market share in all segments including exports OE segment.

The Company also improved its performance in the Aftermarket (AM) both in India andglobally.

Exports to global OEMs and global After Markets has helped the Company to understandthe technology quality and service needs of the advanced automobile markets. The Companyhas invested in the right areas to meet these higher technological requirements for theIndian and global markets. The trend of increasing exports is expected to continue in thisyear as well. However the situation of COVID pandemic and other global crisis leading touncertainties will be a critical factor for sales in the exports market.

The Company continues to sustain its commitment to the highest levels of quality andincreased focus on business continuity plans. During the year the Company took variousmeasures for cost reduction such as affordable automation digitization interlinking ofmachines energy conservation and productivity improvement across products which couldhelp to remain cost competitive.

With a well-equipped Tech Centre and strong support from its Technology Partners theCompany had acquired key businesses for BS-6 models in the last years requiring latesttechnology and stringent quality requirements. This also resulted in improved market sharewith the key OEMs in India. Further Tech Centre is working on forward-lookingtechnologies such as testing products for ethanol blending and solutions for Non-ICEsegments.

Company continues to invest in the latest technology to stay ahead of competition. Inthe coming year also the company will face a lot of headwinds due to the big push ofelectrification by the Government further wave of COVID uncertainty due to the Ukrainewar inflationary tendencies leading to high commodity prices and the continuing shortageof semi-conductor chips. The management are working to overcome these headwinds in thecoming year and are also working diligently to find further avenues of growth for thecompany.

Dividend

The Directors in their meeting held on May 6 2022 have recommended that equityshareholders be paid dividend @ Rs. 10.00 per share for the year inclusive of Rs. 6.00per share already paid as interim dividend; the equity dividend would absorb Rs. 220Million against Rs.134 Million last year and an amount of Rs. 1082 Million be transferredto the General Reserve Account.

Buy-back

During the year the Company bought back 350000 Nos. equity shares of the Company incompliance with the provisions of Companies Act 2013 and SEBI (Buy-back of Securities)Regulations 2018.

New projects and Capacity Expansion

Share of revenue from After Market OE spares and Exports has improved. The Companyexpects the After Market OE spares and Exports to have a much longer life span therebyde-risking its business model.

The Company has a clear strategy for diversification of its product portfolio and isactively working on the same for continuous growth in sales. The Company is working onidentifying suitable products and technology partners to help its entry into the electricmobility segment and other adjacencies.

Change in nature of business

During F.Y. 2021-22 there was no change in the nature of Company's business.

Material changes and commitment

No material change and/ or commitment affecting the financial position of the Companyhas occurred between April 1 2022 and the date of signing of this Report.

Subsidiary Company and its Annual Accounts

There was no operation in the Subsidiary Company SPR International Auto ExportsLimited during the year. Annual accounts of the Subsidiary Company are available onCompany's website and shall also be kept for inspection by any member in the Head Office& Registered Office. Copy of Annual Accounts of Subsidiary Company would also be madeavailable to members seeking such information.

In accordance with the Indian Accounting Standard (Ind AS-110) on consolidatedfinancial statements the consolidated financial statements are attached which form partof the Annual Report.

During the year no company has become or ceased to be Company's Subsidiary JointVenture or Associate Company. However Board of Subsidiary Company SPR International AutoExports Limited in its meeting of April 4 2022 resolved to make an application to theRegistrar of Companies under Section 248(2) of the Companies Act 2013 for removing thename of the Subsidiary Company from the Register of Companies.

Board Meetings

During the year 6 meetings of the Board of Directors were held details of which havebeen provided in the Report on Corporate Governance Annexure-I to this Report.

Audit Committee

As on 31.03.2022 members of the Audit Committee of the Company are Shri InderdeepSingh (Chairman) Shri Pradeep Dinodia Ms. Ferida Chopra and Shri Alok Ranjan.

During the year the Board has accepted all recommendations made by the AuditCommittee.

Whistle Blower Policy

The Company has a Whistle Blower Policy for Directors Employees and Stakeholders toreport any kind of misuse of Company's properties mismanagement or wrongful conductprevailing/executed in the Company. As per the policy all Whistle Blowers are grantedaccess to the Chairman of the Audit Committee in appropriate cases.

