Rane Engine Val. Director Discussions


Your Board of Directors hereby present to you the Fifty-First Annual Report covering the operational and financial performance together with the accounts for the year ended March 31, 2023 and other prescribed particulars:

1. State of Companys affairs

The financial year 2022-23 saw a pick-up in the business at the backdrop of a robust growth of the Indian and global economy. The automotive and auto components industry faced supply chain challenges due to semiconductor shortage, shipping and logistics constraints.

The Company scaled up the production in line with the demand and worked on several cost optimization measures to mitigate the inflationary environment. The Company continued to enhance the customer relationships and increase its business share across several customers.

1.1 Financial Performance

The financial highlights of the year under review are as follows:

(in Crores)

Particulars

2022-23 2021-22
Revenue from Operations 497.57 382.06
Other Income 2.06 2.89

Profit / loss before Depreciation, Finance Costs, Exceptional items and Tax Expense

36.22 16.43

Less: Depreciation / Amortisation / Impairment

19.28 20.00

Profit / loss before Finance Costs, Exceptional items and Tax Expense

16.94 (3.57)
Less: Finance Costs 10.11 7.89

Profit / loss before Exceptional items and Tax Expense

6.83 (11.46)
Add / (less): Exceptional items (6.67) (3.55)
Profit / (loss) before Tax Expense 0.16 (15.01)

Less: Tax Expense (Current & Deferred)

(0.22) 3.15
Profit / (loss) for the year (1) (0.06) (11.86)

Other Comprehensive Income / loss (2)

0.26 0.11

Total Comprehensive Income (1+2)

0.20 (11.75)

Balance of profit / loss for earlier years

(47.60) (35.85)
Less: Transfer to Reserves - -
Less: Dividend paid on Equity Shares - -
Less: Dividend Distribution Tax - -
Balance carried forward (47.40) (47.60)

The Key Performance Indicators (KPI), operational performance and summary on balance sheet are furnished in page no 1 of this annual report.

The net sales and operating revenue of the Company for the year 2022-23 was Rs. 497.57 Crores as against Rs. 382.06 Crores for the previous year. The Company incurred a net loss of Rs. 0.06 Crores as against loss of Rs. 11.86 Crores in the previous year. The Earnings Per Share for the year 2022-23 was Rs. (0.09) as against (Rs. 17.65) in the previous year.

The Company continues to be a Subsidiary of Rane Holdings Limited (RHL / Holding Company). There was no material change or commitments, affecting the financial position of the Company between the end of the financial year of the Company and date of the report other than those disclosed in the financial statements section of this annual report. There was no change in the nature of business during the year.

1.2. Appropriation

The net deficit for the financial year 2022-23 stood at Rs. 47.40 Crores, after adjusting a deficit of Rs. 47.60 Crores brought forward from the previous financial year and adjustments of Other Comprehensive Income to the tune of Rs. 0.26 Crores. The Board of Directors, taking into consideration, the operational performance, financial position of the Company and uncertainties faced by the automotive sector, has decided not to declare / recommend any dividend, for the year under review.

1.3. Credit rating

The Companys financial management and its ability to service its financial obligations in a timely manner, has been re-affirmed by CRISIL Limited for its credit facilities during the year under review and this has been disclosed to stock exchange and made available in the Companys website. The Corporate Governance section of this Annual Report carries the details of credit rating.

1.4. Share capital

The paid up equity share capital of the Company as on March 31, 2023 stood at Rs. 7,06,26,340 consisting of 70,62,634 equity shares having face value of Rs. 10/- each fully paid up. During the year, the Company raised approx Rs. 7.50 Crores pursuant to allotment of 3,43,642 equity shares of Rs. 10/- each arising on conversion of equivalent warrants issued to Rane Holdings Limited (RHL / Promoter / Holding Company). This resulted in an increase in shareholding of RHL by 2.19% in the Company to 57.28%. The funds were utilised for the purpose stated in the objects and there was no deviation from the same.

1.5. Management Discussion & Analysis

The business of your Company is manufacturing and marketing of auto components for transportation industry viz., engine valves, valve guide and tappet. The analysis on the performance of the industry, the

Company, internal control systems, risk management are presented in the Management Discussion and Analysis report forming part of this report and provided in ‘Annexure A.

1 .6. Subsidiaries, Associate and Joint Venture Companies

The Company does not have any subsidiary, associate or joint venture. There was no Company which has become or ceased to be Companys subsidiary, Joint venture or associate during the financial year 2022-23.

