DIRECTORS' REPORT TO THE SHAREHOLDERS (Including Management Discussion & Analysis) Your Board of Directors are pleased to present the 69th Annual Report of the Company together with Audited Accounts for the year ended March 31, 2016. ECONOMIC ENVIRONMENT The year gone by was characterized by soft global commodity prices. Led by the most critical commodity crude, prices of virtually all commodities ruled weak throughout the year. However, this trend reversed somewhat towards the end of the year and commodity prices once again firmed up. This scenario threw up a mixed bag of reactions in the global economic activity and performance. In India, gross value added (GVA) in industry accelerated in the first half of the financial year. This was primarily led by manufacturing growth which gained from continued low input costs. However, in sharp contrast industrial production remained flat. Capital goods production fell into deep contraction since November 2015. An area of concern is slack rural demand which resulted in the consumer non-durable sector shrinking, particularly in the fourth quarter. The ray of hope was provided by the consumer durables sector which remained strong. This suggests that the urban demand is holding strong. On the other hand GVA in agriculture and allied activities moderated in the first half of the financial year 2015-16. However, as per indications in Q3 and Q4 there is every reason to believe that the advance estimates of Central Statistical Organization will be achieved during the year. Activities in the services sector of the economy expanded steadily throughout the year. The main drivers of this were trade, hotels, transport and communication. Although the construction sector has a huge inventory of unsold properties, demand for commercial real estate was boosted by demand from the IT sector. There are enough reasons to now look forward towards the next financial year with cautious confidence. Reserve Bank of India's Consumer Confidence Survey of March 2016 showed improvement in consumer sentiments. This is largely due to improved perceptions on overall economic conditions and income. Other lead and coincident indicators also point to a better future. RBI's industrial outlook survey suggests that business expectations for the first quarter of 2016-17 continue to be positive. Increase in air traffic - both passenger and cargo volumes, foreign tourist arrivals, automotive sales alongwith forecast of a good monsoon give reasons for a positive outlook. INDUSTRY STRUCTURE & DEVELOPMENT The Passenger Vehicle Division during the year under review grew by about 6% over the previous year. The Commercial Vehicle Division grew by 12% after zero growth last year. Overall the 3/4 Wheeler market grew by about 5%. The 2-Wheeler Sales grew by a modest 2%. COMPANY PERFORMANCE Automotive Batteries Sales of Automotive Batteries had a growth rate of 4.3% by volume in 2015-16 as compared to the previous year. The aftermarket sales of four wheeler batteries witnessed an overall growth of 10% in units from the previous year. In the two wheelers aftermarket, the growth rate during the year was nearly 14%. Sale of batteries in the four wheeler OEM division was however lower by about 2% in units during the year. In the OEM two wheelers, the Company witnessed a growth rate of 3% in sales as compared to that of previous year. Inspite of the competitive market conditions, your Company continues to remain the preferred supplier to most of the vehicle manufacturers in the country. Industrial Batteries Although the market in general for Industrial Divisions remained subdued for the greater part of this year, your Company was successful in registering double digit growth for both Institutional UPS and Traction divisions. This was made possible through innovative product offerings as well as greater market penetration across all customer groups. New and cost effective products were launched in the Home UPS Tubular Battery division, which were welcomed by the market. Industrial R&D benchmarked itself against global offerings in this year and has been successful in designing and developing products meeting these stringent norms. In certain categories like Plante, OPZs, etc your Company's product quality can compare very favourably with respect to global competition. R&D was also successful in developing and stabilising the Gel Tubular range in this financial year. Your Company has also geared up to expand rapidly in the Telecom Division, which is showing great promise going into the future. The Advanced VRLA designs in 2V VRLA have already been tested and found to be much superior in charge acceptance and performance and are expected to bolster your Company's presence in the market. The Solar Division has also been under focus where your Company has introduced new products in the cost-effective range thereby enhancing its competitiveness in the market place. Submarine Sale of Submarine Batteries for the FY 2015-2016 recorded an impressive growth rate of about 42%. Exports Despite a gloomy Global Automotive outlook, our export of Automotive Batteries registered a marginal growth of around 2% in value compared to the previous year, primarily through consolidation in the existing markets. The export of Industrial Batteries, Home UPS and Solar Systems recorded a volume growth of around 6.5% over the previous year. During the year, the Company was successful in making deeper inroads in the export of Automotive batteries in Dubai, Egypt and Republic of Congo, as well as deemed export. Batteries for buses of SBS Bus Company and for taxis of Comfort Taxi Company in Singapore were retained and continued to be supplied by