Samkrg Pistons & Rings Ltd Directors Report.

DEAR SHAREHOLDERS

Your Directors are pleased and privileged to present 33rd Annual Report and the Audited Accounts of the Company for the year ended March 31, 2019.

Financial Results

2018-19 2017-18
Gross total income from operations 35616.53 32397.15
Other Income 198.73 219.12
Profit before Interest, Depreciation and Tax (PBIDT) 4567.42 4373.71
Interest 143.75 140.23
Profit before depreciation and Tax (PBDT) 4423.67 4233.48
* Depreciation 1205.97 1305.18
Profit before Exceptional Item 3217.70 2965.80
C S R 42.50 37.50
Extraordinary Item 0 0
Profit after CSR 3175.20 2928.30
Provision for Taxation
i) Current Year 1026.61 866.25
ii) Deferred Taxation 45.00 46.59
Net Profit before Extraordinary Item 2103.59 2015.46
Extraordinary Item 0
Profit after Extraordinary Item 2103.59 2015.46

Note: Figures have been re-grouped wherever necessary to confirm to current period classification.

DIVIDEND

Your Directors recommended dividend of Rs.5/- per equity share (50%) of face value of Rs.10/- each for the year ended March 31, 2019.

CREDIT RATING

The companys financial discipline and prudence is reflected by becoming a debt free company for the last few years and credit ratings ascribed by CRISIL

Long term rating : CRISIL A-/Stable (Reaffirmed)

Short term Rating : CRISIL A2+ (Reaffirmed)

Review of business operations:

In the year 2018-19 the Global Automotive Industry was passing through one of the most challenging times, which turned out to be a double edged affect for the Domestic Industry. The Domestic Industry performed very well and achieved the targets for the first two quarters and in the third quarter started slowing down and the last quarter drop down to the rock bottom because of various factors and also general elections. However, our Company achieved all time good financial results.

The Company posted remarkable performance growing 9.94% increase in the gross turnover of Rs.35616.53 lakhs during year 2018-19 as against Rs.32397.76 Lakhs in the previous year 201718 and Net turnover increase of 18.05% of Rs.28956.06 Lakhs during the year 2018-19 as compared to Rs.24527.71 Lakhs for the previous year 2017-18.

The company R&D expenditure is Rs. 61.32 Lakhs i.e. 0.25% of Net sales during the year to catch up with up-gradation of technology and to meet OEMs ever demanding quality and new developments requirement to improve life cycle of their product meeting BS-VI norms of environmental standards for Auto components.

The operations of the Company on the whole have been satisfactory.

In pursuance of National Electric Mobility Machine Plan (NEMMP) and other initiatives and Government to achieve long term growth in industry and reduced emissions and oil dependents. To meet these stringent environmental regulations on pollution and carbon emissions have necessitated heavy investments in both automobile and also auto parts such as our industries. To meet with the challenges of these BS-VI norms and having achieved BS-IV norms in the years 2015-16, 2016-17 and 2017-18 during the second and third quarter of 2018 have been many challenges and settling down for an improved performance post general elections.

As the rural economy is growing, the demand for two wheelers and three wheelers complying BS-IV norms may give encouraging results and hopeful of maintaining growth this year also. Company is now focusing customer preferences and distributions channels and always exploring new avenues in the export market which will give encouraging results.

Earnings Before Depreciation, Interest and Tax (PBDIT) at Rs.4524.92 lakhs as against previous year of Rs.4373.71 Lakhs. The Profit Before Tax was at Rs. 3175.20 lakhs as compared to Rs. 2928.30 lakhs in 2017-18 an increase of 8.43%

FUTURE PROSPECTUS:

In line with motto of ‘Reshaping our business for tomorrow Samkrg is serving the growing needs of our Business Accounts and Individual Customers of export and domestic and also OEM Customer segments by offering cost effective prices and different Products and Services. Our end to end operation across the value chain, from gross level customers enable us to deliver superior quality products. Over the years, we have built strong relationship with the domestic and overseas customers and other channel partners that has allowed us to serve all Customer segments through our nationwide professional distribution network. We are now leveraging this extensive network established for our products to extend our customercentric services.

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:

• In the participation of Annual Accounts the applicable Indian accounting standards have been followed and that there have been no material departures.

• 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 as at March 31, 2018 and the profit loss account to the Company for that period.

• The Directors had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Companies Act, 2013, for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities.