2. Board of Directors, Committees and Management

2.1. Composition

The composition of the Board of Directors and its Committees, viz., Audit Committee, Nomination and Remuneration Committee Stakeholders Relationship Committee and Corporate Social Responsibility Committee are constituted in accordance with Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR), wherever applicable. The Board of Directors have also constituted an Executive Committee and a Finance Committee. The Corporate Governance Report given in ‘Annexure D contains an overview of the role, terms of reference, meetings and composition of the Board of Directors of the Company and its Committees. The following were the changes in the composition of Board of Directors and its Committees: a. Mr. Ashok Malhotra (DIN:00029017) & Mr. C N Srivatsan (DIN:00002194) ceased to be directors on completion of their second term as Independent Directors of the Company at the 50th AGM held on June 28, 2022. b. Mr. Ramesh Rajan Natarajan (DIN:01628318) was appointed as an Independent Director by the shareholders of the Company at its 50th AGM held on June 28, 2022 for a term of 5 consecutive years. c. Mr. Pradip Kumar Bishnoi (DIN:00732640) was appointed as an Independent Director by the shareholders of the Company vide Postal Ballot Notice dated August 11, 2022 with effect from September 10, 2022 to July 02, 2026. d. Ms. Vasudha Sundararaman (DIN:06609400) has been appointed as an Additional Director (Independent) by the Board of Directors with effect from May 04, 2023, based on recommendations of the Nomination and Remuneration Committee. The approval of the shareholders of the Company is being sought at the ensuing Annual General Meeting for appointment as an Independent Director.

e. Dr. Brinda Jagirdar (DIN:06979864) will be completing her second term as an Independent Director of the Company on July 22, 2023 as per the provisions of the Companies Act, 2013. The Board placed on record its appreciation for her valuable advice and guidance rendered during her tenure.

The Board of Directors are of the opinion that the Directors proposed for appointment / re-appointment at the ensuing 51st AGM of the Company possess integrity, necessary expertise, relevant experience and the Corporate Governance report annexed to this report contains necessary disclosures regarding the Director(s).

The terms and conditions of appointment of Independent Directors have been disclosed in the policies section of the website of the Company at: https://ranegroup.com/investors/rane-engine-valve-limited/. All the Directors have affirmed compliance with the Code of Conduct of the Company. The Independent Directors have affirmed that they satisfy the criteria laid down under section 149(6) of the Companies Act, 2013 (Act) and Regulation 25 and other applicable regulations of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR), as amended from time to time. Further, in terms of Section 150 of the Companies Act, 2013 read with Rule 6 of the Companies (Appointment and Qualification of Directors) Rules, 2014, Independent Directors of the Company have confirmed that they have registered themselves with the databank maintained by the Indian Institute of Corporate Affairs (IICA) and have passed the proficiency test, if applicable to them. The Board of Directors at its first meeting of the FY 2022-23 has taken on record the declarations and confirmations submitted by the Independent Directors. During the year, the Board had not appointed any person as an Alternate Director for an Independent Director on the Board. The Company has obtained a certificate from a Company Secretary in Practice that none of the Directors on the Board of the Company have been debarred or disqualified from being appointed or continuing as Directors of Companies by the SEBI / Ministry of Corporate Affairs or any such statutory authority.

2.2. Retirement by rotation

Mr. Harish Lakshman (DIN:00012602) retires by rotation at the ensuing 51st Annual General Meeting (AGM), being eligible, he offers himself for re-appointment.

The proposal for re-appointment of Mr. Harish Lakshman as a Director is included in the notice convening the 51st AGM.

2.3. Board and Committee Meetings

The schedule of meetings of the Board of Directors and Committees of the Board is circulated to the Directors in advance. During the year, five (5) Board Meetings were convened and held, the details of which are given in the Corporate Governance report. The gap between two consecutive meetings of the Board of Directors was less than 120 days. The details of committee meetings are provided in the Corporate Governance Report annexed to this report of the Board. For eligible matters, the Board / its Committees may also accord approvals through resolutions passed by circulation, between two meetings.

2.4. Meeting of Independent Directors

A meeting of Independent Directors was held to assess the quality, quantity and timeliness of flow of information between the management and the Board. The Independent Directors expressed that the current flow of information and contents were good to effectively perform their duties.

2.5. Board evaluation

An annual evaluation of the performance of the Board, functioning of its committees, individual directors and the Chairman of the Board was carried out based on the criteria set by the Nomination and Remuneration Committee. A structured questionnaire was sent to all the directors seeking feedback and any comments on various parameters as recommended by the Nomination and Remuneration Committee.

