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Your Directors have pleasure in presenting their Twenty Seventh Annual Report of your Company, together with the Audited Accounts for the year ended 31st March 2019.
Your Companys performance during the year as compared with that during the previous year is summarized below: (र in Lakhs)
|Add: Other Income||2,504||3,385|
|(i) Materials & Manufacturing Expenses||33,510||36,108|
|(ii) Value Addition Cost||17,025||16,520|
|Profit before Depreciation,Amortization||12,585||17,877|
|Depreciation & Amortization Expenses||3,993||3,791|
|Profit before Tax||8,593||14,086|
$Restated financial information under IndAS 103 Refer note given elsewhere in Directors Report
Your Companys revenues for the year stood at 60,616 Lakhs as against 67,120 Lakhs for previous year. Operating Profit before Depreciation & Amortization amounted to 12,585 Lakhs as against 17,877 Lakhs for previous year. Profit before Tax amounted to 8,593 Lakhs as against 14,086 Lakhs for previous year.
During the year under review, Chinese automotive industry witnessed slowdown in the second half triggering all Global OEMs & Tier-1s to pull back estimates in China resulting in pruning down the pipeline for tight inventory controls. Besides this, all global OEMs & Tier-1s pulled back volumes and inventories in other geographies as well. Your Company experienced a turnaround in the volume of the new programs by the end of the financial year. Your Company has taken initiatives covering range of activities including lean manufacturing streams, tight control on expenses, connecting the supply-chain partners, focus on customers to maintain business efficiency.
Pursuant to the Shareholders approval (other than Promoter & Promoter Group) by way of Postal Ballot on September 20,2018, your Company acquired the export division of Agile Electric Sub Assembly Private Limited - [AESPL] (Holding Company) for a consideration of 13,562 Lakhs as a "going concern" ("Slump Sale") along with all assets, liabilities and employees with effect from 01st October, 2018.
Upon acquisition of Export Division of AESPL, the Board of Directors approved cancellation of ongoing process of amalgamation of AESPL with the Company as the majority of desired benefits have already been achieved.
Your Company had adopted the Dividend Distribution Policy and the same was hosted on the website of the Company at: http://www.igarashimotors.com/uploads/investor/pdf/14788383387IMIL-Dividend_Distribution_ Policy.pdf
In line with the said Policy, your Directors are pleased to recommend a dividend of 4.90/- per Equity Share on Face value of 10/- each for the year ended March 31, 2019.
The Board has not recommended any transfer to general reserve from the profits of the year under review.
TRANSFER OF UNPAID & UNCLAIMED DIVIDEND AND UNCLAIMED SHARES TO INVESTOR EDUCATION AND PROTECTION FUND (IEPF)
During the year, there are no unclaimed dividends and unclaimed shares which have to be transferred to Investor Education and Protection Fund (IEPF) by the Company.
The Reserves at the end of the year 31st March, 2019 is at 39,811 Lakhs as against the Total Reserves of 36,816 Lakhs as at 31st March 2018.
No material changes or commitments have occurred between the end of the Financial Year and the date of this Report which affect the financial statements of the Company in respect of the reporting year.
INDIAN ACCOUNTING STANDARDS
Pursuant to The Companies (Indian Accounting Standards) Rules, 2015, your Company has to comply with Indian Accounting Standards (IndAS) from April 01, 2017. Accordingly, the financial statements of the Company for the financial year 2018-19 have been prepared as per IndAS.
Pursuant to the Acquisition of Export Division of Agile Electric Sub Assembly Private Limited, the said acquisition was considered as a Business Combination involving entities or businesses under a common control under IndAS 103 "Business Combinations". Consequently, the financial information for all the previous periods/year have been restated in the Audited Financials to include financials of the acquired Export Division as if the acquisition occurred from April 01,2017.
DETAILS OF SUBSIDIARY/JOINT VENTURES/ASSOCIATE COMPANIES
Your Company has no Subsidiary/ Associate / Joint Venture Companies as on March 31, 2019. Form AOC-1 enclosed to this report.
Your Company is holding 9.20% stake in Bosch Electrical Drives India Private Limited (BEDPL). Your Company is an investment partner of Robert Bosch since the joint venture agreement was terminated automatically due to fall in shareholding in BEDPL below the threshold limit.
Your Companys investment in BEDPL has gone down and appropriate impairment has been provided.
