Rane (Madras) Management Discussions


1. Company Overview

Rane (Madras) Limited (RML) manufactures steering and suspension linkage products, steering gear products and specialized aluminum high pressure die-casting products. The Company is a significant supplier to major manufacturers of Passenger Vehicles (PV), Utility Vehicles (UV) and Farm Tractors (FT) in India and globally. The Company operates in a single reportable segment viz., components for the transportation industry.

2. Economic Review

2.1. Global Economy

The global economy is estimated to have grown by 3.4% in 2022 on the back of slowdown in the US and European economy and lockdowns in China due to zero Covid policy adopted by the government. Global manufacturing and trade activity weakened amidst slowing demand due to aggressive global rate hiking cycle adopted by central banks to curb inflation. U.S. manufacturing activity grew at a slow pace as new orders contracted amid increase in interest rate by the Federal Reserve to tame inflation. Europe grappled with high energy prices resulting in slowdown in economic activity and led to decline in business and consumer confidence. Covid-19 outbreaks and subsequent lockdowns hurt consumer spending in China and disrupted global supply chains. The global economic activity is witnessing downturn amidst high inflation and resulting tighter monetary policy, geopolitical tensions which have disrupted supply chain and led to unprecedented rise in prices. The global growth is estimated to slow to 2.8% in 2023. The growth in the US economy is expected to decelerate to 1.6% in 2023 on the back of declining real disposable income and subdued demand amid tighter policy environment. Growth in China is expected to revive to 5.2% in 2023 due to the easing of stringent pandemic related restrictions, favourable policy support from the government and benefit of a low base in 2022. While the historic global tightening could rein in inflation, it could also restrict economic growth in US and Europe.

2.2. Indian Economy

Indian economy continued to be one of the fastest-growing major economies despite growing at an estimated 7.2% in FY23 and has shown higher resilience to global shocks on the back of strong government capital spending and private demand. The growth momentum was supported by recovery in the labour market and increasing credit to the private sector. However, the growth was slightly impacted due to ongoing policy tightening to curb high inflation. Weakening of the rupee and high oil prices continued to exert upward pressures on inflation and along with geopolitical uncertainty, dampened growth momentum in the manufacturing and mining sectors. However, agriculture, electricity, construction, and services sector witnessed robust sentiment and consumer demand remained relatively strong. According to International Monetary Fund (IMF), Indias GDP growth is expected to moderate to 5.9% in FY24 on the back of weaker external demand and tighter financial conditions. The RBI is likely to shift its stance from policy tightening to growth considerations once inflation cools off. The growth dynamics remain strong and economic growth momentum is likely to be boosted by growth in services activity, uptick in government capital expenditure and pick up in manufacturing activity. India continues to remain a bright spot amidst global uncertainties and the domestic demand-led economy is less likely to be impacted by the global slowdown. Moreover, increased infrastructure spending along with various supportive measures by the government is likely to support private investment and increase in manufacturing activities. However, sharp slowdown of global growth along with supply chain disruptions due to intensifying war in Ukraine could disrupt global food and energy prices and weigh on export and investment growth thereby impacting Indian economy.

. Industry Review

.1. Global Automobile Industry

The U.S. auto industry posted lowest sales in more than a decade with new-light vehicle sales declining by 8.2% YoY to 13.7 million units due to semiconductor shortage and other supply chain related issues which impacted production volumes. Electric-vehicle sales accounted for nearly 6% of the retail market in the U.S. in 2022, up from about 3% in the prior year. The National Automobile Dealers Association (NADA) expects the U.S. new-vehicle sales to increase by 6.6% to 14.6 million units in 2023 despite higher borrowing costs on the back of resolution of supply chain constraints and considerable pent-up demand in the market.

According to European Automobile Manufacturers Association (ACEA), the European Union passenger car market contracted by 4.6% to 9.3 million units in 2022 on the back of ongoing supply chain pressures amidst geopolitical conflicts between Russia and Ukraine. Production constraint due to semiconductor shortage impacted supply side during the first half of the year while slowdown in the economy and rising interest rates impacted consumer confidence thereby slowing down demand. The auto volume is expected to pick up in 2023 on the back of easing of supply side bottlenecks. However, the demand side could face headwinds in the form of slowdown in economic activity, high interest rate and increasing fuel cost leading to decline in consumer confidence.