your Company. In Export markets of Industrial Batteries, your Company was able to penetrate the African continent with Standby products while continuing to service Traction battery requirements to several countries against global competition. Technology Upgradation In order to maintain its leadership position, your Company is continuously focused on upgrading its product and manufacturing technology as well as acquire new and advanced technology to meet the emerging expectations of the customers. The in-house R&D Division is officially recognised by the Department of Scientific and Industrial Research, Government of India, as a fully accredited Research Centre in the field of energy storage. The R&D staff is actively involved in the development of new, cutting-edge products together with developments in new materials as well as advanced manufacturing techniques. The activities are in full consonance of the company objective of offering the most advanced storage solutions at minimum cost. Your company also acquires state-of-art technologies through technical collaboration agreements with leading international battery manufacturers. The in-house R&D plays a major role in providing the interface between the company priorities and the adoption of the collaborators technology. Your company has ongoing technical collaboration and assistance agreements with East Penn Manufacturing Company Inc, USA, (EPM), a leading high quality US manufacturer of lead-acid batteries and related items. EPM is providing technical assistance and support for the manufacture of both automotive and industrial batteries, as well as to the two captive lead smelting units belonging to your subsidiary company. Major upgradations and introduction of most advanced product design and manufacturing technologies are currently in progress for the manufacture of automotive batteries of the highest quality. Your Company also has agreements with Hitachi Chemicals (formerly Shin-Kobe Electric Machinery Co. Limited), Japan for a variety of automotive and VRLA industrial products. Recent collaborative work between the two companies has resulted in the launching of an advanced VRLA solution for the ever-growing telecom market with un-matched life expectancy. Apart from the above, your Company also has ongoing technology cooperation agreement with Furukawa Battery Company Limited, Japan for advanced, maintenance free batteries for 4 wheelers as well as for VRLA batteries for 2-wheelers. HIGHLIGHTS OF PERFORMANCE Your Company recorded a Net Sales of Rs. 6,809.18 crores in 2015-16 as compared to Rs. 6,865.54 crores in the previous year with a corresponding profit before tax of Rs. 906.27 crores as compared to Rs. 798.49 crores. Consolidated Financial Statements In accordance with Accounting Standard 21, Consolidated Financial Statements form part of the Annual Report & Accounts. These statements have been prepared on the basis of audited financial statements received from the subsidiary companies as approved by its respective Board of Directors. Dividend Your Company has paid an interim dividend at the rate of 160% i.e. @ Rs. 1.60 per equity share of Re.1/- each (Previous Year 150%) on the equity shares to the shareholders, whose names appeared on the Register of Members on November 07, 2015. Your Directors are now pleased to recommend a final dividend at the rate of 80% i.e. Re. 0.80 per equity share of Re.1/- each (Previous year 70%) for the year ended March 31, 2016, subject to approval of the shareholders at the ensuing Annual General Meeting. Consequently, the total dividend for the year ended March 31, 2016 including the interim dividend paid during the year, amounts to 240% i.e. Rs. 2.40 per equity share of Re.1/-each (Previous year 220%). SHARE CAPITAL The paid up equity share capital as on March 31, 2016 was Rs. 85 crores, divided into 85,00,00,000 equity share of face value of Re. 1/- each. A) Issue of equity shares with differential rights The Company did not issue equity shares with differential rights during the financial year 2015-16. B) Issue of sweat equity shares The Company did not issue sweat equity shares during the financial year 2015-16. C) Issue of employee stock options The Company did not issue stock options during the financial year 2015-16. D) Provision of money by company for purchase of its own shares by employees or by trustees for the benefit of employees The Company does not have a scheme for purchase of its own shares by employees or by trustees for the benefit of employees. DEPOSITS During the year under review the Company did not accept any deposits from the public within the ambit of Section 73 of the Companies Act, 2013 and the Companies (Acceptance of Deposits) Rules, 2014. PARTICULARS OF LOANS, GUARANTEES OR INVESTMENTS Pursuant to Section 186 of the Companies Act, 2013, the details of the loans given (Note nos.14 and 20), guarantees on securities provided (Note no. 37) and investments made (Note nos.13 and 16) by the Company during the year under review, have been disclosed in the financial statements. MATERIAL CHANGES AND COMMITMENTS There has been no material changes which have occurred subsequent to the close of the financial year of the Company to which the financial statements relates and the date of the report, for example: Settlement of tax liabilities; Operation of patent rights; Depression in market value of investments; Institution of cases by or against the company; Destruction of any assets or disposal of a substantial part of undertaking; Changes in capital structure; Alteration in wage structure arising out of trade union negotiation; and Material changes concerning purchase of raw material and