During the year under review, your Company has not invited or accepted any deposits from the public under Section 76 of the Companies Act, 2013 and Rules made there under.
EMPLOYEE STOCK OPTION SCHEME
At 25th Annual General Meeting held on August 02,2017, the Shareholders approved Employee Stock Option Scheme (The Igarashi Motors Employees Stock Option Scheme 2017). Pursuant to the approval, the Board has been authorised to offer, issue and allot stock options to eligible employees of the Company and its Holding Company (AESPL) under ESOP 2017. The maximum number of shares under the ESOP 2017 shall not exceed 6,00,000 equity shares. Out of this, during the year under review your Company had granted 507,600 (468,700 to the employees of Company and 38,900 to the employees of Holding Company) Stock Options. The following summary of grants made during the year under review :-
|Grantee||No. of options granted|
|Mr. R Chandrasekaran, CFO (KMP)||25,000|
|Mr. P Dinakara Babu, Company Secretary (KMP)||9,000|
|Eligible Employees other than KMP (including Holding Company)||4,73,600|
The relevant disclosures pursuant to Rule 12 (9) of the Companies (Share Capital and Debentures) Rules, 2014 and Regulation 14 of SEBI (Share Based Employee Benefits) Regulations, 2014 is forming part of Annual report. Your Company has received a certificate from the Statutory Auditors of the Company that ESOP Scheme 2017 has been implemented in accordance with Regulation 13 of the SEBI (Share Based Employee Benefits) Regulations, 2014 and the resolution(s) passed by the Members of the Company. The certificate would be placed at the ensuing AGM for inspection by Members of the Company.
SHARE CAPITAL- BONUS SHARES
Upon completion of Open offer on April 17, 2018, your Companys Promoters & Promoter Group Shareholding increased from 75% to 77.12%. In order to meet minimum public shareholding norms, your company has allotted 866,604 equity shares (2.75%) having value of 10/- (Rupees Ten) per share as fully paid bonus to the holders of the equity shares, to the exception of the Promoter and promoter group of the company, in the proportion of 25 (Twenty Five) equity share for every 202 (Two Hundred Two) existing equity shares. Consequently the issued,
Subscribed and Paidup Equity Shares has increased from 3,060.84 Lakhs divided into 3,06,08,444 Equity of 10 each to 3147.50 Lakhs divided into 31,475,048 Equity Shares of 10 Each on September 29,2018. Your Company had distributed cash equivalent to 5,639 fractional Bonus shares to eligible shareholders.
Your Companys Paid-up equity share capital to 3147.50 Lakhs as on March 31, 2019.
During the year, Mr. K K Nohria (DIN : 00060015) was appointed as Director (Non- Executive & Non- Independent) of the Company whose period of office liable to determination by retirement by rotation, Such appointment was made based on Nomination & Remuneration Committee recommendation and the Board approved, at its meeting held on May 22, 2018 and also by the shareholders at 26th Annual General Meeting held on September 14,2018 by passing a Special Resolution as required under SEBI Listing Regulations for appointment of person who is having age of Seventy Five years or more.
Mr. Hemant M Nerurkar and Mr. S Radhakrishnan as Non-Executive, Independent Directors are not liable to retire by rotation.
RETIREMENT BY ROTATION
Mrs. Eva Maria Rosa Schork (DIN: 07159550) Director retires by rotation at forthcoming 27th Annual General Meeting and being eligible, offers herself for re-appointment. The brief resume and other details as required under the Listing Regulations are provided in the Notice of the 27th Annual General Meeting of the Company.
RE-APPOINTMENT OF MANAGING DIRECTOR
On March 29,2019, the Board of Directors, based on recommendation of Nomination and Remuneration Committee, approved re-appointment and remuneration of Mr. P Mukund for a period of 5 years effective from April 01,2019 subject to the approval of shareholders. The terms and conditions of re-appointment forms part of Notice of ensuing 27th Annual General Meeting.
All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(7) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations).
Further, the brief profiles of above directors are given in along with the resolutions of re-appointments are forming part of Notice of the ensuing 27th Annual General Meeting being sent to the shareholders along with the Annual Report.
The Nomination and Remuneration Committee and the Board of Directors recommend re-appointment of Mrs. Eva Maria Rosa Schork as Director and Mr. P Mukund as Managing Director for your approval.
