REPORT OF THE BOARD OF DIRECTORS Your Directors have pleasure in presenting the Eleventh (11th) Annual Report together with the accounts for the year ended March 31, 2016 and other prescribed particulars: 1.2 Appropriation During the year 2015-16, the board of directors declared an interim dividend of 100% (i.e., Rs.10.00 per share) on the equity share capital on March 10, 2016. The interim dividend was paid on March 23, 2016 to all the eligible shareholders whose name appeared in the registered of members of the Company as on March 18, 2016 (being the Record Date) fixed for this purpose. In view of this, the board did not recommend any final dividend for the year ended March 31, 2016. After transfer of Rs. 13.37 crores to the general reserve, Rs. 9.53 crores has been retained as surplus in the Profit and Loss Account. 1.3 Management Discussion & Analysis Your Company is engaged in the manufacturing and marketing of auto components for transportation industry viz., friction material (Brake Linings, Clutch Facings, Clutch Buttons, Disc Pads, Brake Shoes and Brake Blocks). A detailed analysis on the performance of the industry, the Company, internal control systems, risk management are discussed in the Management Discussion and Analysis report forming part of this report and annexed as 'Annexure A'. 2. Board of Directors 2.1 Composition The composition of the Board of Directors of the Company is furnished in the Corporate Governance Report annexed to this report. During the year, Mr. Vinay Lakshman was co-opted to the Board as an additional director with effect from October 1, 2015. The Board has, subject to the approval of shareholders, appointed Mr. Vinay Lakshman as Managing Director for a period of three years, viz., from October 1, 2015 to September 30, 2018. The terms and conditions of appointment of independent directors have been disclosed on the website of the Company and available at <http://rane>. co.in/pdf/investors/rbl/rbltermsid.pdf All directors have affirmed compliance with the Code of Conduct of the Company. The independent directors have affirmed that they satisfy the criteria laid down under section 149(6) of the Companies Act, 2013 (Act) and SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR). 2.2 Retirement by rotation At the ensuing Annual General Meeting (AGM), Mr. Harish Lakshman (DIN 00012602), retires by rotation and being eligible, offers himself for re-appointment. The notice convening the AGM includes the proposal for his re-appointment as director. 2.3 Board Meetings A calendar of meetings is prepared and circulated in advance to the directors. During the year, five (5) Board Meetings were convened and held, the details of which are given in the Corporate Governance Report. The intervening period between two consecutive meetings was less than 120 days. 2.4 Meeting of Independent Directors During the year, two separate meetings of Independent Directors were held. In the said meetings, the independent directors assessed the quality, quantity and timeliness of flow of information between the management and the Board at the meeting and expressed that the current flow of information and contents were adequate for the Board to effectively perform its duties. Also in the meeting of Independent Directors, the performance of the non-independent directors and the board as a whole was reviewed and the performance of the chairperson of the Company was reviewed taking into account the views of executive directors and non-executive directors. 3. Board and Management 3.1 Board evaluation During the year, a formal process for annual evaluation of performance of Board, its committees and directors was carried out as per the criteria laid down by the Nomination and Remuneration Committee, pursuant to the provisions of the Companies Act, 2013 (CA 2013) and clause 49 of the listing agreement as applicable at that time. The criteria for evaluation of board and its committees were founded on the structure, composition, board-management relationship, effectiveness in terms of roles and responsibilities and processes encompassing the information flow and functioning. The guiding standards for the assessment of performance of directors (including the independent directors) were their attendance and participation at board meetings, sharing of their relevant domain expertise, networking in other forums, their strategic inputs and demonstration towards governance compliances. For evaluation of performance of the Chairman additional aspects like institutional image building, providing guidance on strategy and performance, maintaining an effective and healthy relationship between the board and the management were taken into consideration. The evaluation was carried out through a structured methodology approved by the Nomination and Remuneration Committee after ensuring that the aspects under each of the laid down criteria are comprehensive and commensurate with the size of the board and the Company. 