sale of the product. AUDITORS Statutory Auditors and their Report M/s S R Batliboi & Co LLP, Chartered Accountants, who retire at the ensuing Annual General Meeting of the Company are eligible for re-appointment. They have confirmed their eligibility under Section 141 of the Companies Act, 2013 and the Rules framed thereunder for re-appointment as Auditors of the Company. As required under Regulation 33(1)(d) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the auditors have also confirmed that they hold a valid certificate issued by the Peer Review Board of the Institute of Chartered Accountants of India. The Statutory Auditors have not reported any incident of fraud to the Audit Committee of the Company in the year under review. Cost Auditors Pursuant to Section 148 of the Companies Act, 2013 read with the Companies (Cost Records and Audit) Rules, 2014 (as amended) the cost records maintained by the Company in respect of the products manufactured by the Company is required to be audited. Your Directors, on the recommendation of the Audit Committee has appointed M/s Shome and Banerjee, Cost Accountants to audit the cost records of the Company for the financial year 2016-17 at a remuneration of Rs. 9,00,000/- (Rupees Nine Lakhs only) plus out-of-pocket expenses and taxes as applicable. A resolution regarding ratification of remuneration payable to M/s Shome & Banerjee, Cost Accountants, forms part of the Notice convening the 69th Annual General Meeting of the Company. Secretarial Auditors & their Report Pursuant to the provisions of Section 204 of the Companies Act, 2013 read with the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014, the Company has appointed M/s S M Gupta & Co., Company Secretaries to undertake audit of secretarial and other related records of the Company. The Secretarial Audit Report is annexed herewith as "Annexure - I". The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. BUSINESS RESPONSIBILITY REPORT The Ministry of Corporate Affairs, Government of India had issued the 'National Voluntary Guidelines on Social, Environmental and Economic Responsibilities of Business'. These Guidelines contain certain Principles which are to be adopted by companies as part of its business practices and disclosures regarding the steps taken to implement these Principles through a structured reporting format, viz. Business Responsibility Report. Pursuant to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, your Company has prepared the Business Responsibility Report and placed on the web-site of the Company. CORPORATE GOVERNANCE Transparency is the cornerstone of your Company's philosophy and all requirements of Corporate Governance are adhered to both in letter and spirit. All the Committees of the Board of Directors meets at regular intervals as required in terms of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015. Your Board of Directors has taken all necessary steps to ensure compliance with all statutory requirements. The Directors and Key Management Personnel of your Company have complied with the approved 'Code of Ethics for Board of Directors and Senior Executives' of the Company. The Report on Corporate Governance as required under the SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015 forms part of and is annexed herewith marked as "Annexure - II". The Auditors' Certificate on compliance with Corporate Governance requirements is also attached to this Report. Further as required under Regulation 17(8) of SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, a certificate from the Managing Director & CEO and Director-Finance & CFO is being annexed with this Report. BUSINESS EXCELLENCE Your Company has well-articulated TQM Model developed to make competitive organisation, satisfying all its stakeholders namely shareholders, partners, customers & employees. TQM initiatives have been deployed across organisation to address the immediate need & priorities, as well as long term sustainability of organisation. Focus on building distinguished corporate culture like 5S, Kaizen, TPM, Customer Centricity, Transparency, Innovation & Creativity is high, and several campaigns, events and activities have been conducted to involve employees. Impact & effectiveness of TQM initiatives are closely monitored & continually improved. Your Company has deployed Quality Circle ('QC') initiative in all its factories to involve operators in continuous improvement journey, develop their competency & healthy relationship. QC teams regularly participates in external competitions organised by QCFI. During the year a total of 69 QC awards have been received by QC teams. Two employees of your company have been selected for "Prime Minister Shram Shree Award" for their innovation & contribution in the field of manufacturing. Your Company's manufacturing excellence journey is followed through TPM Initiative. The maturity in TPM practice is assessed regularly by JIPM Japan, the effects of TPM on key result areas like OEE, Yield, Energy, Productivity, Quality etc. are evaluated along with approach & its deployment. As an assessment outcome of JIPM Japan, two factories (Haldia & Taloja) have been awarded "Award for Excellence in Consistent TPM Commitment - 2015" by JIPM Japan. During the year, the TPM initiative is now extended to upstream partners to build their in manufacturing excellence, and realise a competitive extended supply chain partners. OCCUPATIONAL HEALTH, SAFETY & ENVIRONMENT Your Company has effectively deployed policies on Safety, Occupational Health & Environment at all locations. It continually focus on improving the effectiveness of system processes, through globally accepted