The global automotive industry faced headwinds in the form of weakening macroeconomic environment, supply chain disruptions, tighter monetary policy and diminishing consumer demand. Pressure due to elevated energy prices, high cost of production and slowing demand impacted the industry. Amidst these challenges, adoption of electric vehicles accelerated during the year on the back of various stimulus measures by policymakers globally to meet decarbonisation targets. The industry is at a crossroad and is witnessing disruptions across technology, vehicle connectivity and consumer preferences. Aggressive EU policy to cut emissions from cars and vans is likely to lead to quick transition to electric vehicles. Shift towards greener transportation medium and increasing adoption of technology such as integration of autonomous features across safety, driving and parking will play an increasingly important role in paving the path to the future for the industry.

3.2. Indian Automobile Industry

The Indian automobile industry witnessed robust growth during the financial year after having faced slight hiccups in the previous year due to pandemic induced supply chain disruption and higher commodity cost.

The Passenger Vehicles (PV) segment achieved a new peak volume due to the launch of new models, continuous supply improvement, and robust demand for UVs, resulting in healthy bookings. The PV segment registered a volume increase of 25%. Utility Vehicles (UV) segment continued to witness strong demand led by new launches and better technologies resulting in volume growth of 33% whereas the Passenger Cars (PC) segment volume increased by 18%. Rising cost of ownership for entry segment cars has been a major deterrent for pick-up in demand despite higher discount levels.

Pick-up in economic activities and infra push by the government led to improved demand in the infrastructure and construction sectors resulting in improved freight availability, better fleet utilization, pick up in replacement demand and increasing demand for e-commerce and last-mile delivery. As a result, Commercial Vehicles (CV) segment witnessed volume growth of 28%. In addition, opening of school and offices also supported the demand in the bus segment. The Medium and Heavy Commercial Vehicles (M&HCV) segment continued to experience positive momentum and registered an increase of 37% due to improving fleet operators profitability and better fleet utilization levels on the back of pick up in infrastructure activities. Demand for M&HCVs also benefitted from the rise in construction activity, especially in the residential housing segment. The Light Commercial Vehicles (LCV) segment reported volume growth of 29% on the back of surge in e-commerce and better last mile connectivity. The Small Commercial Vehicles (SCV) segment reported volume growth of 11%.

Despite price hikes taken by OEMs and increase in interest rates, Tractors experienced 11% growth on the back of better crop realization and reached all-time high volumes. Although weak exports along with elevated cost of ownership impacted off-take in volumes, the two-wheelers segment witnessed 10% growth on the low base supported by a good festive season and increasing consumer interest in EVs.

Industry Segment

Growth in %

(Production figures)

(YoY change)

Vehicles FY23 FY22
Passenger Cars (PC) 18 4
Utility Vehicles (UV) 33 43
Multi-Purpose Vans (MPV) 23 7
Passenger Vehicles (PV) 25 19
Small Commercial Vehicles (SCV) 11 24
Light Commercial Vehicles (LCV) 29 18
Medium & Heavy Commercial 37 50
Vehicles (M& HCV)
Commercial Vehicles (CV) 28 29
Farm Tractors (FT) 11 (3)

4. Business Review 4.1. Domestic Market

The sales of the Company during FY 23 grew by 34.8% in the domestic market. While the gravity of the semiconductor shortages and commodity price fluctuations situation easened yet not completely settled, the geo-political conflict between countries and its related challenges took prominence. In spite of these, the Company made remarkable sales growth across all segments in the domestic market. Company did its highest ever sale in all segments like OEMs, OES and After Market. Automotive industry held a huge order backlog and hence was performing better through all the quarters of the year. Company also secured new orders from existing customers and also acquired new customers through the year. Company focussed on developing various new products for the After Market segment which_ will_ help the Company to increase its range and higher sales in_the market for years to come. The Light Metal Casting Products had a strong growth in PV, HCV, EV and FT segments due to increased market demand as well as new product introduction. The overall domestic sales increased by 73%. However, the Aluminum prices continued to escalate, which had an impact on the top line. The break-up of the domestic sales by products is given below:

Products FY 23 FY 22 Growth in %
Steering Gear 747.60 587.50 27.3%
Products
Suspension and 448.88 317.59 41.3%
Linkage Products
Hydraulic Products 107.94 76.76 40.6%
Light Metal 128.41 74.22 73.0%
Casting Products
Other Automotive 74.51 62.04 20.1%
Parts
Total 1,507.34 1,118.11 34.8%

The break-up of domestic sales between Original Equipment Manufacturers (OEMs) and Aftermarket is given below:

( in Crores)
Market FY 23 FY 22 Growth in %
OEM & OES 1,236.31 889.97 38.9%
Aftermarket 271.03 228.14 18.8%
Total 1,507.34 1,118.11 34.8%

Exports sales saw a significant growth during the year and achieved an increase of 41% over the previous year. New businesses / volume increase from China, Korea, Brazil, Mexico and US aided for the strong growth. The growth is seen across all the product lines. Company continued to maintain a global lead in ATV mechanical steering business and aggressively growing in Passenger Cars and Ball joints businesses.

Light Metal Casting Products exports grew by 69% due to strong demand from OEMs for the secured new businesses, whose realization happened in FY 2022-23.

The break-up of the export sales (including deemed export) is given below:

Growth
Products FY 23 FY 22 in %
Steering Gear 364.59 283.44 28.6%
Products
Suspension Linkage 119.76 65.47 82.9%
Products
Hydraulic Products 1.99 3.98 (50.0)%
Light Metal Casting 90.01 53.27 69.0%
Products
Other Automotive 2.69 4.51 (40.4)%
Parts
Total 579.04 410.67 41.0%
Standalone
Sl. No. Key Ratios March 31, 2023 March 31, 2022 Reason for change in FY 23
1 Interest Coverage Ratios (turns) 5.62 3.44 Due to higher revenues and profits
2 Operating Profit Margin (%) 7.4% 4.7% Due to fair value loss recognised as
3 Net Profit Margin (%) (6.0)% 2.4% an exceptional item in relation to investments
4 Return on Networth (%) (40.7)% 10.7%
5 Debt Service Coverage 2.28 1.70 Due to higher revenues and profits
6 Net capital turnover ratio (39.71) (21.37) Due to higher term loan repayment in next 12 months and increase in working capital loan
7 Return on Capital Employed (%) 20.1% 8.8% Due to higher revenues and profits

Consolidated

Sl. No. Key Ratios March 31, 2023 March 31, 2022 Reason for change in FY 23
1 Interest Coverage Ratios (turns) 3.09 (0.08)
2 Operating Profit Margin (%) 4.4% (0.1)%
3 Net Profit Margin (%) 1.3% 0.6% Due to higher revenues and profits
4 Return on Networth (%) 12.8% 5.2%
5 Debt Service Coverage 1.62 0.71
6 Net capital turnover ratio (38.17) (21.35) Due to higher term loan repayment in next 12 months and increase in working capital loan
7 Return on Capital Employed (%) 11.5% (0.2)% Due to higher revenues and profits

4.3. Operational and Financial Performance 4.3.1.Financial Review Standalone Financial Highlights

The Company registered sales of 2,086.38 Crores, an increase of 36.5% over last year, mainly because of the increased demand in the Indian_Automotive sector. The significant cost reduction in both variable and fixed costs also helped increase the operating profits.

• Revenue from sale of products increased to 2,086.38 Crores in FY23 from 1,528.78 Crores in FY22.

• EBITDA increased to 228.42 Crores in FY23 from 133.63 Crores in FY22.

• Net loss of 126.54 Crores in FY23 as against a Net profit of 36.61 Crores in FY22. The Net loss of 126.54 Crores was arrived after considering an exceptional expense of 225.89 Crores consisiting of 223.28 Crores as a reduction in the fair value of the Overseas Investment and VRS expenditure of 2.61 Crores as on March 31, 2023.

Consolidated Financial Highlights

• Revenue from sale of products increased to 2,313.75 Crores in FY23 from 1,711.74 Crores in FY22.

• EBITDA increased to 200.36 Crores in FY 23 from 79.47 Crores in FY 22.

• Net profit of 30.02 Crores in FY23 as against a Net profit 10.66 Crores in FY22. The Net profit 30.02_ Crores was arrived after considering an exceptional expense of 11.66 Crores consisting of 9.05 Crores as an asset impairment provision recorded for the LMCA fixed assets and VRS expenditure of 2.61 Crores as on March_31, 2023.

