DIRECTORS' REPORT Your Directors have pleasure in presenting the Forty Second Annual Report of your Company together with the Audited Balance Sheet as at March 31, 2015, the Statement of Profit & Loss for the year ended that date and the Auditors' Report thereon. REVIEW OF PERFORMANCE DRY CELL BATTERIES The Dry Cell Battery Industry production as a whole increased about 1.54% for the year 2014-15. Your Company's production has decreased from 569 million pieces to 532 million pieces showing decrease of 6.50%. The sales also decreased from 638 million pieces to 617 million pieces. In terms of value, your Company had registered a turnover of Rs.341crores as against Rs.350 crores in the previous year. LIGHTING PRODUCTS The sales volume of lighting products has decreased from 84.25 Lakh pieces to 61.22 Lakhs pieces as compared to the previous year. DIVIDEND Your Directors recommends a dividend of Rs.25/- per share (250%) for the year 2014-15. This Dividend, if approved, will be paid to the Shareholders whose names appear on the Register of Members as on 23rd September, 2015. The Company intends to pay the dividend on 29th September, 2015. FIXED DEPOSITS The Company has not accepted any deposits from the public. MANAGEMENT'S DISCUSSION AND ANALYSIS REPORT Management's Discussion and Analysis Report for the year under review, as stipulated under Clause 49 of the Listing Agreement with the Stock Exchanges in India, is presented in a separate section forming part of the Annual Report. SUBSIDIARIES, JOINT VENTURES OR ASSOCIATE COMPANIES There are no companies which have become or ceased to be its subsidiaries, joint ventures or associate companies during the year. DIRECTORS' RESPONSIBILITY STATEMENT Your Directors state that: a) in the preparation of the annual accounts for the year ended March 31, 2015, the applicable accounting standards read with requirements set out under Schedule III to the Act, have been followed and there are no material departures from the same; b) the Directors have selected such accounting policies and applied them consistently and made judgements 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, 2015 and of the profit of the Company for the year ended on that date; c) the Directors have taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting fraud and other irregularities; d) the Directors have prepared the annual accounts on a 'going concern' basis; e) the Directors have laid down internal financial controls to be followed by the Company and that such internal financial controls are adequate and are operating effectively; and f) the Directors have devised proper systems to ensure compliance with the provisions of all applicable laws and that such systems are adequate and operating effectively. CORPORATE GOVERNANCE A separate report on Corporate Governance along with Auditors' Certificate on its compliance is attached as Annexure - "B" to this report. RELATED PARTY TRANSACTIONS As per the requirements of the Companies Act, 2013 and Equity Listing Agreement, your Company has formulated a Policy on Related Party Transactions which is also available on Company's website at www.nippobatteries.com The Policy intends to ensure that proper reporting, approval and disclosure processes are in place for all transactions between the Company and Related Parties. This Policy specifically deals with the review and approval of Material Related Party Transactions keeping in mind the potential or actual conflicts of interest that may arise because of entering into these transactions. All Related Party Transactions are placed before the Audit Committee as well as Board for review and approval. Prior omnibus approval is obtained for Related Party Transactions on a quarterly basis for transactions which are of repetitive nature and/ or entered in the Ordinary Course of Business and are at Arm's Length. There were no contract / arrangement / transactions entered in to during the year ended March 31,2015 which were not at arm's length basis. All the material related party transitions exceeding ten percent of the annual consolidated turnover as per the last audited financial statement were entered during the year by the company are disclosed in accordance with section 134 (3) (h) of the Companies Act, 2013, in form AOC 2 as per Annexure -"C" of this report. CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE: The CSR committee comprises Mr.N.Ramesh Rajan, Chairman, Mr. S. Obul Reddy, and Mr. M. Subramanyam as other members. The Board has laid out the Company's policy on corporate social responsibility (CSR), and the CSR activities of the Company are carried out as per the instructions of the committee. The Committee also monitors the implementation of the framework of the CSR Policy and recommending the amount to be spent on CSR activities. During the year, the Company has spent 2% of its average net profits for the three immediately preceding financial years on CSR activities. The financial data / Annual Report pertaining to the Company's CSR activities for the financial year 2014-2015 is presented in the prescribed format in Annexure-"D" to the Board Report. The CSR Policy is available on our website www.nippobatteries.com RISK MANAGEMENT The Board has constituted a Risk Management Committee which has been entrusted with the responsibility to assist the Board in overseeing that all the risks that the organization faces such as strategic, financial, credit, market, legal, regulatory, reputational and other risks have been identified and assessed and there is an adequate risk management infrastructure in place capable of addressing those risks. The Company regularly updates to committee on the principal risks and