standards. During the year OHSAS 18001 standards have been deployed and certified at 5 factories (Hosur, Bawal, Shamnagar, Haridwar & Roorkee) and ISO 14001 in 2 factories (Haridwar & Roorkee). Your Company develop and manufacture products that are safe, eco-friendly and economical. Our products enhance people's safety and reduce contamination to environment, also during their subsequent recycling and disposal. Your Company design processes to ensure that people's health and safety and effects on the environment. Your company is fully prepared to deal with emergencies due to fire & safety. Your Company reviews its processes and its behavior on a regular basis and measure their effects on people and on the nature. This is the process of identifying potential for improvement, and ensures the effectiveness of our program towards work safety, people's health and the environment. Every year, your Company celebrates National Safety Day. During the week, activities like fire fighting training, emergency preparedness training and basic life safety training are provided to associates. Effective medical surveillance plan has been deployed in manufacturing. Every year, "Lead in Blood" test is organised for all associates within the Plant. The maturity level of occupational, health, safety and environmental system at your Company are audited by external certification body. During the financial Year 2015-16 your company has been awarded with "Annual Greentech Environmental Gold Award" 2015 for Taloja Factory "Annual Greentech Environmental Gold Award" 2015 for Chinchwad Factory "Annual Greentech Environmental Silver Award" 2015 for Hosur Factory. CORPORATE SOCIAL RESPONSIBILITY Your Company always seeks ways to make a positive impact on the society at large through various CSR activities. Environment, basic education, health, women's empowerment and community development continues to remain the main pillars of your company's CSR philosophy, even before the passing of the Companies Act, 2013. The Board of Directors of your Company has approved a Corporate Social Responsibility (CSR) Policy namely "EIL CSR Policy" in accordance with Section 135 of the Companies Act, 2013 and the Companies (Corporate Social Responsibility Policy) Rules, 2014 notified by the Ministry of Corporate Affairs, Government of India, which is available at '<http://www>. exideindustries.com/corporate/about-us/our-policies' The disclosures as per Rule 9 of Companies (Corporate Social Responsibility Policy) Rules, 2014 is annexed hereto as "Annexure - III" During the year, the Company has invested significant time and resources in laying down a strong foundation for CSR activities like programme identification, monitoring mechanism and creation of enabling infrastructure to scale up existing / new projects. The Company has also put in place institutional arrangements for further expansion to newer geographical locations. Preference was given to allocate and spend higher amount on activities pertaining to local area and areas around the Company's factories. However, being early years in implementation of CSR, the Company has faced practical problems in utilising its identified areas of spent. Lack of co-ordination and consensus amongst the beneficiaries, local villagers, gram panchayats and other related agencies to carry out the identified projects by the Company has contributed to the delay and utilisation of entire amount of the CSR spent. As the Company's foreign shareholding exceeds 50%, any amount contributed by it to certain institutions / agencies would need prior approval of the Ministry of Home Affairs (MHA) under the Foreign Contribution Regulation Act, 2010 (FCRA). Some of the projects identified by the Company, which are engaged in social activities aligned with the Company's CSR Policy, could not materialise due to procedural delays in getting the requisite approval. As a result of these, there was a shortfall in the total CSR spent from its total obligations of at least 2% of the average net profits made during the three immediately preceding financial years. The initiatives taken by the Company will certainly help in deploying larger funds across social sectors and achieve rapid scale in utilising its full CSR budget in the coming financial years. The Company remains committed to the cause of CSR and will take necessary steps to fulfill its CSR obligations during the coming financial years. The Company is however committed to the cause of CSR and will take necessary steps to fulfill its CSR obligations during the coming financial years. INTERNAL CONTROLS Your Company has an adequate system of internal controls commensurate with its size and scale of operations that are designed to provide reasonable reassurance that the company's financial statements are reliable and prepared in accordance with the law. The Internal Audit function comprising of both external audit firms, who have been appointed as internal auditors, and also the in-house internal audit team conducts the audits at each factory, branch, regional and head office as per the annual audit plan with the objective to evaluate and continuously improve the effectiveness of internal controls and governance processes. Additional areas, if any, identified during the year are taken up as special assignments. The key Internal Audit findings are reviewed periodically by the Audit Committee of the Board of Directors and corrective action, as deemed necessary, is taken. Your Company also has laid down procedures and authority levels with suitable checks and balances encompassing the entire operations of the Company. OUTLOOK The overall outlook on economic growth of the country has