Director's Report to the Shareholders Your Directors are pleased to present 29th Annual Report and the Audited Statement of Accounts of the Company for the year ended March 31, 2015. OPERATIONS: The Company achieved the gross turnover of Rs. 25543.09 lakhs during 2014-15 as against Rs. 22810.04 lakhs in the previous year 2013-14 there by recorded an increase of 12%. The company R&D expenditure is Rs. 127.86 lakhs i.e., 0.55% of sales during the year to catch up with up- gradation of technology and to meet OEM's ever demanding quality and new developments requirement to improve life cycle of their product meeting Euro III norms. The operation of the Company on the whole has been satisfactory. Your company has posted Net turnover of Rs. 23247.38 lacs as compared to Rs. 20562.72 lacs for the previous year an increase of 13.06%. Earnings Before Depreciation, Interest and Tax (PBDIT) at Rs. 3419.34 lakhs as against previous year of Rs. 3005.85 Lakhs. The Profit Before Tax was at Rs. 1800.82 lakhs as compared to Rs. 1559.17 lakhs in 2013-14 an increase of 15.50% LISTING OF EQUITY SHARES The Company's equity shares are listed on BSE Ltd., Feroz Jeejeebai Towers, Dalal Street, Mumbai 400001. MEETINGS OF THE BOARD OF DIRECTORS During the year ended March 31st, 2015, 4 (four) Board Meetings were held. The dates on which the Board Meetings were held are 19.05.2014, 06.08.2014, 15.10.2014 and 02.02.2015. DIRECTORS RESPONSIBILITY STATEMENT Pursuant to Section 134 of the Companies Act, 2013 with respect to the Directors' Responsibility Statement, the Board of Directors of the Company hereby confirms: (a) in the preparation of the annual accounts, the applicable accounting standards had been followed along with proper explanation relating to material departures; (b) the directors had selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the profit and loss of the company for that period; (c) the directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the company and for preventing and detecting fraud and other irregularities; (d) the directors had prepared the annual accounts on a going concern basis; and (e) the directors, in the case of a listed company, had laid down internal financial controls to be followed by the company and that such internal financial controls are adequate and were operating effectively. (f) the directors had devised proper systems to ensure compliance with the provisions of allapplicable laws and that such systems were adequate and operating effectively. The Company's Internal Auditors have conducted periodic audit to provide reasonable assurance that the Company's established policies and procedures have been followed. The Audit Committee of the Board meets once in a quarter with Internal Auditors to review internal control and financial reporting issues. STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SECTION149(6) The Independent Directors have submitted the declaration of independence as required pursuant Sec.147 of the Companies Act, 2013 stating that they meet the criteria of independence as provided in Sec. 149(6). NOMINATION AND REMUNERATION COMMITTEE The Nomination and Remuneration Committee consists of the following Directors namely Mr. V Chakrapani, Mr. M N Thakkar and Mr. S. Madhava Rao. Brief description of terms of reference: • Identifying persons who are qualified to become directors and who may be appointed in senior management in accordance with the criteria laid down and recommend to the Board for their appointment and removal; • Carry on the evaluation of every director's performance; • Formulation of the criteria for determining qualifications, positive attributes and independence of a director; • Recommend to the Board a policy relating to the remuneration of the directors, key managerial personnel and other employees; • Formulation of criteria for evaluation of independent Directors and the Board; • Devising a policy on Board diversity; and • Any other matter as the Board may decide from time to time. • Nomination and Remuneration policy The objective of the Policy. 1. To lay down criteria and terms and conditions with regard to identifying persons who are qualified to become Directors (Executive and Non-Executive) and persons who may be appointed in Senior Management and Key Managerial positions and to determine their remuneration. 2. To determine remuneration based on the Company's size and financial positions and trends and practices on remuneration prevailing in peer companies. 