Board diversity and skill set to review strategies, risk management dimensions and processes, flow of information, adequacy and timeliness of agenda materials, effectiveness of presentations and more importantly the processes of reviewing strategic matters, annual operating plan, strategic business plans and guiding the management, were the key focus areas for evaluation of the Board and its Committee functioning. Ensuring top-level policy framework, creating an open environment for exchange of views besides ensuring effective mechanism for implementing board action points were the areas on which the Board of Directors evaluated the performance of the Chairman.

Individual directors, including Independent Directors performance and contributions were evaluated through peer evaluation based on evaluation criteria determined by Nomination and Remuneration Committee. Contributions to board decisions and discussions and attributes like staying up to date on recent trends, being aware of macro level developments and networking skills were the areas considered for framing the evaluation criteria of directors besides commitment, competency and Sectoral knowledge.

The Chairman after detailed consideration of all the feedback, comments and suggestions received from the directors, discussed with the board a proposed action plan on matters requiring attention of the board. The evaluation framework includes mechanism to share evaluation feedback on individual directors to the Nomination and Remuneration Committee, wherever required.

2.6. Familiarisation program for Independent Directors

The details of familiarisation program for Independent Directors have been disclosed in the policies section of the website of the Company and available at the web link:https://ranegroup.com/investors/rane-engine-valve-limited/.

2.7. Key Managerial Personnel

During the year under review, Mr. Murali K Rajagopalan retired as Manager and President effective from the close of business hours on November 30, 2022. As at the year ended March 31, 2023, Dr. S Rajkumar, President (who was appointed as Manager with effect from February 07, 2023), Mr. V K Vijayaraghavan, Senior Vice President-Finance & Chief Financial Officer (CFO), Mr. Vivekanandaa M, Secretary, hold the office of Key Managerial Personnel (KMP), respectively, within the meaning of Section 2(51) of the Companies Act, 2013.

2.8. Remuneration policy

The policy contains criteria for determining qualifications, positive attributes, independence of a Director and also covers aspects of remuneration which is reasonable and sufficient to attract, retain and motivate Directors / high potential employees of the Company to run successfully.

The policy on appointment and remuneration of Directors, KMP and Senior Management Personnel (SMP) as laid down by the NRC of the Board has been disclosed in the policies section of the website of the Company and available at the web link: https://ranegroup.com/investors/rane-engine-valve-limited/. There has been no change in this policy during the financial year 2022-23.

The details of remuneration paid / payable to the Directors during the financial year 2022-23 is furnished in the Corporate Governance report annexed to this report of the Board.

3. Audit and allied matters

3.1. Audit Committee

The composition, terms of reference and meetings of the Audit Committee are disclosed in the Corporate Governance section of the Annual Report. The Audit Committee of the Board acts in accordance with the terms of reference, which is in compliance with the provisions of Section 177 of the Companies Act,

2013 (Act) and Regulation 18 of SEBI LODR and other applicable provisions of SEBI LODR, as amended from time to time.

3.2. Statutory Auditor

M/s. Varma & Varma, Chartered Accountants (Varma & Varma) (Firm registration Number. 004532S) hold the office of Statutory Auditors of the Company, in terms of Section 139 of the Companies Act, 2013 read with applicable rules thereunder and as per the members approval accorded at the 50th Annual General Meeting (AGM) for the second term of five consecutive years i.e., from the conclusion of the 50th AGM (2022) till the conclusion of the 55th AGM (2027).

The Statutory Auditors report to the members for the year ended March 31, 2023 does not contain any qualification, reservation, adverse remark or disclaimer. Also there has been no instance of fraud reported by the statutory auditors for the period under review.

3.3. Cost Audit & maintenance of cost records

Pursuant to section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014, the Board of Directors, at their meeting held on July 20, 2022, had appointed M/s. Jayaram

& Associates, Cost Accountants, represented by Mr. R Jayaram (Membership no. 26103) as Cost Auditor of the Company for the financial year 2022-23 as per the recommendations of the Audit Committee, after obtaining necessary certificate under Section 141 of the Act conveying his eligibility for re-appointment. In terms of Section 148(3) of the Companies Act, 2013 the remuneration as fixed by the Board, based on the recommendation of the Audit Committee, is required to be ratified by the members at the AGM in terms of Section 148(3) of the Act. The notice convening the ensuing AGM includes the proposal for ratification of the remuneration payable to the Cost Auditor. The Company maintains all such accounts and records as specified by the Central Government under section 148 (1) of the Companies Act, 2013.