4.3.2.Operations and Manufacturing Review

After a turbulent FY22, the demand for the Steering and Linkages business was strong throughout the year across all the segments / product lines. All plants achieved their best ever performance with Sales, Cost, Delivery and Quality across customers and geographies. Plants contributed by working on all cost elements and kept them under control helping the Company to protect its profit margins. Capacity additions were made to cater to the increased demand of customers both in domestic and exports. Manufacturing facilities were also upgraded on par with global competitors, as planned, to enhance the Companys capabilities to meet the stringent Quality and Delivery expectations. The plants also operated effectively by optimising the capacity and working through various productivity improvement projects. Several new products were developed and delivered during the period. The supply chain was also developed through various technical assistance initiatives to make them suitable for the global market.

The Companys new plant at Maraimalai Nagar acquired from M/s. Yagachi Technologies Private Limited completed its first full year of operation. The integration of this plant with the operations of the Company had been successful and flawless. The Company has also moved this plant and integrated it with its Varanavasi Plant to enhance the operational and cost efficiencies. The Companys focus on new technologies continued during the year with good progress on the development of several new products which will pave the way for future growth aspirations.

In the Light Metal Casting business, seamless launch of new products was the main focus during FY 22-23. The initiatives taken to improve the availability of the machines, set up time reduction and cycle time reduction in Casting to improve productivity were pursued during the FY 22-23 also. These initiatives helped to improve the Overall Equipment Effectiveness (OEE) enhancement of Diecasting machines and thereby improving the capacity. The capacity utilisation of this division improved significantly to about 72% in Q4 after nearly two years of very low utilisation.

4.4. Rane Light Metal Castings Inc., USA (LMCA)

The management has been focusing in the last couple of years on business development and operational improvements. The former initiative has had reasonable success. The latter has helped improvement in Q, C and D metrics. However, the recovery post Covid in the US market has not happened. While the semiconductor_ shortage has somewhat eased, the US auto industry has entered_ into a phase of slowdown. This has resulted in poor offtake in the new business developed and even existing products. The turnaround planned in LMCA has had a major setback. The Board is closely monitoring the situation and decided to restrict future investments and also review the best decision regarding the future of this business in the long term interests of the Company.

4.5. Pursuit of Business Excellence

The Company continued to follow and practice TQM initiatives and principles which has given immense benefits over the years. The strong performance and results can be largely attributed to the TQM practices that the Company has imbibed as its way of work. This has helped the Company to identify its strengths and areas of improvement and guide it towards a sustainable and measurable success. At fixed intervals, processes and systems across functions are reviewed for its adequacy, relevance and sustenance to achieve overall organizational / self-development goals. As a recognition for such efforts, the Company won the following awards during the year:

• Overall best performance award from Maruti Suzuki

• Best Kaizen award from Ashok Leyland

• National / Regional awards from ACMA / Quality forums

• "Great place to work" for the 5th consecutive year

4.6. Opportunities and Threats

The Indian automotive industry remains well placed to ride strong growth momentum as the industry focuses on reducing reliance on imported products and working towards developing a strong domestic supplier ecosystem. In order to remain relevant and stay ahead of the curve and establish the country as a global auto component manufacturing hub, it is equally important to make investments in technology and work towards fully digitalizing manufacturing and non-manufacturing operations. Although, there are positive factors driving the demand environment, supply chain constraints leading to shortage of chips, high cost of raw material, increase in logistics cost and rising fuel prices could impact growth for the industry. Moreover, implementation of new regulations to meet the stringent second phase of BS VI emission norms has resulted in increase in the cost of the vehicles, and this coupled with global recessionary trend and elevated geopolitical tensions could impact growth of the industry.

4.7. Outlook

The Indian automotive industry is likely to witness sustained growth momentum going forward despite minor headwinds in the form of rising interest rates and cost increases due to new emission and safety norms. Introduction of vehicle scrapping policy for scrapping and replacing old vehicles is likely to aid growth of the industry. Adoption of Electric Vehicles (EVs) is expected to accelerate in the coming years as EV becomes more cost competitive on the back of supportive government policies, enhanced charging infrastructure and consumer willingness to move towards clean and sustainable mobility solution. Light Metal Casting business in India is in the process of launching several new programs to SOP in the FY 23-24 which will further improve its capacity utilization and revenue growth. The US subsidiary has gained customer confidence and growing both within the customer and adding new customers.