3.2 Familiarisation program for independent directors The familiarisation program for independent directors and details of familiarisation program for independent directors has been put up on the website and available at <http://rane.co.in/ranebrakelining/rblinvestors.html> 3.3. Key Managerial Personnel Mr. Vinay Lakshman, Managing Director (MD), Mr. M A P Sridhar Kumar, Vice President - Finance & Chief Financial Officer (CFO) and Mr. Venkatraman, Secretary hold the office of Key Managerial Personnel within the meaning of Section 2(51) of the Companies Act, 2013. Mr. P S Rao, Manager, retired from the services effective September 30, 2015. 3.4 Remuneration policy The Nomination and Remuneration Committee has laid down a policy on appointment and remuneration of directors, Key Managerial Personnel (KMP) and Senior Management Personnel (SMP). The same is annexed herewith as 'Annexure B'. 4. Audit 4.1 Audit Committee In terms of the provisions of Section 177 of the Companies Act, 2013 and Clause 49 of the listing agreement / SEBI LODR, the Audit Committee of the Board acts in accordance with terms of reference prescribed therein. Detailed disclosure on compositions, terms of reference and meetings of the Audit Committee are furnished in the Corporate Governance Report. 4.2 Statutory Auditors M/s. Varma & Varma were appointed as Statutory Auditors at the ninth Annual General Meeting (AGM) held on July 22, 2014, for a period of three years i.e., until the conclusion of the twelfth AGM. Their appointment is however, subject to ratification by members at every AGM. The Company has received letter from Statutory Auditors to the effect that their appointment for 2016-17 if ratified, would be within the prescribed limits and that they do not suffer from any disqualification under Section 141 of the Companies Act, 2013 and the rules made there under. Statutory Auditors have also submitted the peer review certificate issued to them by The Institute of Chartered Accountants of India. The statutory auditors report to the members for the year ended March 31, 2016 does not contain any qualification, reservation, adverse remark or disclaimer. During the year under review, the Auditors have not reported any matter under Section 143 (12) of the Act and therefore no detail is required to be disclosed under Section 134(3)(ca) of the Companies Act, 2013 4.3 Cost Audit Cost audit is not applicable to the Company as per the threshold limits prescribed under Companies (Cost Records and Audit) Rules, 2014. 4.4 Secretarial Auditors The Company had appointed M/s. S Krishnamurthy & Co., Company Secretaries in practice, to undertake the Secretarial Audit of the Company pursuant to the provisions of Section 204 of the Companies Act, 2013 and the rules, thereunder. The report on the Secretarial Audit carried out for the year 2015-16 is annexed herewith as 'Annexure C'. The secretarial audit report does not contain any qualification, reservation, adverse remark or disclaimer. 4.5 Internal Auditors The Company continues to engage M/s. Capri Assurance and Advisory Servicies, a firm of independent assurance service professionals, as Internal Auditors of the Company. Their scope of work includes review of processes for safeguarding the assets of the Company, review of operational efficiency, effectiveness of systems and processes and assessing the internal control strengths in all areas. Internal Auditors findings are discussed with the process owners and suitable corrective actions are taken as per the directions of Audit Committee on a regular basis to improve efficiency in operations. 5. Directors' responsibility statement In terms of Section 134(3)(c) read with section 134(5) of the Companies Act, 2013, the directors, confirm that: i. in the preparation of the financial statements for the financial year 2015-16, the applicable accounting standards had been followed and there were no material departures; ii. they had selected such accounting policies and applied them consistently and made judgments and estimates that were reasonable and prudent so as to give a true and fair view of the state of affairs of the Company at the end of the financial year and of the profit of the Company for the year under review; iii. they had taken proper and sufficient care for the maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company, preventing and detecting fraud and other irregularities; iv. they had prepared the financial statements for the financial year on a 'going concern' basis; v. they had laid down internal financial controls to be followed by the Company and such internal financial controls were adequate and were operating effectively; and vi. they had devised proper systems to ensure compliance with the provisions of all applicable laws and such systems were adequate and operating effectively. 