Nomination and Remuneration Policy

The Nomination and Remuneration Committee (NRC) of Board has formulated a Nominationand Remuneration Policy for remuneration of Directors Key Managerial Personnel (KMP)Senior Management Personnel (SMP) and other employees of the Company.

The Nomination and Remuneration Policy covers the criteria for appointment of Directors(including Independent Directors) KMPs and SMPs. The Policy also covers the criteria forremuneration.

There was no change in the Policy during the year.

The level and composition of remuneration shall be reasonable and sufficient toattract retain and motivate Directors KMPs SMPs and employees at all levels. It shallbe determined taking into account the factors such as Company's performance and theremuneration structure as generally applicable in the industry.

The Directors affirm that remuneration paid to all Directors KMPs SMPs and all otheremployees is as per the remuneration policy of the Company.

Nomination and Remuneration Policy of the Company is available on Company's websiteviz. www.shrirampistons.com under the link "Investors' Guide".

As on 31.03.2022 the number of permanent employees on rolls of the Company are 3998.

Related Party Transactions

The Company's contracts/arrangements/transactions with related parties are in theordinary course of business and on an arm's length basis. Thus provisions of Section188(1) of the Companies Act 2013 are not applicable. During the year the Company has notentered into any contract/ arrangement/ transaction with related parties which could beconstrued to be "material" in accordance with the "Policy for determiningmaterial Related Party Transactions" approved by the Board. Thus there are notransactions required to be reported in Form AOC-2. Details of all transactions withrelated parties are given in Note No. 33 of Notes forming part of Financial Statements.

The Company has complied with the Accounting Standards on Related Party Transactions.

Internal Financial controls and their adequacy

The Company had appointed Ernst & Young KPMG Grant Thornton and RSM Astute as itsInternal Auditors for 2021-22 in addition to its in house team. The Internal ControlSystem is commensurate with the size scale and complexity of Company's operations. TheInternal Auditors report to the Chairman of the Audit Committee.

The Internal Audit teams monitor and evaluate the efficacy and adequacy of internalcontrol systems in the Company its compliance with operating systems accountingprocedures and policies at all locations of the Company. Based on their reports thecorrective actions in respective areas are taken to strengthen the controls andsignificant audit observations and corrective actions thereon are presented to the AuditCommittee.

Annexures to Directors' Report

Following reports which form an integral part of Directors' report are enclosed: -

1. Report on "CORPORATE GOVERNANCE" - as per Annexure-I

2. Report on "MANAGEMENT DISCUSSION AND ANALYSIS" - as per Annexure-II

3. Report on "CONSERVATION OF ENERGY" "TECHNOLOGY ABSORPTION" and"FOREIGN EXCHANGE EARNING & OUTGO" - as per Annexure-III

4. Data of "EMPLOYEES" - as per Annexure-IV

5. "REPORT ON CSR ACTIVITIES UNDER TAKEN" - as per Annexure-V

6. "SECRETARIAL AUDIT REPORT" - as per Annexure-VI

7. "SALIENT FEATURES OF SUBSIDIARY COMPANY" - as per Annexure-VII

In terms of SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015 areport on Business Responsibility forms part of this Annual Report.

Disclosures on Company's website

Company is committed to good corporate governance practice and corporate socialresponsibility. In line with the Company's principles/commitment the following policies/programmes/ reports are in place and are available on Company's website viz. www.shrirampistons.comunder the link "Investors' Guide":

1. Corporate Social Responsibility (CSR) Policy

2. Vigil Mechanism/ Whistle Blower Policy

3. Company's policy on dealing with Related Party Transactions

4. Nomination and Remuneration Policy

5. Familiarization programmes for Independent Directors

6. Policy for distribution of Dividend and

7. Annual Return of the Company Directors' Responsibility Statement:

The Directors confirm that: -

1. in the preparation of the annual accounts the applicable Accounting Standardsissued by the Institute of Chartered Accountants of India and requirements of CompaniesAct have been followed and there are no material departures from the same.

2. appropriate accounting policies have been selected and applied consistently andhave made judgments and estimates that are reasonable and prudent so as to give a true andfair view of the state of affairs of the Company as at 31st March 2022 and of the profitof the Company for the same year.

3. proper and sufficient care has been taken for the maintenance of adequate accountingrecords in accordance with the provisions of the Companies Act 2013 for safeguarding theassets of the Company and for preventing and detecting fraud and other irregularities.

4. the annual accounts have been prepared on a going concern basis.