improved with the new Government assuming the office and initiating the process of long standing policy reforms. It is expected that this will facilitate the industry to grow at a faster rate in the medium to long term. The process of softening of interest rate has already started and it is expected that with the inflation under control, it will continue it's southward journey. Further the forecast of good monsoon during the current year is also expected to give a much needed impetus to manufacturing which would consequently increase consumption. The industry and infrastructural sectors are expected to benefit out of this and the automobile industry, in particular, is expected to perform much better in coming years. OPPORTUNITIES AND THREATS Your Company has growth opportunities in industrial and automotive divisions specially solar, telecom, e-rickshaw and commercial vehicle divisions. Your Company has strategies in place to tap the potential. However the new entrants and aggressive expansion plan of existing competitors are biggest challenge. The competitive price, network strategy, technology & product quality are critical to our success. Your company has advantage of having strong brand value, large network, widely spread product range, strong partners and collaborators relationship. It is fully prepared to meet the challenge of competition leveraging its competitive strengths of network quality, technology, product range and brand value. In Lead Acid Storage battery your Company has a very large share of business in divisions like Automotive, OEM, Power, Project, Manufacturing and Solar. Economy plays a very important role in these divisions. A subdued economy is a threat to your Company. RISKS AND CONCERN Your company is exposed to various business risks. These risks are driven through external factors like economic environment, competition, regulations etc. Cost & Quality are critical success factors in current business environment. Risk of losing market share/ ability to maintain high share or losing business share with key accounts are rooted on these factors. Lead cost that drives the price of battery is extremely critical for your Company. This is being managed effectively, leveraging the capacity & efficiency of subsidiary lead smelting facilities & competitive sourcing strategy. Productivity improvement in manufacturing through TPM initiative is continuous process that is helping to reduce the conversion cost in spite of fluctuating energy cost & rising wages. Product and process improvement is a continuous process of your company. Capability of upstream partners to fulfill changing cost & quality expectation is critical. The suppliers capability development initiative has been implemented rigorously. In order to improve the controls, detailed guideline has been issued in Vendor Manual. Manufacturing excellence initiative TPM has been promoted to suppliers for quality & productivity improvement. Your Company is having complex and diverse supply chain, order fulfilment and fulfilment of delivery expectation eliminating the risk of failure/disruptions which is critical. In this regard SCM is continually improved through streamlining processes & strengthened controls. It is being further improved to achieve global benchmarks, through Project Sun Rise under consultation of E & Y. VIGIL MECHANISM/WHISTLE BLOWER POLICY In accordance with the provisions of the Companies Act, 2013 read with the Companies (Meeting of Board and its Powers) Rules, 2014 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, every listed Company is required to have a Vigil Mechanism for the Directors and employees to report their genuine concerns and grievances. Your Company has a Whistle Blower Policy in place and the same is also available in the web-site under the web-link '<http://www.exideindustries.com/> corporate/about-us/our-policies'. The Audit Committee of Directors are entrusted with the responsibility to oversee the Vigil mechanism. SUBSIDIARIES Your Company has four Indian subsidiaries viz, Chloride Metals Limited, Chloride Power Systems & Solutions Limited, Chloride International Limited, Exide Life Insurance Company Limited and three foreign subsidiaries, viz. Chloride Batteries S.E. Asia Pte. Ltd., Singapore, Espex Batteries Limited, UK and Associated Battery Manufacturers (Ceylon) Limited, Sri Lanka. Exide Life Insurance Company Limited, which is a 100% subsidiary of your Company, is engaged in the business of life insurance and providing financial investment products. The total premium collected by the said Company during the year ended March 31, 2016 was Rs. 2,016.24 crores. The said Company recorded a profit of Rs. 88.76 crores against a profit of Rs. 65.26 crores in the previous year. Pursuant to the Scheme of Amalgamation sanctioned by the Hon'ble High Court of Calcutta, Chloride Alloys India Limited, a 100% subsidiary of the Company having its plant at Kolar District, Karnataka was amalgamated with Chloride Metals Limited, another 100% subsidiary of your Company, having its plant at Markal, Pune with effect from March 01, 2016. Consequent to the said amalgamation, Chloride Alloys India Limited ceased to be subsidiary of your Company. Both the Companies were engaged in the similar business of running smelting plants having integrated facilities for extracting lead from exhausted batteries and manufacturing and supplying recycled lead and lead alloys. The consolidated net sale of Chloride Metals Limited was Rs.1,007.68 crores and the profit before tax was Rs. 24.15 crores. Chloride Power Systems & Solutions Limited, a 100% subsidiary of your Company having its factory at Sector V, Salt Lake