The details of familiarization programmes to Independent Directors is put up on the website of the Company at the link: http://www.igarashimotors.com/investor-list.php?invescatid=23.
EVALUATION OF THE BOARDS PERFORMANCE
Your Company has devised a policy for performance evaluation of Independent Directors, Board, Committees and other individual Directors which include criteria for performance evaluation of the non-executive directors and executive directors. Pursuant to the provisions of Companies Act, 2013 and Regulation 25 of the Listing Regulations, the Board has carried out annual performance evaluation of its own performance, the directors individually as well the evaluation of the working of its Audit, Nomination & Remuneration and Stakeholder Relationship Committee. Each Board member completed a questionnaire providing feedback on the functioning and overall engagement of the Board and its committees on various parameters such as the composition, execution of specific duties, quality, quantity and timelines of flow of information, deliberations at the meeting etc.,. Besides this, one on-one meeting of the individual directors with the Chairman of the Board was also conducted as a part of self-appraisal and peer group evaluation. The Directors were also asked to provide their valuable feedback and suggestions about the over all functioning of the Board and its committees.
NUMBER OF MEETINGS OF THE BOARD
During the year, Six Board Meetings were held on 22nd May, 2018, 08th August, 2018, 14th September, 2018, 09th November, 2018, 13th February, 2019 and 29th March, 2019. The Companys last Annual General Meeting was held on 14th September, 2018. The particulars of Directors, their attendance during the financial year 2018-2019 have been disclosed in the Corporate Governance Report forming part of this Annual Report.
For details of the Committees of the Board, please refer to the Corporate Governance Report.
DIRECTORS RESPONSIBILITY STATEMENT
In compliance of Section 134 (5) of the Companies Act, 2013 your directors, on the basis of information made available to them, confirm the following: a) In the preparation of the annual accounts for the financial year ended March 31,2019, the applicable Accounting Standards have been followed with explanation relating to material departures, if any; b) They have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give true and fair view of the state of affairs of the Company as at March 31, 2019 and of the profit of the Company for that period; c) Proper care has been taken for maintenance of adequate accounting for safe guarding the assets of the Company and detecting fraud and other irregularities; d) They have laid down Internal Financial Controls to be followed by the Company and the Audit Committee of the Board of Directors shall ensure that the internal control is adequate and robust; e) The annual accounts are prepared on a going concern basis; f) They have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.
DEMATERIALISATION OF SHARES
99.25% of the Companys paid up Equity Share Capital is in dematerialized form as on March 31, 2019 and balance 0.75% is in physical form. Your Company has already sent three reminders to all concerned shareholders advising them to convert physical shares into demat form. The Companys Registrars are Cameo Corporate Services Limited, No.1, Subramaniam Building, Club House Road, Chennai 600 002.
During the year CARE has given credit ratings of CARE A+ for long term debt, CARE A1+ for short term debt.
CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION
The information required to be furnished pursuant to Section 134(3) (m) of the Companies Act, 2013, is appended hereto and forms part of this Report.
FOREIGN EXCHANGE EARNINGS AND OUTGO
The details of expenditure and earnings in foreign currency are given as an annexure to this Report.
PARTICULARS OF LOANS & INVESTMENTS BY COMPANY
Details of loans and investments by the Company, to other body corporate or persons are given in notes to the financial statements.
RELATED PARTY TRANSACTIONS
All the related party transactions entered during the year were in ordinary course of business and on arms length basis. Your Company obtained shareholders approval by way of Postal Ballots on February 10,2018, and also on September 20, 2018 for material related party transactions though such transactions being entered during ordinary course of business and on arms length basis as required under Listing Regulations.
Your Companys Policy on Related Party Transactions which can be accessed through weblink : http://www. igarashimotors.com/investor-list.php?invescatid=18.
Your Company presents a statement of all related party transactions before the Audit Committee. Details of such transactions are given in the accompanying financial statements. Disclosure of Related Party transaction (include details of the transactions with Promoter/Promoter Group holding is annexed with the report as per Form AOC-2.
DISCLOSURE UNDER THE SEXUAL HARASSMENT OF WOMEN AT WORKPLACE (PREVENTION, PROHIBITION AND REDRESSAL) ACT, 2013
Your Company has in place a Policy on Prevention, Prohibition and Redressal of Sexual Harassment and Non-discrimination at Work Place in line with the requirements of the Sexual Harassment of Women at the Workplace (Prevention, Prohibition & Redressal) Act, 2013.