• The Directors had prepared the Annual accounts on a going concern basis and

• The Directors, in the case of 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

• The Directors had devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems were adequate and operating effectively.

• The Companys Internal Auditors have conducted periodic audit to provide reasonable assurance that the Companys 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.

RISK MANAGEMENT COMMITTEE

Risk management committee consists of the following Directors:

1. Mr. S.D.M. Rao - Managing Director
2. Mr. Pinninti Raghu Prakash Swamy - Director
3. Mr. K Chaitanya Abhishek - 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 sometimes 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:

1. Mr. S Kishore Chairman
2. Mr. Pinninti Raghu Prakash Swamy Member
3. Mr. K Chaitanya Abhishek Member

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 - 3.

STATEMENT ON DECLARATION GIVEN BY INDEPENDENT DIRECTORS UNDER SECTION 149(6)

The Independent Directors have submitted the declaration of independence as required pursuant Sec. 149(7) 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. K Chaitanya Abhishek, Ms. Nama Rishita, Mr. S. MadhavaRao.

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 directors 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 ti me 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 Companys 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 Companys 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 186:

The company has neither issued any Loans, Guarantees nor made any investments during the Financial year 2018-19.

PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES REFERRED TO Sec. 188(1)

The particulars of contracts or arrangements with related parties referred to Section 188(1) are prepared in form No.AOC-2 pursuant to Section 134(3)(h) of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014. The details of the transactions with related parties are given in the financial statements.

TRANSFER OF AMOUNTS TO RESERVES

The Company proposes to transfer an amount of Rs. 631.08 lakhs to the general reserve for the financial year ended 31st March, 2019.

LISTING OF EQUITY SHARES

The Companys equity shares are listed on BSE Ltd., Feroz Jeejeebai Towers, Dalal Street, Mumbai 400001.

MEETINGS OF THE BOARD OF DIRECTORS

The details of the Board of Directors Meeting held were given in the Report on Corporate Governance under Item No. 2(b).

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-1 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.

Information with respect to 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 is prepared and annexed as Annexure -2 to this report.

BOARD OF DIRECTORS

Shri S Karunakar, Whole Time Director who is liable to retire by rotation at this Annual General Meeting and being eligible, offers himself for re-appointment.

Shri V Chakrapani has ceased to be Director w.e.f. 09th September, 2018.

Shri K Chaitanya Abhishek has been appointed w.e.f. 29th October, 2018.

Shri Pinninti Raghu Prakash Swamy has been appointed w.e.f. 20th April, 2019.

Key Managerial Persons

Ms. Ratnakumari Nama has resigned from the post of Chief Financial Officer w.e.f. 15th May, 2019.

Shri Dinker Mishra having ICSI Membership No. ACS 48511 has been appointed as Company Secretary & Compliance Officer w.e.f. 20th April, 2019.

Shri Kota Ramesh has been appointed as Chief Financial Officer w.e.f. 16th May, 2019.

DEPOSITS

The Company has not accepted any Deposits in terms of Section 73 of the Companies Act, 2013 and the rules made there under and hence compliance with the same as not applicable.

AUDITORS

Statutory Auditors

At the Annual General Meeting held on 25th September, 2017 M/s. Sridhara Chary V & Co., Chartered Accountants, were appointed as statutory Auditors of the Company to hold office till the conclusion of the Annual General Meeting to be held in the calendar year 2022.

Auditors Report

There are no qualifications, reservations or adverse remarks made by M/s Sridhara Chary V & Co., chartered Accountants, Hyderabad Chartered Accountants (ICAI Reg. No.011478S) Statutory Auditors in their report for the Financial Year ended March 31st 2019..

Audit Committee

Composition of Audit Committee included in Corporate Governance report.

Corporate Governance

A separate report on Corporate Governance is annexed as part of the Annual Report along with the Auditors Certificate on its compliance.

VIGIL MECHANISM

The Board of Directors has 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 AUDITOR REPORT

As per the provisions of Section 204 of the Companies Act, 2013, the Board of Directors have appointed 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, 2019.

Secretarial Audit Report issued by Mr. V B S S Prasad, Practicing Company Secretary in form MR-3 is enclosed as Annexure - 4 to this Annual Report.

There are no qualifications 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 - 5 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 Companys nature of business during the financial year ending March 31st, 2019.

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, 2019 to the date of signing of the Directors 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, 2019, 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

Sd/-

S. D. M. RAO

CHAIRMAN &MANAGING DIRECTOR

Place: Hyderabad

Date: 29th May, 2019