City, Kolkata is engaged in manufacture and sale of battery chargers, D.C Power Systems and associated equipment. During the year 2015-2016, the said Company achieved a turnover of Rs. 58.09 crores and a profit before tax of Rs. 2.53 crores representing a decrease of 22% and 58% respectively over the previous year. Chloride International Limited is presently not engaged in any trading or manufacturing activity and has income from rent and interest on securities. The income of Chloride International Limited during 2015-16 amounted to Rs. 70.86 lakhs with a profit before tax of Rs. 52.70 lakhs. Your Company also holds 100% of the share capital in Chloride Batteries S.E. Asia Pte. Ltd., Singapore. The said Company is engaged in the business of lead acid batteries and caters to the South East Asian and Australian markets. During the year 2015-2016, the said Company achieved a turnover of SGD 20.5 million and incurred a loss of SGD 3.1 million. Espex Batteries Limited, UK, 100% subsidiary of your Company is engaged in marketing and selling of lead acid batteries for industrial applications. During 2015-2016, the Company achieved a turnover of GBP 4.742 million and made a profit before tax of GBP 109,833. Your Company also holds 61.5% of the share capital in Associated Battery Manufacturers (Ceylon) Limited, Sri Lanka. The said Company is engaged in the business ofmanufacturing and marketing of lead acid batteries. During the year 2015-16, the said Company achieved a turnover of SLR 2341 million and made a profit before tax of SLR 205.9 million. The profit and loss accounts, balance sheet, auditors' report and directors' report of the subsidiaries are not attached to the annual accounts of your Company pursuant to general exemption granted vide general circular number 2/2011 dated 08.02.2011 issued by the Government of India, Ministry of Corporate Affairs and in terms of Section 136 of the Companies Act, 2013. Pursuant to the provisions of Section 129(3) of the Companies Act, 2013 read with Rule 5 of Companies (Accounts) Rules, 2014, a statement containing salient features of financial statements of subsidiaries in Form AOC 1 is attached to the Accounts. However, the necessary details about the subsidiaries are given in the consolidated financial statements attached to the annual accounts. Further any shareholder of the Company or the subsidiary Companies may obtain copies of these documents by writing to the Company Secretary at the registered office of your Company. Copies of the annual accounts of the subsidiaries would also be available for inspection by any such person at the registered office of your Company on any working day. EXTRACT OF THE ANNUAL RETURN The extract of the Annual Return in Form No. MGT - 9 attached as "Annexure - IV" shall form part of the Board's report. DIRECTORS At the Meeting held on October 28, 2015, your Board appointed Mr. Nawshir H Mirza as an Additional Director to hold office till conclusion of the ensuing Annual General Meeting of the Company. The Company has received a Notice as per the provisions of Section 160(1) of the Companies Act, 2013, from a Member proposing the appointment of Mr. Nawshir H Mirza. The Company has also received confirmation from Mr. Mirza stating that he meets the criteria of independence as provided under Section 149(6) of the Companies Act, 2013 and in the opinion of your Board he is a person of integrity and possesses relevant expertise and experience for being appointed as Independent Director. Mr. P. K. Kataky, Managing Director and Chief Executive Officer will be retiring from the directorship of the Company with effect from the close of business hours on April 30, 2016. Your Board of Directors wishes to record its sincere appreciation for the services rendered by Mr. Kataky during his long association with the Company. Your Board of Directors at its Meeting held on April 27, 2016 appointed Mr. Gautam Chatterjee as the Managing Director and Chief Executive Officer with effect from May 01, 2016. Mr. Chatterjee joined the services of the Company in 1982 and was appointed a Whole-time Director on May 13, 1996. Mr. Chatterjee became the Joint Managing Director with effect from May 01, 2013 and was heading the automotive and submarine battery business of the Company. At the said Meeting, Mr. Arun Mittal was appointed as an Additional and Whole-time Director to be designated as Director-Industrial, with effect from May 01, 2016. A Notice has been received from a Member under Section 160(1) of the Companies Act, 2013 proposing the appointment of Mr. Arun Mittal as a Director at the ensuing Annual General Meeting. Mr. A. K. Mukherjee, Director - Finance & CFO and Mr. Nadeem Kazim, Director - HR & Personnel, retire by rotation and being eligible offer themselves for re-appointment. Your Board of Directors at its meeting held on April 27, 2016 appointed Mr. Gautam Chatterjee as Managing Director and CEO for a tenure of 3 years with effect from May 01, 2016. Necessary information pursuant to SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 in respect of Directors to be appointed/re-appointed at the ensuing Annual General Meeting are given in the Annexure to the Notice convening the Annual General Meeting scheduled to be held on July 19, 2016. None of the Directors of your Company are disqualified for being appointed as Directors, as specified in Section 164(2) and Rule 14(1) of Companies (Appointment and Qualification of Directors) Rules, 2014. All Independent Directors have given declarations that they meet the criteria of independence as laid down under Section 149(6) of the Companies Act, 2013 and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. BOARD