3. To carry our evaluation of the performance of Directors. 4. To provide them reward linked directly to their effort, performance, dedication and achievement relating to the Company's operations. 5. To retain, motivate and promote talent and to ensure long term sustainability of talented managerial persons and create competitive advantage. PARTICULARS OF LOANS, GUARANTEES AND INVESTMENTS UNDER SECTION 136. The company has neither issued any Loans, Guarantees nor made any investments during the Financial year. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO Sec. 188(1) Related parties to Sec. 188(1) is prepared in form No. AOC-2 pursuant to Sec. 134(3)(h) of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014 and the same is enclosed as Annexure-1 to this report. TRANSFER OF AMOUNTS TO RESERVES The Company proposes to transfer an amount of Rs. 153.94 lakh to the general reserve for the financial year ended 31st March, 2015. DIVIDEND In view of requirement of funds for the operations of the company and to meet with Capital expenditure with internal accruals and also to improve liquidity, your Directors recommend a dividend of Rs. 3.00 per equity share i.e 30% for the Year Ended 31st March 2015 as against Rs. 2.50 per equity share ie.25% in the previous year. EXTRACT OF ANNUAL RETURN The Extract of Annual Return is prepared in Form MGT-9 as per the provisions of the Companies Act, 2013 and Rule 12 of the Companies (Management and Administration) Rules, 2014 and the same is enclosed as Annexure - 2 to this report. The conservation of energy, technology absorption, foreign exchange earnings and outgo pursuant to provisions of Sec. 134(3)(m) of the Companies Act, 2013 read with the Companies (Accounts) Rules, 2014. Attached herewith as Annexure-3. RISK MANAGEMENT COMMITTEE Risk management committee consists of the following Directors: 1. Mr. S.D.M. Rao - Managing Director 2. Mr. S Madhava Rao - Director 3. Mr. V Chakrapani - Director RISK MANAGEMENT POLICY The company has taken all the steps to mitigate the following risks: Raw material prices : Ours is a continuous high volume manufacturing industry. Our profitability will depend on change in the price in raw materials and input costs. Foreign currency Risks: Exchange rate fluctuations may some times effect. Adequate steps were taken. Competition and Price Pressure: The Company is facing stiff competition in the segments of OEMs and aftermarket as well as price pressure from the OEMs which playing major roll on the profitability of the company. CORPORATE SOCIAL RESPONSIBILITY COMMITTEE The Corporate Social Responsibility committee consists of the following Directors: Corporate social responsibility policy was adopted by the Board of Directors on the recommendation of corporate social responsibility committee. Report on corporate social responsibility as per Rule 8 of Companies (Corporate Social Responsibility) Rules, 2014 is prepared and the same is enclosed as annexure - 4. BOARD OF DIRECTORS Ms. N Rishita appointed as Independent director on 02.02.2015 and she is eligible offer to be appointed as director (women) of the company. Shri Akula Venkateswara Rao, appointed as Independent director on 02.02.2015 representing minority shareholders and he is eligible offer to be appointed as director of the company. DIRECTORS AND KEY MANAGERIAL PERSONNEL WHO WERE APPOINTED OR HAVE RESIGNED DURING THE YEAR Mr. V Venkat Reddy has been resigned on 2nd February, 2015 Sri. S.Madhava Rao,Sri.V. Chakrapani and Sri.M.N.Thakkar were appointed as independent Directors to hold office for a term of 5 Years in the AGM held on 18th September,2014. Further Mr. Akula Venkateswara Rao was appointed as Additional Director (independent) and Ms. Nama Rishitha was appointed as Additonal director (Independent woman Directors). DEPOSITS The Company has not accepted any Deposits in terms of Sec.73 of the Companies Act, 2013 and the rules made there under and hence compliance with the same as not applicable. AUDITORS Statutory Auditors The Company, in terms of Section 139(a) and (2) of the Act 2013, is required to appoint statutory auditors for a term of five consecutive years i.e., till the conclusion of sixth annual general meeting and ratify their appointment, during the period, in every annual general meeting by an ordinary resolution. The period for which any firm has held office as auditor prior to the commencement of the Act 2013 will be taken into account for calculating the