5. Risk Management

The Company has laid down well-structured procedures for monitoring the risk management plan and implementing risk mitigation measures. The risks are broadly classified into strategic risks, operational risks, financial risks and statutory compliance risks. These risks are rated based on factors such as past year experience, probability of occurrence, probability of non-detection and their impact on the business. The top management reviews the strategic risks, and the risks with high probability and high impact every quarter and presents its report along with a risk mitigation plan to the Board of Directors on a half-yearly basis. The strategic risks are taken into consideration in the annual planning process with their mitigation plan. Other risks are covered as part of the internal audit process and presented to the Audit Committee every quarter. The business process risks, and the related controls are subjected to internal audit and reviewed on a quarterly basis. The risk ratings are revalidated with the top management as part of the internal audit process every quarter. The overall reassessment of risks at the Company level is carried out and presented to the Board of Directors once in two years for their review.

Risk Nature of Risk Risk Mitigation Strategies
Quality Risk of International business a) Product liability coverage ensured in line with international sales.
– Product recall or launch delay or brand image getting Coverage value to be increased from 100 Crs to 150 Crs in 2023-24.
affected due to quality issues.
b) Automated assembly line with inbuilt quality controls, traceability system for high volume projects.
Growth High dependency on one product (R&P) for future growth (45 % of SBP growth). a) New range product expansion in FT, SCV, LCV applications – gear pump, EPS.
Strategic High dependence on existing b) Focused new business development in ball joint – Export.
customers for International c) Domestic market opportunity in Hydraulic products (with unserved customers).
business growth.
d) Target business development with Global Steering gear suppliers like ZF, RFQs generated and technical reviews in progress.
Quality / Processes Quality and delivery are sacrosanct for safety critical products supplied by the Group. e) Expand new businesses with Global Tire 1s. Skilled workforce, imparting job skill enhancement training, enhancing supplier capabilities and robust manufacturing processes help the Company mitigate quality and delivery risks.
Operational People Risk Attrition of key personnel could impact business operations and growth. The Companys HR processes are constantly upgraded to attract, retain and develop talent. The performance management system and other employee engagement initiatives help develop and retain talent. Further employee feedback is obtained and improvements in People Process are made to sustain the Great Place to Work (GPTW) Certification.
Currency Exposed to foreign currency The Company uses a multi-pronged approach as suitable to the scenarios.
Risk exchange risk as the Company This approach includes:
exports its products to various countries and import raw a) Optimally balancing the import and export to create natural hedge.
materials. b) Working with customer to index prices to mitigate currency fluctuations.
Financial Interest Use of borrowings to fund c) Taking forwards on a rolling basis to protect its export realization. The Company manages interest rate risk on the following basis:
Rate Risk expansion exposes the Company to interest rate risk. a) Maintaining optimal debt-equity levels.
b) Using internal accruals to fund expansion.
c) Ensuring a competitive interest rate by leveraging multiple banking relationship.
d) Constantly optimizing export packing credit to reduce interest costs.

6. Human Resource Development and Industrial Relations 6.1. Talent Development Initiatives

In FY 2022-23, the Company focused on the following talent development initiatives:

Leadership Development

6.1.1. Young Leadership Development (YLD)

The objective of YLD is to facilitate the development of leadership competencies of first time managers and to provide young leaders relevant exposures and high quality learning experiences thereby strengthening the leadership bandwidth at middle management. The fifth and sixth batch with 20 participants underwent 5 days of classroom sessions across 3 modules facilitated by Shri Dharmasthala Manjunatheshwara Institute for Management Development (SDMIMD).

6.1.2.High Potential Leadership Development (HPLD)

The objective of HPLD is to build leadership competencies of high potential talent and strengthen the leadership pipeline. Overall 24 employees were engaged in HPLD intervention. Employees from the seventh batch completed their one-year development journey and worked on Action Learning Projects (ALP) in teams to address critical organizational challenges. Participants worked on the projects under the guidance of Prof. Suresh Srinivasan from Great Lakes Institute of Management and made project presentations to business leaders for their inputs. HiPos from the eighth and ninth batch began their leadership development journey through a Development Center. The developmental inputs focussed on Rane leadership competencies to facilitate career transitions to leadership roles.