uncertainties that can impact its ability to achieve its strategic objectives. In accordance with the Articles of Association of the Company Mr. P. Aditya Reddy and M. Subramanyam will retire by rotation at this ensuing Annual General Meeting. They being eligible, offer themselves for re-appointment. As per Ministry of Corporate Affairs (MCA) General Circular 14/2014 dated 09th June, 2014, all existing independent directors within one year from 01st April, 2014 should be re-appointed under Section 149 of the Companies Act, 2013 for a period of 5 years otherwise their terms will be expired on 31st March, 2015. Mr. VR.Gupte had resigned from the Board of your Company effective 15th April, 2015. Dr.S.A.Dave had resigned from the Board of your Company effective 15th April, 2015. The Board of Directors places on record their appreciation for the valuable contribution made by Mr. V.R.Gupte and Dr.S.A.Dave for the growth of the Company during their tenure as Director of the Company. The Company has received declarations from all the Independent Directors of the Company confirming that they meet with the criteria of independence as prescribed both under sub-section (6) of Section 149 of the Companies Act, 2013 and under Clause 49 of the Listing Agreement with the Stock Exchanges. Information about all the Directors proposed to be re-appointed is furnished in the Explanatory Statement under Section 102 of the Companies Act, 2013 under the heading "Information about the Directors proposed to be re-appointed" attached to the Notice of the ensuing Annual General Meeting for your consideration. As per Companies Act, 2013 and clause 49 of the Listing Agreement mandates that the Board shall monitor and review the Board evaluation framework and a formal annual evaluation needs to be made by the Board of its own performance and that of its committees and individual directors. Schedule IV of the Companies Act, 2013 states that the performance evaluation of independent directors shall be done by the entire Board of Directors, excluding the director being evaluated. The evaluation of all the directors and the Board as a whole was conducted based on the criteria and framework adopted by the Board. TRAINING OF INDEPENDENT DIRECTORS To familiarize the strategy, operations and functions of our Company, the executive directors make presentations / orientation programme to non -executive independent directors about the company's strategy, operations, product and service offerings, markets, organization structure, finance, human resources, production facilities and quality and risk management. The appointment letters of Independent Directors has been placed on the Company's website at www.nippobatteries.com MEETING OF INDEPENDENT DIRECTORS The Independent Directors of the Company had met during the year on 06th February, 2015 to review the performance of non- Independent Directors and the Board as a whole, review the performance of the Chairperson of the Company and had accessed the quality, quantity and timeliness of flow of information between the company management and the Board. MEETINGS OF THE BOARD Six meetings of the Board of directors were held during the year. 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. PERSONNEL Your Directors wish to place on record their appreciation for the dedication and hard work put in by the employees at all levels for the overall growth of your Company. Relations with the employees at Factory, Head office and other Branches were cordial during the year. In terms of the provisions of Section 197(12) of the Companies Act, 2013 read with Rules 5(2) and 5 (3) of the Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 the information required in respect of employees of the Company, will be provided upon request. As per section 136 (1) of the Companies Act, 2013 the report and accounts are being sent to the members and others entitled thereto. Any member interested in inspecting or obtaining copy of the statement of particulars of employees being forms part of the Report may contact the Company Secretary at Registered Office during working hours and any member interested in obtaining such information may write to the company secretary and the same will be furnished on request. NOMINATION AND REMUNERATION POLICY Your company recognizes the importance of human resource as its valuable assets and aligning the business objectives with specific measurable performance of individual objectives and targets. This policy on nomination and remuneration of Directors, Key Managerial Personnel (KMPs) and other employees has been formulated in terms of the provisions of the Companies Act, 2013 and the Listing Agreement to pay equitable remuneration to the directors, KMPs and employees of the Company. The objective and purpose of the Remuneration Policy is to determine qualifications, competencies, positive attributes and independence for the appointment of a director (executive / nonexecutive) and recommend to the Board policies relating to the remuneration of the directors, KMPs and other employees .It also ensures that recognition of performance encourages achieving better operational results. The Nomination and Remuneration Committee recommends the remuneration/commission payable to execute Directors which is approved by the Board of Directors, subject to the approval of shareholders, wherever necessary. The Board will have the discretion to retain the Managing Director, KMP and senior management personnel in the same position / remuneration or otherwise, even after attaining the retirement age, for the benefit of the Company. The Statement of Disclosure of Remuneration under Section 197 of Companies Act, 2013 and Rule 5(1) of