3.4. Secretarial Auditor

M/s. S Krishnamurthy & Co., a firm of Company Secretaries in practice, have been appointed by the Board of Directors as Secretarial Auditors for the FY 2022-23. The Secretarial Audit report pursuant to Section 204 of the Companies Act, 2013 is annexed in ‘Annexure B and was taken on record by the Board of Directors at its meeting held on May 04, 2023. The report does not contain any qualification, reservation, adverse remark or disclaimer.

3.5. Internal Auditor

M/s. Capri Assurance and Advisory Servicies, a firm of independent assurance service professionals, continues to be the Internal Auditor of the Company.

Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes, review of statutory and legal compliances with applicable statutes / laws and assessing the internal control strengths in all these areas including financial reporting. Internal Auditor findings are discussed with the process owners and suitable corrective actions taken as per the directions of the Audit Committee on a regular basis to improve efficiency in operations. The Internal Auditor reports directly to the Audit Committee. The Committee, while reviewing their performance scope, functioning, periodicity and methodology for conducting the internal audit, has taken into consideration their confirmation to the effect that their infrastructure viz., internal audit structure, staffing and seniority of the officials proposed to be deployed etc., are adequate and commensurate to the scope, functioning, periodicity and methodology for conducting the internal audit.

4. Directors responsibility statement

In terms of Section 134(3)(c) read with section 134(5) of the Companies Act, 2013, the Directors, to the best of their knowledge and belief, based on the information and explanations obtained by them, confirm that: a. in the preparation of the annual accounts, the applicable accounting standards had been followed and there were no material departures; b. they had selected such accounting policies and applied them consistently and made judgments and estimates that were 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 loss of the Company for the year under review; c. they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company, preventing and detecting fraud and other irregularities; d. they had prepared the financial statements for the financial year on a ‘going concern basis; e. they had laid down internal financial controls to be followed by the Company and such internal financial controls were adequate and were operating effectively; and f. they had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively.

5. Related Party Transactions (RPT)

All RPT that were entered into during the financial year were on an arms length basis and were in the ordinary course of business. There are no materially significant related party transactions made by the Company with Related parties which requires approval of the shareholders / which may have potential conflict with the interest of the Company at large.

All RPTs are placed before the Audit Committee and the Board, wherever required, for approval. Prior omnibus approval of the Audit Committee is obtained for the transactions which are entered into in the ordinary course of business and are repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted are reviewed by the Audit Committee on a quarterly basis.

All the RPT that requires prior approval of the Audit Committee is being approved by the Independent Directors who are the members of the Committee. The Company has put in place a proper system for identification and monitoring of such transactions. Save as disclosed in this report, none of the Directors or Key Managerial Personnel has any pecuniary relationships or transactions with the Company. The policy as approved by the Board has been disclosed in the policies section of the website of the Company and available at the web link:https://ranegroup.com/investors/rane-engine-valve-limited/.

None of the Directors or Key Managerial Personnel or Senior Management Personnel has any material, financial and commercial transactions (except receipt of remuneration, as applicable), which may have potential conflict with interest of the Company at large.

6. Corporate Social Responsibility (CSR)

The Rane Groups vision on Corporate Social Responsibility (CSR) is: "To be socially and environmentally responsible corporate citizen". The CSR activities of Rane Group focus on four specific areas of: (a) Education; (b) Healthcare; (c) Community Development; and (d) Environment. The CSR policy of the Company has been disclosed in the policies section on the website of the Company and available at the weblink: https://ranegroup.com/investors/rane-engine-valve-limited/.

Owing to the inadequacy of profits / loss during the immediately preceding three financial years, the Company was not required to spend towards CSR activities during FY 2022-23 as per Section 135 of the Companies Act, 2013 read with rules thereunder.

7. Energy conservation, technology absorption and foreign exchange earnings and outgo

The information on conservation of energy, technology absorption and foreign exchange earnings and outgo as required under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, after 2014 the following to be included ‘is available in ‘Annexure C.

8. Corporate Governance Report

The Company is committed to maintaining the highest standards of corporate governance and effective compliance with the regulatory norms under the SEBI regulations and other laws and regulations applicable to the Company. The Corporate Governance Report and the certificate issued by the Statutory Auditors are available in ‘Annexure D to this report.

9. Particulars of Directors, Key Managerial Personnel and Employees

The statement in terms of Section 197(12) of Companies Act, 2013 read with Rule 5 of the Companies (Appointment and remuneration of Managerial Personnel) Rules, 2014 is enclosed as an ‘Annexure to this report.