6.1.3.Leader as Coach

The objective of "Leader as Coach" is to cultivate appreciation of behavioural change and encourage the culture of development. The leaders were provided with insights on the elements of individual development through the concept of breakdown, skill, practices & reflection and four different dimensions of individual development as part of facilitator led sessions. Participants have periodic one-on-one conversations with coach on using these coaching techniques for team and self-development. 3 leaders underwent the third batch of "Leader as Coach" intervention.

6.1.4. Rane Manufacturing Systems Professionals (RMSP)

RMSP was introduced as a Professional Course in 2017 with the objective of ‘Building Manufacturing Capability". The Gemba based intervention is for junior and middle management employees in Manufacturing, Manufacturing Engineering, Quality Assurance and Plant Engineering functions. Having seen five years of implementation a need was felt to link the initiative to plant level performance and focus on depth of coverage in addition to breadth of coverage. In August 2022, it was decided to conduct an in-depth study on repurposing RMSP to analyze the impact and make improvements as necessary by taking inputs of all stakeholders. The repurposed version RMSP 4.0 was designed with the objective to "Enhance Manufacturing Capability through Technical proficiency for Significant improvement in Plant Performance". RMSP 4.0 will be rolled out in April 2023 and region wise awareness sessions were organised for highlighting the importance and impact of RMSP 4.0 across the group.

6.2. Performance Assessment & Development System (PADS) Refresh

As a process the Company looks at revamping its performance management system, PADS every 5 years understanding the value the present system brings to the organization. With an intention to discover on how it enables the employees to perform it had multiple rounds of focus group discussions across various locations then the Company assimilated points for its process enhancement. Along with points that came out of focus group discussions the Company also did benchmark study of various practices across industry to design a refreshed process, PADS 7.0 with effect from April 2023, for the FY 24. PADS 7.0 is a transformation from an event based performance management to a continuous performance management. The intervals between the manager/ employee conversations is shortened by adding of 5 conversations between manager and employee comprising of 2 performance conversations and 3 development conversations in a year which was previously limited to only one conversation. This will enable frequent conversation on performance and development between manager/employees. Thus, the Company is transforming from managing performance to enabling performance of employee. This also gave the Company an opportunity to look at how it can simplify the system which enables the performance management process. The Company redesigned the forms and competencies such that it becomes easy and simple for employees to access it and enter details. The system is also designed to track and measure completion of development milestones.

6.3. Great Place to Work (GPTW)

The Rane Group believes in continuous improvement in all aspects of its operations. Employee satisfaction and engagement are key to its growth as business performance. Therefore, to give the employees a platform to express their views in a free and open manner, Rane has been conducting an Employee Opinion Survey for almost a decade. An external consultant would administer the survey, share the findings, and help in identifying the strengths and areas of opportunity. As the organisation grew, there was a need to find other models that accurately and efficiently captured employee views and helped to benchmark against the best in keeping the employees happy. GPTW is a globally recognized body that helps businesses create a sustainable, high trust, high-performance culture. Since 2008-2009, Rane Group has been participating in the survey and using the findings to fine-tune the employee engagement and development programs. Subsequently, individual Rane companies have been participating in the survey. RML was certified with GPTW for 5th year in a row.

6.4. Wellness at Rane

Rane Group is committed to promoting a healthy and positive work environment for its employees. The Company has partnered with The Wellness Corner which provides holistic wellness solutions to prioritize the health and well-being of the employees. With the launch of its wellness initiative, the Company is taking a proactive approach in improving the employee well-being and creating a supportive work environment. The employees are encouraged to participate in challenge circles to reinforce adoption of healthy habits such as regular exercise, mindful eating etc. Rane Premier League is one such event to celebrate the togetherness and also craft a workplace wellness. Rane Premier League (RPL), a first of its kind cricket tournament was held among the group entities of Rane. They nominated their best cricketers who were enthusiastic to bring home the trophy. The Company had a total of 9 teams who fought for winner and runner up awards.

Chennai Marathon is yet another event which saw good participation from Rane Group as part of wellness initiative. The Chennai Marathon is the largest sporting event in Chennai. This year, 146 employees from the Rane Group participated in the Chennai Marathon.