5. internal financial controls are followed by the Company and are adequate andoperating effectively.

6. proper and adequate systems have been devised to ensure compliance with provisionsof all applicable laws and such systems are adequate and operating effectively.

Other Disclosures:

1. During the year no fraud has been reported by the Statutory Auditors to the AuditCommittee or the Board under Section 143(12) of the Companies Act 2013.

2. No orders were passed by the Regulator(s) or Court(s) or Tribunal(s) which couldimpact going concern status and Company's operations in future.

3. There are no disqualifications reservations or adverse remarks or disclaimers inthe Statutory Auditors' and Secretarial Auditors' Report.

4. No Director of the Company is receiving commission from its Subsidiary Company.

5. Company has not given any loans or guarantees under section 186 of the CompaniesAct 2013. The Company has acquired 3636364 nos. equity shares of Lalganj Power Pvt.Ltd. to be captive buyer for purchase of solar power for Ghaziabad Plant.

6. The Company has complied with applicable Secretarial Standards on Board Meetings andGeneral Meetings.

7. The Company has not issued any of the following:

i) Equity Shares with differential rights

ii) Sweat Equity Shares

iii) Shares issued pursuant to Employee Stock Option Scheme or Employee Stock PurchaseScheme

8. No application has been made or proceeding is pending against the Company under theInsolvency and Bankruptcy Code (IBC) 2016.

9. Disclosure w.r.t. difference between the amounts of the valuation executed at thetime of one-time settlement and the valuation done while taking loan from the Banks orFinancial Institutions is not applicable.

Fixed Deposits

Fixed deposits amounting to Rs. 211 Million were accepted during the year and fixeddeposits amounting to Rs. 9.8 Million pertaining to 35 depositors remained unclaimed/unpaid at the closing of the year. During the year there was no default in repayment offixed deposits and interest thereon. Fixed deposits accepted by the Company are incompliance with requirements of Chapter V of the Companies Act 2013.

Investor Education and Protection Fund

The amount lying in unpaid dividend accounts for the last seven years is Rs. 0.66Million. Unclaimed final dividend amount of F.Y. 2014-15 is due to be transferred to theInvestor Education and Protection Fund on 2.8.2022. Amount transferred to the InvestorEducation and Protection Fund during the year is Rs. 0.11 Million.

Disclosures w.r.t. shares lying in lEPF Account:

S. No. Particulars No. of Shareholders No. of Shares
1 Aggregate number of Shareholders and the outstanding shares in the IEPF Authority account lying at the beginning of the year 11 14800
2 Number of Shareholders who approached the Company for transfer of shares from IEPF Authority account during the year nil nil
3 Number of Shareholders to whom shares were transferred from IEPF Authority account during the year nil nil
4 Number of Shareholders whose shares were transferred to IEPF Authority account during the year 3 2473
5 Aggregate number of Shareholders and the outstanding shares in the IEPF Authority account lying at the end of the year 14 17273