EVALUATION Pursuant to the provisions of the Companies Act, 2013 and SEBI (Listing Obligations & Disclosure Requirements) Regulations, 2015, the Board has carried out an annual evaluation of its own performance, as well as the evaluation of the working of its Committees and individual Directors, including Chairman of the Board. The performance evaluation of all the Directors was carried out by the Nomination and Remuneration Committee. The performance evaluation of the Board as a Whole, Chairman and the Non-Independent Directors was carried out by the Independent Directors. This exercise was carried out in accordance with the Remuneration Policy framed by the Company within the framework of applicable laws. While evaluating the performance and effectiveness of the Board, various aspects of the Board's functioning such as adequacy of the composition and quality of the Board, time devoted by the Board to Company's long-term strategic issues, quality and transparency of Board discussions, execution and performance of specific duties, obligations and governance were taken into consideration. Committee performance was evaluated on the basis of their effectiveness in carrying out respective mandates. A separate exercise was carried out to evaluate the performance of Independent Directors including the Chairman of the Board, who were evaluated on parameters such as level of engagement and contribution to Board deliberations, independence of judgement, safeguarding the interest of the Company and focus on creation of shareholders value, ability to guide the Company in key matters, attendance at meetings, etc. The Executive Directors were evaluated on parameters such as strategy implementation, leadership skills, quality, quantity and timeliness of the information flow to the Board, etc. The Directors expressed their satisfaction with the evaluation process. REMUNERATION POLICY In accordance with the provisions of Section 178(3) of the Companies Act, 2013 and the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company has remuneration policy in place. The objectives and key features of this Policy are: a. Formulation of the criteria for determining qualifications, positive attributes of Directors, Key Managerial Personnel (KMP) and Senior Management Personnel and also independence of Independent Directors; b. Aligning the remuneration of Directors, KMPs and Senior Management Personnel with the Company's financial position, remuneration paid by its industry peers etc.; c. Performance evaluation of the Board, its Committees and Directors including Independent Directors; d. Ensuring Board diversity; e. Identifying persons who are qualified to become Directors and who may be appointed in senior management in accordance with the criteria laid down; f. Directors' induction and continued training. The Remuneration Policy is available on the Company's website under the following web-link '<http://www.exideindustries>. com/corporate/about-us/our-policies.' During the year under review four Board Meetings and four Audit Committee Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening gap between the Meetings was within the period prescribed under the Companies Act, 2013. The details of constitution of the Board and its Committees are given in the Corporate Governance Report. COMPLIANCE WITH CODE OF ETHICS FOR BOARD OF DIRECTORS AND SENIOR EXECUTIVES All Directors and Senior Management Personnel have affirmed Compliance with the Code of Ethics for Board of Directors and Senior Executives. A Declaration to that effect is attached with the Corporate Governance Report. RISK MANAGEMENT POLICY In accordance with the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Board of Directors of the Company are responsible for framing, implementing and monitoring the risk management plans of the Company. The Company has a "Risk Management Policy" to identify risks associated with the Company, assess its impact and take appropriate corrective steps to minimise the risks which may threaten the existence of the company. The Risk Management Policy is available on the Company's website under the following web-link '<http://www.exideindustries>. com/corporate/about-us/our-policies.' LISTING The equity shares continue to be listed on the BSE Limited (BSE), National Stock Exchange of India Limited (NSE) and the Calcutta Stock Exchange Limited (CSE). The Company has paid annual listing fee for the financial year 2016-17 to BSE, NSE and CSE. PARTICULARS OF CONTRACTS OR ARRANGEMENTS WITH RELATED PARTIES All related party transactions those were entered during the financial year were in the ordinary course of business and on an arm's length basis. There were no materially significant related party transactions entered into by the Company with Promoters, Directors, Key Managerial Personnel or other persons which may have a potential conflict with the interest of the Company. All related party transactions are placed before the Audit Committee for review and approval. Prior omnibus approval is also obtained from the Audit Committee for the related party transactions which are of repetitive nature and which can be foreseen and accordingly the required disclosures are made to the Audit Committee on quarterly basis in terms of the omnibus approval of the Committee. The policy on materiality of related party transactions and also on dealing with related party transactions as approved by the Audit Committee and the Board of Directors is uploaded on the web-site under the following web-link '<http://www>. exideindustries.com/corporate/about-us/our-policies.' Since all related party transactions entered into by the Company were in the ordinary course of business and were on an arm's length basis and there were no material related party transactions during the year, Form AOC - 2 is not applicable to the Company. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS OR COURTS OR TRIBUNALS IMPACTING THE GOING CONCERN STATUS AND COMPANY'S OPERATIONS IN FUTURE There are no significant material orders passed by the Regulators/Courts which would impact the going Concern status of the company and its future operations. CONSERVATION OF ENERGY, TECHNOLOGY ABSORPTION AND FOREIGN EXCHANGE EARNINGS AND OUTGO Information pursuant to Clause (m) of Sub-Section (3) of Section 134 of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014, is annexed herewith as "Annexure - V" HUMAN RESOURCES Your company recognises that the purpose of Human Resources is to be a catalyst and change agent. Our HR policies are geared to attain these objectives of ensuring sustained business performance, while simultaneously addressing the needs of its multiple stakeholders. Your Company has well laid down, objective and transparent processes in the HR levers of Recruitment, Selection, Performance Management and Talent Management. Several L&D interventions have been carried out towards organisational capability building. Moreover succession planning, career planning, job rotation, Hi-potential identification and talent pipeline development process continues to be our priority towards building sustainable bench strength for the future. The Industrial Relations scenario continued to be largely positive across all Exide manufacturing locations. During the year under review, long term agreements were signed with the Trade Unions at Taloja, Hosur, Haldia and Shamnagar plant. The total number of employees of the Company as on March 31, 2016 stood at 5,299. PARTICULARS OF EMPLOYEES The information required pursuant to Section 197 read with Rule 5 of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 in respect of employees of the Company, will be provided upon request. In terms of Section 136 of the Act, the Report and Accounts are being sent to Members and others entitled thereto, excluding the information on employees particulars which are available for inspection by the Members at the Registered Office of the Company during business hours on working days of the Company up to the date of the ensuing Annual General Meeting. If any Member is interested in obtaining a copy thereof, such Member may write to the Company Secretary in this regard. Further, we confirm that there was no employee employed throughout the financial year or part thereof, who was in receipt of remuneration in the financial year which, in the aggregate, is in excess of that drawn by the Managing Director and Whole-time Directors and holds by himself or along with his spouse and dependent children, not less than two percent of the equity shares of the Company. Particulars of employees pursuant to Section 134(3)(q) of the Companies Act, 2013 read with Rule 5(1) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed hereto and marked as "Annexure - VI". PREVENTION OF SEXUAL HARASSMENT AT WORKPLACE As per the requirement of The Sexual Harassment of Women at Workplace (Prevention, Prohibition & Redressal) Act, 2013 ('Act') and Rules made thereunder, your Company has constituted Internal Complaints Committees (ICC). The Company has designated the external independent member as a Chairperson for each ofthe Committees which was beyond the requirements of law. During the year, no complaints with allegations of sexual harassment were filed with the Company. DIRECTOR'S RESPONSIBILITY STATEMENT To the best of their knowledge and belief and according to the information and explanations obtained by them, your Directors make the following statements in terms of Section 134(3)(c) of the Companies Act, 2013: a. That in the preparation of the annual financial statements, the applicable accounting standards have been followed along with proper explanation relating to material departures, if any; b. That the Directors have selected such accounting policies and applied them consistently and made judgments and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit or loss of the Company for that period; c. That the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of this Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d. That the Directors have prepared the annual accounts on a going concern basis; e. That proper internal financial controls were in place and that the financial controls were adequate and were operating effectively; and f. That systems to ensure compliance with the provisions of all applicable laws were in place and were adequate and operating effectively. FORWARD LOOKING STATEMENTS This Report contains forward-looking statements that involve risks and uncertainties. When used in this Report, the words "anticipate", "believe", "estimate", "expect", "intend", "will" and other similar expressions as they relate to the Company and/or its businesses are intended to identify such forward-looking statements. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performance or achievements could differ materially from those expressed or implied in such forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of their dates. This Report should be read in conjunction with the financial statements included herein and the notes thereto. ACKNOWLEDGEMENT Your Directors would like to record its appreciation for the co-operation and support received from its employees, shareholders, Government agencies and all stakeholders. On behalf of the Board of Directors (R. G. Kapadia) Chairman Date: April 27, 2016 Place: Mumbai |