6.5. Industrial Relations

During the financial year, long-term wage settlements with the employee union at Varanavasi, Pantnagar and Bollaram plants were concluded smoothly. The industrial relations were generally cordial in all the plants. The group level industrial relations council works towards the objective of creating a healthy working environment by promoting peace and harmony amongst all segments of employees. The focus areas for the council includes interpretation and implementation of legislations, workforce mix planning for optimal deployment and sharing of best practices.

7. Corporate Social Responsibility (CSR)

Rane Foundation, a public charitable trust founded in the year 1967, is the lead for implementing Rane Groups CSR initiatives. The Companys CSR vision is ‘to be a socially and environmentally responsible corporate citizen. The Company continues to focus on four thrust areas for its CSR activities – Education, Healthcare, Environment and Community Development. In FY 2022-23, the Group implemented several projects by primarily focusing on Education.

The Company contributed to Rane Foundation (RF), the CSR arm of Rane Group, which primarily focused on Education during the FY 2022-23.

7.1. Education

The Rane Polytechnic, established at Trichy in the year 2011 under the aegis of Rane Foundation has stepped into its twelfth academic year. The institution is accredited by the National Board of Accreditation (NBA) for its Diploma in Mechanical Engineering program. So far 1694 students have completed their diploma program and 167 students have completed the program in the academic year 2022-23. Out of 167 students, 127 opted for placements and 100% placement was achieved for the FY 2022-23 batch. Rane Vidyalaya, established at Trichy in the year 2018 under the aegis of Rane Foundation has stepped into its fifth academic year. Rane Vidyalaya is recognized by Directorate of School Education, Tamil Nadu in 2018 and is affiliated to the Central Board of Secondary Education, New Delhi. In 2022-23, it reached a student strength of 634 in its fifth year of operations, operating from LKG to VIII standard proving the need for a quality school in rural area. Rane Foundation in association with Maithree organized pre-vocational training to 10 special children between the age group of 14 to 18. Rane Foundation made a contribution to TN Arya Samaj Educational Society towards DAV School project at Pallikarnai.

Rane Foundation extended support to the Gopalapuram Educational Society towards running & maintenance of Boys & Girls Schools.

7.2. Healthcare, Community Development and Environment

Rane Foundation and companies made significant contribution towards COVID relief measures to various relief funds and NGOs. Other major CSR activities carried out by the Company during FY 2022-23 are as follows:

• Restoration of pond in Mannadipet Commune Panchayat, Pondicherry by deepening, desilting, bunding and carrying out other maintenance activities. This restored the condition of the water body and improved the local bio-diversity. Nearly 500 villagers benefitted through this project.

• Installed interactive smart board at Panchayat Union Middle School, Navamalmarudur, Kandamangalam, Pondicherry to improve the learning effectiveness. The school has students up to fifth standard and 450 students benefitted through this project.

• Installed 2 RO water plants at Alavur village in Government Elementary School, Varanavasi village thus enabling 600 people to have access to clean drinking water.

• Desilting and restoration of a canal leading to pond in Varanavasi village thus enhancing the water storage level.

• Adequate sanitation and hygiene facilities in schools are critical to create a healthy and positive environment for children to enhance their learning and development. To improve the same, the Company launched a school sanitation program to augment school infrastructure in Government Higher Secondary School.

7.3. CSR Monitoring mechanism – To ensure continuity in Companys CSR initiatives, the Company monitors the previous two-year projects through regular visits and extend its support in maintaining the facilities.

8. Internal Control Systems

The Company has set up a robust internal control system to prevent operational risks through a framework of internal controls and processes. These controls ensure that the business transactions are recorded in a timely and complete manner in the financial records, resources are utilized effectively and that the assets are safeguarded.

The internal audit function is outsourced to a professional firm. The Audit Committee and the Board, in consultation with the internal auditors, statutory auditors and operating management, approve annual internal audit plan. The scope also covers the internal financial controls and internal controls over financial reporting. The internal audit findings are placed before the Audit Committee at each of its quarterly meeting for review. The managements responses and counter measures are discussed in the Audit Committee meetings. This process ensures robustness of internal control system and compliance with laws and regulations including resource utilization and system efficacy.

9. Cautionary Statement

The information and opinion expressed in this Report may contain certain forward-looking statements, which the management believes are true to the best of its knowledge at the time of its preparation. Actual results may differ materially from those either expressed or implied in this report.