6. Related Party Transactions All related party transactions that were entered into during the financial year were on an arm's length basis and were in the ordinary course of business. There were no materially significant related party transactions made by the Company with Related Parties which might have potential conflict with the interest of the Company at large. All Related Party Transactions were placed before the Audit Committee as also the Board for approval. Prior omnibus approval of the Audit Committee was obtained for the transactions which were foreseen and repetitive in nature. The transactions entered into pursuant to the omnibus approval so granted were reviewed by the Audit Committee on a quarterly basis. The Company has put in place proper system for identification and monitoring of such transactions. The policy on Related Party Transactions as approved by the Board has been uploaded on the Company's website (<http://rane.co.in/pdf/policies/rblrpt.pdf>). None of the Directors or Key Managerial Personnel or Senior Management Personnel has any material financial and commercial transactions, where they have personal interest, which may have potential conflict with interest of the Company at large. 7. Corporate Social Responsibility (CSR) The vision on Corporate Social Responsibility (CSR) is: "To be socially and environmentally responsive organization committed to improve quality of life within and outside". The CSR activities of Rane Group focus on four specific areas of: (a) Education (b) Healthcare (c) Community Development and (d) Environment. The CSR activities undertaken by the Company were in line with the CSR Policy and recommendations of the CSR Committee comprising of Mr. L Lakshman, Committee Chairman, Mr. L Ganesh, Director and Mr. S C Gupta, an independent director, as members. The Annual Report on CSR activities carried out during the year 2015-16 has been annexed as 'Annexure D'. The CSR policy of the Company is available in the Company's website (<http://www.rane.co.in/pdf/policies/rblcsr.pdf>) 8. Fixed Deposits The deposit outstanding as on March 31, 2016 amounted to Rs. 0.91 crores. All deposits that matured during the year were repaid. The Company has not defaulted in repayment of any fixed deposits or any interest thereon. The Company had discontinued accepting or renewing the fixed deposits with effect from April 1, 2014 and has not accepted deposits falling within the ambit of Chapter V, Section 73 of the Companies Act, 2013. Based on the application made by the Company in terms of Section 74 (2) Company Law Board (CLB) vide its order dated September 16, 2015 granted time to the Company to repay the deposits on their respective maturity dates in accordance with the terms of acceptance of such deposits or March 31, 2017, whichever is earlier. 9. Energy conservation, technology absorption and foreign exchange earnings and outgo The information on conservation of energy, technology absorption and foreign exchange earnings and outgo stipulated under Section 134(3)(m) of the Companies Act, 2013 read with Rule 8 of the Companies (Accounts) Rules, 2014 is annexed herewith as 'Annexure E'. 10. Particulars of Directors, Key Managerial Personnel and 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 Directors, Key Managerial Personnel (KMP) and Employees of the Company are provided in the Annual Report is annexed herewith as 'Annexure F'. 11. Corporate Governance Report Your Company has complied with the corporate governance requirements as stipulated under clause 49 of the listing agreement / Regulation 34 of SEBI LODR. Detailed report on the compliance and a certificate by the Statutory Auditors forms part of this report as 'Annexure G'. 12. Other disclosures i) Details of loan, guarantees and investments under the provisions of Section 186 of the Companies Act, 2013, if any, are given in the notes to the Financial Statements. ii) The Internal control systems and adequacy has been discussed in detail in the Management Discussion and Analysis annexed to the Directors Report. iii) There was no significant material order passed by the Regulators / Courts which would impact the going concern status of the Company and its future operations. iv) The details forming part of the extract of the Annual Return under Section 92(3) of the Companies Act, 2013 in form MGT-9 is annexed herewith as 'Annexure H'. v) The Company has established a formal vigil mechanism named 'Rane Whistle Blower Policy' for reporting improper or unethical practices or actions which are violative of the code of conduct of the Company. vi) The Company believes that women should be able to do their work in a safe and respectful environment that encourages maximum productivity. The Company has a zero tolerance towards sexual harassment. The Company has adopted a policy on prevention of sexual harassment of women at work place and put in place proper mechanism across the Company for reporting complaints of this nature. There was no case reported during the year under review through this mechanism. For and on behalf of the Board L GANESH Chairman VINAY LAKSHMAN Managing Director DATE : May 23, 2016 PLACE : Chennai |