period of five consecutive years, as per the fourth proviso to Section 139(s) of the Act 2013 read with Rule 6(3) of the Companies (Audit and Auditors) Rules, 2014. M/s. Ravi & Kesav, Chartered Accountants, Hyderabad, who were earlier appointed as statutory auditors of the Company, at the Annual General Meeting held on 27th September, 2013, are eligible to be appointed for the remaining period of three years out of the first term of five consecutive years in terms of the Act 2013. The Company has obtained necessary certificate under Section 141 of the Act 2013 from the auditor conveying their eligibility for the above appointment. The audit committee and board received their eligibility criteria,as laid down under section 141 of the Act 2013 and recommended their appointment as auditors for the aforesaid period. Audit Committee Composition Audit Committee included in Corporate Governance report. Corporate Governance Pursuant to the provisions of the Clause 49 of the Listing Agreement a report on Corporate Governance and a certificate from the Statutory Auditors regarding the Compliance of conditions of Corporate Governance are annexed to and form part of this Annual Report. VIGIL MECHANISM The Board of Directors have adopted whistle Blower policy. The Whistle Blower policy aims for conducting the affairs in the fair and transparent manner by adopting highest standards of professionalism, honest, integrity and ethical behavior. All permanent employees of the Company are covered under the Whistle Blower Policy. A mechanism has been established for employees to report concerns about unethical behavior, actual or suspected fraud or violation of Code of Conduct and Ethics. It also provides for adequate safeguards against the victimization of employees who avail of the mechanism and allows direct access to the chairperson of the audit committee in exceptional cases. SECRETARIAL AUDIT REPORT As per the provisions of Section 204 of the Companies Act, 2013, the Board of Directors have oppointed Mr. V B S S Prasad, Practicing Company Secretary (C.P.No: 4605) as Secretarial Auditor to conduct Secretarial Audit of the Company for the Financial year ended 31st March, 2015. Secretarial Audit Report issued by Mr. V B S S Prasad, Practicing Company Secretary in form MR-3 is enclosed as Annexure - 5 to this Annual Report. There are no qualification in Secretarial Audit Report. PARTICULARS OF APPOINTMENT AND REMUNERATION OF MANAGERIAL PERSONNEL. The Statement of particulars of Appointment and Remuneration of Managerial Personnel as per Rule 5 of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 as enclosed as per Annexure - 6 to this Annual Report. INSURANCE All properties and insurable interests of the Company including building, plant & machinery and stocks have been fully insured. CHANGE IN NATURE OF BUSINESS There is no change in the Company's nature of business during the financial year ending March 31st, 2015. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The company has well defined internal control systems and procedures for ensuring optimum utilization of various resources, Investment decisions involving Capital Expenditure or taken up only after due appraisal and review. Internal audit function covers and carried out periodically and reviewed by the Audit Committee to ensure that all policies and procedures are adhered to, and all statutory obligations complied with. SIGNIFICANT AND MATERIAL ORDERS PASSED BY REGULATORS No such orders have been received. MATERIAL CHANGES AND COMMITMENTS There are no Material changes and commitments in the business operations of the Company from the Financial year ended 31st March, 2015 to the date of signing of the Director's Report. POLICY ON SEXUAL HARASSMENT The Company has adopted policy on Prevention of Sexual Harassment of Women at Workplace in accordance with the Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013. During the Financial year ended 31st March, 2015, the company has not received any Complaints pertaining to Sexual Harassment. ACKNOWLEDGEMENTS Your Directors wish to place on record their appreciation for the cooperation and support of Bankers, Customers, Business Associates, Shareholders, dealers, and suppliers who are enabling the Company to achieve its goals. The Directors also place on record their appreciation made by the employees at all levels. On behalf of the Board of Directors S.D.M. RAO CHAIRMAN & MANAGING DIRECTOR Place : Hyderabad Date : 25.05.2015 |