All employees (permanent, contractual, temporary, trainees) are covered under this policy. Your Company had arranged external expert consultant trainings on Compliance of Policy to all the employees and service providers. Your Company also launched awareness campaigns on said Policy.
An Internal Complaints Committee (ICC) was set up to redress complaints received regarding sexual harassment and discrimination at work place.
During the year ended March 31, 2019, the ICC has received no complaints pertaining to sexual harassment / discrimination at work place.
KEY MANAGERIAL PERSONNEL
Pursuant to Section 203 of the Companies Act, 2013, the Key Managerial Personnel of the Company are Mr. P Mukund, Manging Director, Mr. R Chandrasekaran, Chief Financial Officer and Mr. P Dinakara Babu, Company Secretary.
During the year, there was change in the Key Managerial Personnel, Re-Appointment of Mr. P Mukund (DIN: 00007788), as Managing Director for a period of 5 (Five) years from April 01, 2019 to March 31,2024 on the same terms of previous appointment, Based on Nomination and Remuneration Committee recommendation, the Board approved, at its meeting held on March 29, 2019 subject to the shareholders approval at the ensuing 27th Annual General Meeting.
M/s. B S R & Co LL.P, Chartered Accountants (Firm Registration No. 101248W/W-100022), were appointed by the Shareholders at the 25th Annual General Meeting held on August 02,2017 as Statutory Auditors for a term of five consecutive years to hold office until conclusion of 30th Annual General Meeting. The appointment is however, subject to ratification by members at every Annual General Meeting in accordance with Section 139 of the Companies Act, 2013 read with applicable rules made thereunder.
Pursuant to the amendment to Section 139 of the Companies Act, 2013 effective from May 07, 2018, ratification by shareholders every year for the appointment of Statutory Auditors is no longer required and accordingly, the Notice of ensuing 27th Annual General Meeting does not include the proposal for seeking shareholders approval for ratification of Statutory Auditors appointment.
No qualification, adverse remarks or disclaimer made by the Statutory Auditors with regard to the financial statements for the financial year 2018-19.
The Statutory Auditors of the Company have not reported any fraud as specified under Section 143(12) of the Companies Act, 2013.
There have been no instances of fraud reported by abovementioned Auditors under Section 143(12) of the Act and Rules framed thereunder either to the Company or to the Central Government during FY 2018-19.
SECRETARIAL AUDITOR, SECRETARIAL AUDIT REPORT AND OTHER CERTIFICATES
Pursuant to the provisions of Section 204 of the Companies Act, 2013 and The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed Mr. C Prabhakar, Partner, BP & Associates, Company Secretaries (Membership No. A30433; Certificate of Practice No. 11033) to undertake the secretarial audit of the Company. Your Company has complied with the Secretarial Standards issued by the Institute of Company Secretaries of India on Board Meetings and Annual General Meetings.
The Secretarial Audit Report is given in Annexure to this Report. The Report does not contain any qualification, reservation or adverse remark.
Also the Secretarial Audit Report issued under Regulation 24A of SEBI Listing Regulations is given in Annexure to this Report.
As required under SEBI Listing Regulations, your Company has obtained a certificate from the Practising Company Secretary that none of the Directors of the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors by MCA/ Statutory Authorities. The said Certificate is forming part of this Report.
As your Company has been operating from MEPZ-Special Economic Zone, appointment of Cost Auditor is exempted under Section 148 of the Companies Act, 2013 read with Companies (Cost Records and Audit) Rules, 2014. Your Company has been maintaining such accounts and cost records as required under the Rules.
EXTRACT OF THE ANNUAL RETURN
Relevant extract of annual return in Form MGT-9 as required under Section 92(3) of the Act read with Rule 12 of Companies (Management and Administration) Rules, 2014 (as amended) to be filed with the Registrar of Companies for financial year 2018-19 is given in Annexure to this Report. A soft copy is also placed at website: www.igarashimotors.com.
INTERNAL CONTROL SYSTEMS
The Company has adequate system of internal control to safeguard and protect from loss, unauthorized use or disposition of its assets. All the transactions are properly authorized, recorded and reported to the Management. Internal Audit is carried out in a programmed way and follow-up actions were taken for all audit observations. Your Companys Statutory Auditors have, in their report, confirmed the adequacy of the internal control procedures.