Companies (Appointment and Remuneration of Managerial Personnel) Rules, 2014 is annexed as Annexure-(G) STATUTORY AUDITORS At the Annual General Meeting held on September 26, 2014 M/s. P. Srinivasan & Co, Chartered Accountants, were appointed as statutory auditors of the Company to hold office till the conclusion of the 44th Annual General Meeting of the Company. In terms of the first proviso to Section 139 of the Companies Act, 2013, the appointment of the auditors shall be placed for ratification at every Annual General Meeting of the company. Accordingly, the appointment of M/s. P. Srinivasan & Co, Chartered Accountants, as statutory auditors of the Company, is placed for ratification by the shareholders. In this regard, the Company has received a certificate from the auditors to the effect that if they are reappointed, it would be in accordance with the provisions of Section 141 of the Companies Act, 2013. There are no qualification or adverse remarks in the Auditor's Report which require any clarification/explanation. COST AUDITOR In terms of Section 148 of the Companies Act, 2013 read with Companies (Cost records and audits) Rules, 2014 the Company has appointed Mr. P. Raju Iyer, Practicing Cost Accountant, as the Cost Auditor of the Company for conducting the audit of cost records of the Company for the financial year 2014-15. SECRETARIAL AUDITOR As required under Section 204 of the Companies Act, 2013 and Rules thereunder the Board has appointed M.Damodaran & Associates, Practising Company Secretaries as Secretarial Auditor of the company to conduct Secretarial Audit for the financial year 2014-15. The Secretarial Audit Report for the financial year ended March 31, 2015 is annexed herewith marked as Annexure-(F) to this Report. The Secretarial Audit Report does not contain any qualification, reservation or adverse remark. WHISTLE BLOWER POLICY/VIGIL MECHANISIM The Company has adopted a whistle blower policy/ Vigil mechanism that covers directors and employees of the Company to bring to the attention of the management any issues which is to be in violation or in conflict with the fundamental business principles of the Company. The Company is committed to adhere to the highest standards of ethical, moral and legal conduct of business operations and in order to maintain these standards, the Company encourages its employees who have genuine concerns about suspected misconduct to come forward and express those concerns without fear of punishment or unfair treatment. No one may take any adverse action against any employee for complaining about, reporting, or participating or assisting in the investigation of, a reasonably suspected violation of any law, this Policy, or the Company's Code of Conduct and Ethics. All the employees have been given access to the Audit Committee. The Company Secretary is the designated officer for effective implementation of the policy and dealing with the complaints registered under the policy. The Whistle Blower Policy is available on the website of the Company www.nippobatteries.com ENERGY CONSERVATION, TECHNOLOGY ABSORPTION, FOREIGN EXCHANGE, ETC Your Company has always been in the forefront of energy conservation. Several measures to conserve energy and to reduce the costs associated with it have been taken. The details regarding conservation of energy, foreign exchange, technology absorption including R & D efforts (as required under Section 134 (m) of the Companies Act, 2013 are given in Annexure "A" to this Report. The Company has an in-house Research Development Department, where the main areas of focus are, Energy Conservation, Process upgradation and Environment Preservation. The Ministry of Science and Technology, Department of Scientific and Industrial Research, Government of India has recognized in-house R&D facilities of the Company. Your company had installed additional 0.276 M.W (existing 1.00 M.W) solar power plant at Tada and power generated through solar plant is being consumed in the factory. Your company also applied for REC accreditation for power generated through Solar Plant. EXTRACT OF ANNUAL RETURN The extract of Annual Return of the Company is annexed herewith as Annexure -"E" to this report. STATEMENT PURSUANT TO LISTING AGREEMENT The Company's Securities are listed with Bombay Stock Exchange (BSE) and National Stock Exchange (NSE). The Company has paid the Annual Listing fees to all the Stock Exchanges. Madras Stock Exchange Limited (MSE) did not achieve the prescribed turnover before the period stipulated by SEBI and hence has opted to seek voluntary surrender of its recognition. Hence your company's securities have been delisted from Madras Stock Exchange Limited. DETAILS OF SIGNIFICANT AND MATERIAL ORDERS PASSED BY THE REGULATORS There are no significant and material orders passed by the regulators or courts or tribunals impacting the going concern status of the Company. GENERAL Your Directors further states that during the year under review, there were no cases filed pursuant to the Sexual Harassment of Woman at Workplace (Prevention, Prohibition and Redressal) Act, 2013. ACKNOWLEDGEMENT Your Directors thank the Central and State Governments and the Banks for their continued help and support. Your Directors also thank the Authorised Wholesale Dealers, Stockiest and Retailers for their excellent support under difficult conditions and the Consumers for their continued patronage of your Company's products. Your Directors are especially thankful to the esteemed Shareholders for their continued encouragement and support. For and on behalf of the Board of Directors For Indo National Ltd N. Ramesh Rajan Chairman (DIN:01628318 Date: 07th August, 2015 Place: Chennai |