Pursuant to Section 136(1) of the Companies Act, 2013, the report of the Board of Directors is being sent to the shareholders of the Company excluding the statement prescribed under Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014. The said statement is available for inspection by the shareholders at the Registered Office of the Company during business hours.

10. Risk Management

The Company has laid down well-structured procedures for monitoring the Risk Management plan and implementing risk mitigation measures and it has been elaborately discussed under the Management Discussion and Analysis Report which forms part of the annual report.

11. Other disclosures

a. Details of loan, guarantees and investments, if any, under the provisions of Section 186 of the Companies Act, 2013 are given in the notes to the financial statements.

b. The Internal control systems and adequacy are discussed in detail in the Management Discussion and Analysis annexed to the Directors Report.

c. There was no significant / material order passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations.

d. The policies approved and adopted by the Board have been made available on the Corporate Governance section on the website of the Company and available at the weblink: https://ranegroup.com/investors/rane-engine-valve-limited/.

e. The copy of the Annual Return is available on the Corporate Governance section of the website of the Company and available at the weblink: https://ranegroup.com/investors/rane-engine-valve-limited/.

f. The Company has complied with the applicable secretarial standards viz., SS-1 on meetings of Board of Directors and SS-2 on General Meetings issued by Institute of Company Secretaries of India (ICSI) as per section 118 (10) of the Companies Act, 2013.

g. The requirement for Business Responsibility and Sustainability Reporting is not applicable for the year under review to the Company since it does not fall under the top 1,000 listed companies based on market capitalization.

h. The details regarding shares and dividend transferred / proposed to be transferred to the Investor Education and Protection Fund (IEPF) and other relevant details in this regard, have been provided in the corporate governance section of this annual report.

i. The Company does not accept any deposit falling under the provisions of section 73 of the Companies Act, 2013 and the rules framed thereunder.

j. The Company has established a formal vigil mechanism named ‘Rane Whistle Blower Policy for reporting improper or unethical practices or actions which are violative of the code of conduct of the Company. The policy which is also available on the intranet portal of the Company provides adequate safeguard against victimisation and has provided direct access to the Chairman of the Audit Committee for by the employees and state their complaints / grievances.

k. The Company has always provided a congenial atmosphere for work that is free from discrimination, harassment and has provided equal opportunities of employment to all irrespective of their caste, religion, colour, marital status and gender. The Company believes that women should be able to do their work in a safe and respectful environment that encourages maximum productivity. The Company has a zero tolerance towards sexual harassment. The Company has adopted a policy on prevention of sexual harassment of women at work place and put in place proper dissemination mechanism across the Company. The Company has carried out awareness programmes / sessions on the mechanism established under this policy, across its various locations. The Company has complied with the provisions relating to the constitution of Internal Complaints Committee (ICC) under The Sexual Harassment of Women at Workplace Prevention, Prohibition and Redressal) Act, 2013 (POSH), comprising of Presiding Officers and members with an appropriate mix of employees and external subject matter experts. During the period, the details of complaints received / resolved or pending are as under: No. of complaints received during the financial year – Nil No. of complaints disposed of during the financial year – Nil No. of complaints pending as on end of the financial year – Nil

l. The Company has not printed physical copies of the Annual Report for distribution in view of the exemptions available vide General circular 10/2022 dated December 28, 2022, issued by the Ministry of Corporate Affairs ("MCA") read with previous circulars and SEBI Circular dated January 05, 2023. The full Annual Report will be made available on the website of the Company and will also be disseminated to the stock exchanges where shares of the Company are listed. The electronic copies of the annual report and the notice convening the 51st AGM would be sent to all the members whose e-mail addresses were registered with the Company or their respective Depository Participants (DP).

Annual General Meeting

m. The 51st AGM would be conducted through video conferencing or other audio visual means on Tuesday, July 25, 2023 at 14:00 hrs (IST), as per the framework notified by the Ministry of Corporate Affairs. The notice convening the 51st AGM contains detailed instructions and notes in this regard.

Acknowledgement

We thank our Customers, Investors, Suppliers, Vendors, Bankers, Government, Regulatory Authorities and other Business Associates for their continued support in successful performance of the Company. We place on record our appreciation for the committed services of all our employees.

For and on behalf of the Board
Harish Lakshman Ganesh Lakshminarayan
Chennai Vice-Chairman Chairman
May 04, 2023 DIN:00012602 DIN:00012583