Note:

``````````````````The voting rights on these shares shall remain frozen till therightful owner of such shares claims the shares.

Maintenance of Cost Records and Cost Audit

As specified by the Central Government the Company is required to maintain CostRecords and get these records audited by a Cost Accountant.

The Company is maintaining Cost Records. Cost Audit Report of the Company for the yearended 31s* March 2021 duly audited by M/s Chandra Wadhwa & Co. CostAccountants New Delhi was submitted to the Ministry of Corporate Affairs Government ofIndia on August 28 2021 within the due date of filing the said report.

Details of CSR Activities undertaken by the Company

During the year Company has spent Rs. 20.65 Million on various CSR activities againstthe requirement of Rs. 29.87 Million and adjusted an amount of Rs. 0.14 Million againstexcess spent in previous financial year as per the provisions of the Companies Act 2013.Further on this basis an amount of Rs. 9.08 Million has been transferred to Unspent CSRAccount-2021-22 which would be incurred in following years. Details of initiatives takenby the Company during the year in CSR activities and composition of the CSR Committee areprovided in the Report on CSR Activities undertaken by the Company in 2021-22 Annexure-Vto this Report.

Risk Management Framework

The Company has developed and implemented a Risk Management Policy includingidentification of elements of risk if any which in the opinion of the Board may threatenthe existence of the Company. The Company has also constituted a "Risk ManagementCommittee". As on 31.03.2022 Members of the Committee are Shri Pradeep Dinodia(Chairman) Shri Inderdeep Singh Shri Alok Ranjan Ms. Meenakshi Dass Shri KrishnakumarSrinivasan Shri A. K. Taneja and Shri Luv D. Shriram.

Disclosure under Sexual Harassment of Women at Workplace (Prevention Prohibition andRedressal) Act 2013

The Company has complied with provisions of Sexual Harassment of Women at Workplace(Prevention Prohibition and Redressal) Act 2013. The Company has in place a Policy onprevention of sexual harassment at workplace. The Company has also constituted InternalComplaints Committees under the Act. No complaint was received/ pending under the aboveAct during the year.

Changes in Directors/ KMPs during the year and Appointment/ Re-appointment of Directorsin the ensuing AGM

Shri Krishnakumar Srinivasan was re-designated as Managing Director & CEO w.e.f.April 1 2021.

Shri Kiyoto Tone Independent Director resigned from the Directorship of the Companyeffective from closing hours of May 7 2021.

The Board appointed Shri Shinichi Unno as Independent Director of the Company w.e.f.May 31 2021 in the casual vacancy caused due to resignation of Shri Kiyoto Tone. This wassubsequently approved by the Shareholders in their meeting held on July 6 2021.

Shri Pankaj Gupta was appointed as Head-Legal and Company Secretary of the Companyw.e.f. August 9 2021.

Shri A. K. Taneja Managing Director & Chief Mentor superannuated from theservices of the Company w.e.f. closing hours of March 31 2022.

The Board expressed deep appreciation of the immense contribution of Shri A. K. Tanejato the growth of the Company spanning about 45 years of his service and making SPR oneof the most respected names in the auto component industry in India and placed on recordthe services rendered by Shri A. K. Taneja.

Shri Yukio Tanemura Non-Executive Director of the Company resigned w.e.f. closinghours of April 5 2022. Consequent to his resignation Shri Kaoru Ito Alternate Directorto Shri Yukio Tanemura has also ceased to be the Director of the Company.

Consequent to the above Board on the recommendation of Nomination & RemunerationCommittee appointed Shri Masaaki Yamaguchi as Director in the casual vacancy causedpursuant to resignation of Shri Yukio Tanemura and Shri Yasunori Maekawa as AlternateDirector to Shri Masaaki Yamaguchi w.e.f. April 6 2022.

Appointment of Shri Masaaki Yamaguchi as Non-Executive Non-Independent Director of theCompany shall be subject to Shareholders' approval in the forthcoming AGM.

Ms. Meenakshi Dass and Shri Pradeep Dinodia Directors retire by rotation and beingeligible offer themselves for re-appointment.

Brief resume and other details of all Directors seeking appointment/re-appointment aregiven in the 'Notice of the Annual General Meeting'.

The Board appreciated the significant contribution of all Directors who have ceased tobe Directors during the year to the Company and in Board deliberations and the servicesrendered.

Declarations from Independent Directors

Shri Hari S. Bhartia Ms. Ferida Chopra Shri Alok Ranjan Shri Inderdeep Singh andShri Shinichi Unno are Independent Directors of the Company and have given thedeclarations to the Board that they meet the criteria of independence as provided underSection 149(6) of the Companies Act 2013 and Regulation 16(1)(b) of SEBI (ListingObligations and Disclosure Requirements) Regulations 2015.

Performance evaluation of Board its Committees and Individual Directors

Pursuant to the provisions of the Companies Act 2013 the Board has carried out anannual performance evaluation of its own performance evaluation of the working of itsCommittees and the Directors individually. The manner in which the evaluation has beencarried out has been explained in Report on Corporate Governance Annexure-I to thisReport.

In the opinion of the Board Independent Directors appointed/ re-appointed during theyear possess relevant integrity expertise and experience required to perform theirduties. Some of the Independent Directors have cleared the on-line proficiency test beingconducted by Indian Institute of Corporate Affairs and the remaining Independent Directorsare in the process of appearing for the same.

Appreciation

The Directors place on record their appreciation:

i) of the support extended to the Company by the Collaborators the Bankers itsbusiness associates and

ii) of the work of all ranks of Company's personnel during the year especially duringCOVID.

On behalf of the Board
New Delhi (PRADEEP DINODIA)
May 6 2022 CHAIRMAN
DIN:00027995

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