CORPORATE SOCIAL RESPONSIBILITY (CSR)
In terms of Section 135 and Schedule VII of the Companies Act, 2013, the Board of Directors of your Company has constituted a CSR Committee. The CSR Committee comprises four members and the Chairman of Board is heading the Committee. CSR Committee of the Board has developed a CSR Policy. The CSR Committee met two times during the year on May 22, 2018 and August 08, 2018.The details of role and functioning of the Committee are given in Annexure to this Report.
MANAGEMENT DISCUSSION AND ANALYSIS REPORT
Management Discussion and Analysis Report of the Company for year under review as required under Regulation 34 of Listing Regulations is given as a separate Statement in the Annual Report.
DEVELOPMENT AND IMPLEMENTATION OF A RISK MANAGEMENT POLICY
Your Company has adopted a Risk Management Policy and constituted a Risk Management Committee for monitoring the same. The Company has been addressing various risks impacting the Company which is provided elsewhere in this Annual Report in Management Discussion and Analysis Report.
BUSINESS RESPONSIBILITY REPORT (BRR)
The Business Responsibility Report is not applicable as your Company is not in top 500 Criteria as per the Market Capitalisation as on March 31, 2019. Your Company voluntarily providing the Business Responsibility Report for the financial year ended March 31, 2019. As green initiative, Business Responsibility Report has been hosted on the Companys website at : http://www.igarashimotors.com/investor-list.php?invescatid=17 as required under Regulation 34(2)(f) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Any Member interested in obtaining a copy of BRR may write to the Company.
APPOINTMENT AND REMUNERATION OF KEY MANAGERIAL PERSONNEL
The information required pursuant to Section 197 read with Rule 5 (1) of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of the statement of particulars of Appointment and Remuneration of Key Managerial Personnel is forming part of this Report.
The remuneration paid to all Key Managerial Personnel was in accordance with remuneration policy adopted by the Company.
STATEMENT ON EMPLOYEE REMUNERATION
The information required pursuant to Section 136(1) of the Companies Act, 2013, the Report of the Board of Directors is being sent to all the shareholders of the Company excluding statement prescribed under Rule 5 of The Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The Statement is available for inspection by the Shareholders at the registered office of the Company as per the details mentioned in the Notice of the 27th AGM during business hours upto the date of 27th Annual General Meeting.
SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS
There have been no significant and material orders passed by the Regulators or Courts or Tribunals impacting the going concern status and Companys operations.
Your Company has 790 numbers of permanent employees on the rolls of the Company as on March 31, 2019. The Board of Directors wishes to place on record their sincere appreciation to all the employees of the Company for their dedication, commitment and loyalty to the Company.
A Report on Corporate Governance along with a certificate from the Auditors of the Company regarding compliance of the requirements of Corporate Governance pursuant to Listing Regulations is annexed hereto.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
Your Company has a vigil mechanism by way of established Whistle Blower Policy, as per the requirement of the Companies Act, 2013 and the Listing Regulations, to enable all employees and the directors to report in good faith any violation of the Policy. The Audit Committee of the Board oversees the functioning of Whistle Blower Policy. Your Company has disclosed the details of revised Whistle Blower policy on its website:http://www.igarashimotors.com/investor-list.php?invescatid=18.
Your Company has been regularly conducting training programmes to all the employees about this policy.
PREVENTION OF INSIDER TRADING
Your Company has adopted a code of conduct for prevention of "Insider Trading" as mandated by the SEBI and same is available on the website of the Company: http://www.igarashimotors.com/investor-list.php?invescatid=18. The said Policy has been revised effective from April 01,2019 in line with SEBI (Prohibition of Insider Trading) (Amendment) Regulations, 2018.
CODE OF CONDUCT
Your Company has laid down a Code of Conduct Policy which can be accessed on the Companys website: http:// www.igarashimotors.com/investor-list.php?invescatid=18.
The shares of your Company continued to be listed at National Stock Exchange of India Limited and Bombay Stock Exchange Limited. Listing fee has already been paid for the financial year 2018-19.
The Board places on record its sincere appreciation for the continued support from the relevant Government Authorities, Promoters, Shareholders, Suppliers, Customers, and other business associates, for their strong support.
|For and on behalf of the Board of Directors|